SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
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(Name of Registrant as Specified In Its Charter) Fidelity Concord Street Trust
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<S> <C> <C>
(Name of Person(s) Filing Proxy Statement, if other than the Arthur S. Loring, Secretary
Registrant)
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[ ] 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
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(4) Date Filed:
SPARTAN(registered trademark) U.S. EQUITY INDEX FUND
A FUND OF
FIDELITY CONCORD STREET TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
INDIVIDUAL ACCOUNTS (PARTICIPANT) 1-800-605-4015
RETIREMENT PLAN LEVEL ACCOUNTS (TRUSTEES, PLAN SPONSORS)
Corporate Clients 1-800-962-1375
"Not for Profit" Clients 1-800-343-0860
FINANCIAL AND OTHER INSTITUTIONS
Nationwide 1-800-843-3001
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of SPARTAN U.S. EQUITY INDEX FUND:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Spartan U.S. Equity Index Fund will be held at the office of
Fidelity Concord Street Trust (the trust), 82 Devonshire Street, Boston,
Massachusetts 02109 on November 19, 1997, at 10:45 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(a) To approve an amended Management Contract for the fund.
1(b) To approve a new Sub-Advisory Agreement for the fund.
The Board of Trustees has fixed the close of business on September 22,
1997 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,
ARTHUR S. LORING, Secretary
September 22, 1997
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 CONCORD STREET TRUST: SPARTAN U.S. EQUITY INDEX FUND
TO BE HELD ON NOVEMBER 19, 1997
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity
Concord Street Trust (the trust) to be used at the Special Meeting of
Shareholders of Spartan U.S. Equity Index Fund (the fund) and at any
adjournments thereof (the Meeting), to be held on November 19, 1997 at
10:45 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.
The purpose of the Meeting is set forth in the accompanying Notice. The
solicitation is made primarily by the mailing of this Proxy Statement and
the accompanying proxy card on or about September 22, 1997. Supplementary
solicitations may be made by mail, telephone, telegraph, facsimile, or by
personal interview by representatives of the trust. In addition, Management
Information Services Corp. (MIS) and D.F. King & Co. may be paid on a
per-call basis to solicit shareholders on behalf of the fund at an
anticipated cost of approximately $________. The expenses in connection
with preparing this Proxy Statement and its enclosures and of all
solicitations will be paid by the fund, provided that they do not exceed
the fund's 0.19% expense cap in effect since April 18, 1997. Expenses
exceeding the 0.19% expense cap will be paid by FMR. The fund will
reimburse brokerage firms and others for their reasonable expenses in
forwarding solicitation material to the beneficial owners of shares. The
principal business address of Fidelity Distributors Corporation (FDC), the
fund's principal underwriter and distribution agent, is 82 Devonshire
Street, Boston, Massachusetts 02109.
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, 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 which 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. D.F. King &
Co. may be paid on a per call basis for vote-by-phone solicitations on
behalf of the fund at an anticipated cost of approximately $______. The
expenses in connection with telephone voting will be paid by the fund,
provided that they do not exceed the fund's 0.19% expense cap in effect
since April 18, 1997. Expenses exceeding the 0.19% 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.
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 proxies 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 proxies 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.
On July 31, 1997 there were ________ shares of the fund issued and
outstanding. [INSERT BENEFICIAL OWNERSHIP LANGUAGE]. Shareholders of record
at the close of business on September 22, 1997 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
FEBRUARY 28, 1997, WRITE TO FIDELITY DISTRIBUTORS CORPORATION AT 82
DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109 OR CALL FIDELITY CLIENT
SERVICES AT THE APPROPRIATE NUMBER LISTED BELOW OR CONTACT YOUR INVESTMENT
PROFESSIONAL.
INDIVIDUAL ACCOUNTS (PARTICIPANT)
If you are investing through a retirement plan sponsor or other
institution, refer to your plan materials or contact that institution
directly.
RETIREMENT PLAN LEVEL ACCOUNTS (TRUSTEES, PLAN SPONSORS)
Corporate Clients 1-800-962-1375
"Not for Profit" Clients 1-800-343-0860
FINANCIAL AND OTHER INSTITUTIONS
Nationwide 1-800-843-3001
VOTE REQUIRED: APPROVAL OF PROPOSALS 1(A) AND 1(B) 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. OVERVIEW OF PROPOSED APPOINTMENT OF BANKERS TRUST COMPANY AS SUB-ADVISER
FOR SPARTAN U.S. EQUITY INDEX FUND.
FMR currently serves as the fund's manager under a management contract
dated January 13, 1988 (the Present Management Contract). As manager,
FMR's duties include managing the fund's investments, supervising
relationships with other companies that provide the fund with services, and
preparing general shareholder communications, all subject to the continuing
oversight of the Board of Trustees. Other Fidelity companies maintain the
fund's shareholder accounts, provide customer services, and handle the
daily accounting of the fund's portfolio of investments. Custodial
services, including safekeeping of the fund's cash and the securities it
owns, are provided by a bank unaffiliated with Fidelity.
In June 1997, FMR proposed to the fund's Trustees that a sub-advisor be
appointed to handle the day-to-day management of the fund's investments and
to provide custodial services. FMR recommended that these services be
provided by Bankers Trust Company (BT), a major institutional money manager
with substantial experience in index fund management. FMR made the
proposals as part of its ongoing efforts to provide services to the fund
efficiently and at low cost.
Under the proposals, FMR would continue to serve as the fund's manager and
investment advisor, but would delegate part of its duties to BT. As
sub-advisor, BT would have day-to-day responsibility for managing the
fund's investments in accordance with its policy of attempting to duplicate
the performance of the Standard & Poor's 500 Index (the S&P 500(registered
trademark)). BT would also provide custodial and securities lending
services. FMR would be responsible for overseeing BT's performance and
would retain its other management responsibilities, subject to oversight by
the Board of Trustees. All other fund services, including shareholder
account services, would be unchanged. The fund's current investment
objectives and policies would be unchanged.
After consideration, the Trustees approved FMR's proposals in July 1997.
BT's appointment as sub-advisor would involve changes to the fund's Present
Management Contract with FMR, discussed in Proposal 1(a), and adoption of a
new sub-advisory agreement with BT (the New Sub-Advisory Agreement),
discussed in Proposal 1(b). The Trustees believe the proposals are in the
best interests of the fund and its shareholders, and recommend that
shareholders vote to approve the proposals. For additional information on
the Board of Trustees' considerations, see "Matters Considered by the
Board" on page 11.
Proposals 1(a) and 1(b) are contingent on each other and will not be
implemented unless both proposals are approved. The following pages
discuss the sub-advisory arrangement as a whole, and provide information
relevant to both proposals. Refer to each proposal for more detailed
information on the terms of each contract.
REASONS FOR PROPOSALS. FMR recommended appointment of a sub-advisor in
order to reduce the costs of operating the fund. In April 1997, FMR
voluntarily lowered the fund's operating expenses (with certain exceptions
discussed below) to 0.19% of the fund's assets per year, and agreed to
limit expenses to that level through December 31, 1999. The 0.19% expense
level is lower than the management fee FMR is entitled to receive from the
fund (0.28%). As a result, FMR is bearing substantially all fund operating
costs. With an annual expense ratio of 0.19%, the fund is one of the
lowest-cost index funds, and one of the lowest-cost mutual funds, in the
United States.
BT is a well-recognized institutional money manager, with over 20 years'
experience in managing accounts or funds indexed to the S&P 500 and other
indexes. As of June 30, 1997, BT and its affiliates managed more than $250
billion for mutual funds, pension funds and other institutions, including
approximately $50 billion in assets indexed to the S&P 500. This
represents almost three times the S&P 500 index assets under management by
FMR and its affiliates as of the same date (approximately $17 billion).
BT's commitment to the specialized area of index account management allows
BT to provide index fund portfolio management services at a lower cost than
FMR. (For more information about BT, refer to the section entitled
"Activities and Management of Bankers Trust Company" beginning on page 14.)
This is expected to have the effect of reducing the cost to FMR of
providing investment management services and maintaining the fund's
expenses at their current exceptionally low level.
The table belows shows the average annual total returns of the [name of BT
fund], [advised/sub-advised] by BT, over the past [1, 5, and 10 years/1 and
5 years and life of fund] for the period ending June 30, 1997, as compared
to the S&P 500.
Fiscal periods ended Past 1 Past 5 10
June 30,1997 year years years/Life of
fund A
name of BT fund % % %
S&P 500 % % %
A From _________________ (commencement of operations)
[name of BT fund] seeks to track, rather than beat, the performance of the
S&P 500. This chart is for illustrative purposes only and is not meant to
be representative of the future performance of the [name of BT fund] or the
fund.
MANAGEMENT FEE REDUCTION. In recognition of these cost savings, FMR has
agreed to reduce its management fee if the sub-advisory arrangements are
approved. As discussed in Proposal 1(a), under the proposed management
contract (the Amended Management Contract) FMR would reduce its annual
management fee rate from 0.28% to 0.24% of the fund's assets. Because FMR
is currently limiting the fund's expenses to a level lower than the
management fee, this reduction would not affect the fund's expenses at
present. However, it represents a reduction in the amount FMR would be
entitled to receive for management services if the expense limit were to
increase in the future.
SUB-ADVISORY FEES. BT's sub-advisory fees cover custodial services as
well as portfolio management services. The majority of BT's fees, equal to
0.006% of the fund's average net assets, would be paid by FMR and would
have no effect on the fund's expenses. However, BT would also receive fees
based on a percentage of the fund's net income from lending portfolio
securities, which would be payable by the fund. Under the proposals, BT
would receive 40% of the net income from the fund's securities lending
activities, and the fund would receive the remaining 60%. These fees would
not be covered by FMR's voluntary expense limitation, and would represent
additional expenses to the fund.
Securities lending is a means of earning a modest amount of additional
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
that represents income to the fund or otherwise provides collateral that
can be invested to earn income. Fidelity Service Company, Inc. (FSC)
currently administers the fund's securities lending program. For the
fiscal year ended February 28, 1997, the fund paid approximately $3,000
(less than 0.0001% of average net assets) to FSC for securities lending
processing.
The amount of securities lending income that can be generated for the fund
will depend on market conditions and other factors. While BT is very
experienced in the area of securities lending and is expected to generate
greater securities lending revenue than currently is produced by the fund,
this still is likely to represent a small percentage of fund assets. In
its fiscal year ended February 28, 1997, the fund earned securities lending
income equal to approximately 0.002% of its average net assets. BT has
estimated that the fund's income from securities lending (before fees)
could equal approximately 0.005% of the fund's assets per year, in which
case BT would receive 0.002% and the fund would retain the remaining
0.003%. The 0.002% paid to BT would represent additional fund expense
above the 0.19% expense limitation. However, because the fees represent a
percentage of net income, they would only be charged to the extent that the
fund has earned additional income.
IMPACT ON FUND EXPENSES. The top portion of following table illustrates
the impact of the proposals on the expenses of the fund before the
voluntary 0.19% expense limitation; the lower portion shows the amount of
expenses reimbursed by FMR. All expenses are shown as annual percentages
of the fund's average net assets.
Current* Proposed*
Managment Fee (before reimbursement) 0.28% 0.24%**
Other Expenses (before reimbursement) 0.27% 0.27%
Gross Expenses (before reimbursement) 0.55% 0.51%**
Expenses Reimbursed by FMR (0.36%) (0.32%)
Total Operating Expenses (after 0.19% 0.19%**
reimbursement)
*Based on historical expenses for the fiscal year ended February 28, 1997.
Proposed expenses based on terms of proposed contracts.
**Including sub-advisory fees equal to 40% of securities lending income,
estimated at 0.002% (not visible due to rounding).
Under the proposals, the management fee would be reduced by 0.04%, as
discussed in Proposal 1(a).
These expense reductions currently benefit FMR, by reducing the costs of
providing investment management services and maintaining the 0.19% expense
limitation. However, they also represent a reduction in the amount of fund
expenses the fund could incur at a future date if the expense limitations
were to change.
The following table illustrates the impact of the proposals on the fund's
expenses for the fiscal year ended February 28, 1997 after the effect of
the voluntary 0.19% expense limitation. The current voluntary 0.19%
expense limitation includes management fees but excludes, interest, taxes,
brokerage commissions, and other transaction costs or extraordinary
expenses. All fees and expenses are expressed as a percentage of the fund's
average net assets.
Current Proposed
Managment Fee (after reimbursement) 0.19% 0.19%*
Other Expenses (after reimbursement) 0.00% 0.00%
Total Operating Expenses (after 0.19% 0.19%*
reimbursement)
*Including sub-advisory fees equal to 40% of securities lending income,
estimated at 0.002% (not visible due to rounding).
Based on data provided by Lipper Analytical Services, Inc. (Lipper), an
independent service that monitors the mutual fund industry, the median
management fee rate for index funds prior to any reimbursement arrangements
was approximately 0.362% as of ________, 1997. This comparative group
comprises 27 funds and 46 classes included in the S&P 500 Index objective
category, excluding funds with a master/feeder structure. This median rate
is approximately 0.12% higher than the fee rate proposed under the Amended
Management Contract and the New Sub-Advisory Agreement (0.242%, including
estimated sub-advisory fees associated with securities lending expenses).
The median total expense rate for these funds (after reimbursements) was
approximately 0.445% for the same period. Based on the Amended Management
Contract and the New Sub-Advisory Agreement (and assuming the current
voluntary expense limitation is in effect), the total operating expenses of
the fund (0.192%, including estimated sub-advisory fees associated with
securities lending expenses) would be below the median.
1(A). TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR THE FUND.
The Board of Trustees, including a majority of the Independent Trustees,
has approved, and recommends that the shareholders of the fund approve, the
Amended Management Contract. The Amended Management Contract allows for
the appointment of BT as sub-advisor to the fund and reduces the management
fee payable by the fund to FMR.
PRESENT MANAGEMENT CONTRACT. The fund's management fee is calculated and
paid monthly, and is normally expressed as an annual percentage of the
fund's average net assets. Under the Present Management Contract, the fund
pays FMR at the annual rate of 0.28% of the fund's average net assets. In
addition to the management fee, the fund also pays other expenses for
services such as maintaining shareholder records and furnishing shareholder
account statements and financial reports. Unlike the management fee, which
is constant, the other expenses will vary from year to year. The
management fee plus these other expenses equals the total operating
expenses for the fund.
PROPOSED AMENDMENTS TO THE PRESENT MANAGEMENT CONTRACT. A copy of the
Amended Management Contract, marked to indicate the proposed amendments, is
supplied as Exhibit 1 on page 18. The proposed amendment would (i) add a
provision to expressly permit FMR to delegate investment advisory authority
to an investment adviser, and (ii) reduce the management fee payable by the
fund to FMR by 0.04% of the fund's average net assets, from 0.28% to 0.24%
of the fund's average net assets. The Amended Management Contract also
reflects the name change of the fund, approved by Trustees on April 17,
1997. In all other respects, the Amended Management Contract is
substantially identical to the Present Management Contract. (For a
discussion of the fund's Present Management Contract, refer to the section
entitled "Present Management Contract" beginning on page 15.)
If approved by shareholders, the Amended Management Contract will take
effect on December 1, 1997 (or, if later, the first day of the first month
following approval) and will remain in effect through July 31, 1998, and
thereafter only as long as its continuance is approved at least annually by
(i) the vote, cast in person at a meeting called for the purpose, of a
majority of the Independent Trustees and (ii) the vote of either a majority
of the Trustees or a majority of the outstanding shares of the fund. If the
Amended Management Contract is not approved, the Present Management
Contract will continue in effect through July 31, 1998, and thereafter
subject to the same requirements for continuance as the Amended Management
Contract.
Currently, FMR voluntarily limits the total operating expenses (including
management fees but excluding, interest, taxes, brokerage commissions, and
other transaction costs or extraordinary expenses) of the fund to 0.19% of
the fund's average net assets. This agreement will continue through
December 31, 1999, whether or not this proposal is approved. Approval of
this proposal is not expected to result in a material change in the total
operating expenses of the fund at this time because, the fund would
continue to be subject to the same voluntary expense limitation. If this
proposal and Proposal 1(b) are approved, sub-advisory fees associated with
securities lending will not be subject to the voluntary expense limitation;
these fees are estimated at 0.002% of average net assets of the fund.
Approval of the proposal would not change the fund's current investment
objectives or policies or the investments of the fund. (For a comparison
of the current management fees and total expenses of the fund and such fees
if the proposals are approved, see the introduction to the proposals.)
CONCLUSION. Based on their evaluation of all material factors and assisted
by the advice of independent counsel, the Trustees concluded (i) that the
existing management fee structure and the exclusion of the sub-advisory
fees paid by the fund from the voluntary expense limitation are fair and
reasonable and (ii) that the proposed modifications to the management fee
rate, that is the reduction of the management fee rate, and the
modification permitting FMR to delegate investment management authority are
in the best interest of the fund's shareholders. The Board of Trustees,
including the Independent Trustees, voted to approve the submission of the
Amended Management Contract to shareholders of the fund and recommends that
shareholders of the fund vote FOR the Amended Management Contract.
Approval of the proposed Amended Management Contract is contingent upon
shareholder approval of the proposed new Sub-Advisory Agreement (see
Proposal 1(b)).
1(B). TO APPROVE A NEW SUB-ADVISORY AGREEMENT FOR THE FUND.
The Board of Trustees, including a majority of the Independent Trustees,
has approved, and recommends that the shareholders of the fund approve, the
New Sub-Advisory Agreement.
Under the New Sub-Advisory Agreement, BT would be appointed sub-advisor to
the fund and authorized, subject to the supervision and direction of the
Board of Trustees and/or FMR, to make investment decisions for the fund,
place orders to buy, sell and lend the fund's investments, vote the fund's
portfolio securities, and manage the fund in accordance with its current
investment objectives and policies. In addition, BT would serve as
custodian to the fund. FMR, the current investment manager to the fund,
will continue as investment manager.
Under the New Sub-Advisory Agreement, FMR, not the fund, would pay BT fees
for providing investment management, securities lending and custodial
services to the fund at an annual rate of 0.006% of the fund's average net
assets. In addition, the fund would pay BT a sub-advisory fee equal to 40%
of net income from the fund's securities lending program (estimated at
0.002% of average net assets of the fund). If the proposal is approved,
the fund will no longer incur fees payable to FSC for securities lending
processing under its transfer agent agreement. For the fiscal year ended
February 28, 1997, the fund paid approximately $3,000 (less than 0.0001% of
average net assets) to FSC for securities lending processing. If the
proposal is approved, the fund will no longer directly pay for custodial
services. For the fiscal year ended February 28, 1997, the fund paid $____
(0.002% of average net assets) to State Street Bank and Trust Company, its
custodian.
Currently, FMR voluntarily limits the total operating expenses (including
management fees but excluding, interest, taxes, brokerage commissions, and
other transaction costs or extraordinary expenses) of the fund to 0.19% of
the fund's average net assets. This agreement will continue through
December 31, 1999, whether or not this proposal is approved. Approval of
this proposal is not expected to result in a material change in the total
operating expenses of the fund at this time because, the fund would
continue to be subject to the same voluntary expense limitation. If this
proposal and Proposal 1(a) are approved, sub-advisory fees associated with
securities lending will not be subject to the voluntary expense limitation;
these fees are estimated at 0.002% of average net assets of the fund.
Approval of the proposal would not change the fund's current investment
objectives or policies or the investments of the fund. (For a comparison
of the current management fees and total expenses of the fund and such fees
if the proposals are approved, see the introduction to the proposals.)
A copy of the New Sub-Advisory Agreement is supplied as Exhibit 2 on page
23. If approved by shareholders, the New Sub-Advisory Agreement will take
effect on December 1, 1997 (or, if later, the first day of the first month
following approval) and will remain in effect through July 31, 1998, and
thereafter only as long as its continuance is approved at least annually by
(i) the vote, cast in person at a meeting called for the purpose, of a
majority of the Independent Trustees and (ii) the vote of either a majority
of the Trustees or a majority of the outstanding shares of the fund. If the
New Sub-Advisory Agreement is not approved, FMR will continue to manage the
fund under the Present Management Contract.
BT, a New York banking corporation with principal offices in New York, is
a wholly owned subsidiary of Bankers Trust New York Corporation, the
seventh largest bank holding company in the United States. (For more
information about BT, refer to the section entitled "Activities and
Management of Bankers Trust Company" beginning on page 14.)
The New Sub-Advisory Agreement would be terminable on 60 days' written
notice by the Board of Trustees, FMR or BT and would terminate
automatically in the event of its assignment.
CONCLUSION. Based on their evaluation of all material factors and assisted
by the advice of independent counsel, the Trustees concluded that the New
Sub-Advisory Agreement is in the best interest of the fund's shareholders.
The Board of Trustees, including the Independent Trustees, voted to approve
the submission of the New Sub-Advisory Agreement to shareholders of the
fund and recommends that shareholders of the fund vote FOR the New
Sub-Advisory Agreement.
Approval of the proposed New Sub-Advisory Agreement is contingent upon
shareholder approval of the proposed Amended Management Contract (see
Proposal 1(a)).
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve as
Trustees are referred to herein as the "Fidelity funds." The Board of
Trustees meets eleven times a year. The Board of Trustees, including the
Trustees who are not "interested persons" of the trust, FMR or BT (the
Independent Trustees), believe that matters bearing on the appropriateness
of the fund's management fees are considered at most, if not all, of their
meetings. While the full Board of Trustees or the Independent Trustees, as
appropriate, act on all major matters, a significant portion of the
activities of the Board of Trustees (including certain of those described
herein) are conducted through committees. The Independent Trustees meet
frequently in executive session and are advised by independent legal
counsel selected by the Independent Trustees.
The proposals to present the Amended Management Contract and the New
Sub-Advisory Agreement to shareholders were considered and approved by the
Board of Trustees of the fund, including all of the Independent Trustees,
on July 17, 1997 and were also considered by the Board on June 19, 1997.
The Board of Trustees received materials relating to the Amended Management
Contract and the New Sub-Advisory Agreement in advance of the meetings at
which the Amended Management Contract and the New Sub-Advisory Agreement
were considered, and had the opportunity to ask questions and request
further information in connection with such consideration.
The Board of Trustees was informed that FMR recommended that a sub-advisor
be appointed to manage the fund's investments and provide custodial
services to the fund. The Trustees were informed that FMR had considered
and reviewed fee proposals from index fund providers, including BT, and
that FMR recommended that BT be appointed as a sub-advisor to the fund.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with their
monthly meetings Trustees receive and review materials specifically
relating to the fund's management contract. These materials include: (i)
information on the investment performance of the fund, a peer group of
funds and the appropriate index, (ii) sales and redemption data, and (iii)
notable changes in the fund's investments. The Board of Trustees and the
Independent Trustees also consider periodically other material factors such
as (1) FMR's financial condition, (2) arrangements in respect of the
distribution of the fund's shares, (3) the procedures employed to determine
the value of the fund's assets, (4) the allocation of the fund's brokerage,
if any, including allocations to brokers affiliated with FMR, (5) FMR's
management of the relationships with the fund's custodian and
subcustodians, (6) the resources devoted to and the record of compliance
with the fund's investment policies and restrictions and with policies on
personal securities transactions and (7) the nature, cost, and audit of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees and in
connection with the Trustee's review of the fund's management fee
structure, additional information was furnished by FMR including, among
other items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees of FMR
funds, (c) the choice of performance indices and benchmarks, (d) the
composition of peer groups of funds, (e) transfer agency and bookkeeping
fees paid to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies of
scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including the fund's shareholders.
In considering the Amended Management Contract and the New Sub-Advisory
Agreement, the Board of Trustees and the Independent Trustees did not
identify any single factor as all-important or controlling, and the
following summary does not detail all of the matters considered. Matters
considered by the Board of Trustees and the Independent Trustees include
the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within its
investment objective and its record of compliance with its investment
restrictions. They also reviewed monthly the fund's investment performance
as well as the performance of a peer group of mutual funds, and the
performance of the appropriate index. The Board of Trustees and the
Independent Trustees considered the ability of the fund to comply with its
investment restrictions under the proposed sub-advisory arrangements with
BT.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees annually review a report detailing the background of the fund's
portfolio manager, and the fund's investment objective and discipline. The
Independent Trustees have also had discussions with senior management of
FMR responsible for investment operations, and the senior management of
Fidelity's equity group. Among other things they considered the size,
education and experience of FMR's investment staff, its use of technology,
and FMR's approach to recruiting, training and retaining portfolio managers
and other research, advisory and management personnel.
BT'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees have reviewed information concerning the fund's proposed
sub-advisor, Bankers Trust Company. Among other things they considered
BT's organization and portfolio management techniques, experience managing
index fund accounts, level of index fund assets under management,
investment performance, index fund investment management techniques,
trading practices, securities lending program, compliance procedures, proxy
voting procedures and custodian activities and foreign subcustodian
networks. The Board of Trustees and the Independent Trustees reviewed the
BT proposal for sub-advisory arrangements and a competing proposal.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent of
administrative and shareholder services performed by FMR and affiliated
companies, both under the Amended Management Contract and under separate
agreements covering transfer agency functions and pricing, bookkeeping. The
Board of Trustees and the Independent Trustees also considered the nature
and extent of FMR's supervision of third party service providers,
principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees considered
the fund's expense ratio and expense ratios of a peer group of funds. They
also considered the amount and nature of fees paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of the
Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent Trustees
have concluded that the cost allocation methodology employed by FMR has a
reasonable basis and is appropriate in light of all of the circumstances.
They considered the profits realized by FMR in connection with the
operation of the fund and whether the amount of profit is a fair
entrepreneurial profit for the management of the fund. They also considered
the profits realized from non-fund businesses which may benefit from or be
related to the fund's business. The Board of Trustees and the Independent
Trustees also considered FMR's profit margins in comparison with available
industry data, both accounting for and ignoring marketing expenses.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent Trustees
also considered the character and amount of fees paid by the fund and the
fund's shareholders for services provided by FMR and its affiliates,
including fees for services like transfer agency, fund accounting and
direct shareholder services. They also considered the allocation of fund
brokerage to brokers affiliated with FMR and the receipt of sales loads and
payments under Rule 12b-1 plans in respect of certain of the Fidelity
funds. The Board of Trustees and the Independent Trustees also considered
the revenues and profitability of FMR businesses other than its mutual fund
business, including FMR's retail brokerage, correspondent brokerage,
capital markets, trust, investment advisory, pension record keeping, credit
card, insurance, publishing, real estate, international research and
investment funds, and others. The Board of Trustees and the Independent
Trustees considered the intangible benefits that accrue to FMR and its
affiliates by virtue of their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the Independent
Trustees considered the benefit to shareholders of investing in a fund that
is part of a large family of funds offering a variety of investment
disciplines and providing for a large variety of fund and shareholder
services.
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,
net assets, and total expenses of funds with investment objectives similar
to Spartan U.S. Equity Index Fund and advised by FMR is contained in the
Table of Average Net Assets and Expense Ratios in Exhibit 4 beginning on
page 41.
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, John H. Costello, Arthur S. Loring, Robert H.
Morrison, Richard A. Silver, Leonard M. Rush, William J. Hayes, Robert A.
Lawrence, and Jennifer Farrelly are currently officers of the trust and
officers or employees of FMR or FMR Corp. With the exception of Mr.
Costello, Mr. Silver, Mr. Rush, and Ms. Farrelly, 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 March 1, 1996 through June 30, 1997, no transactions
were entered into by Trustees 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 BANKERS TRUST COMPANY
BT, a New York banking corporation with principal offices at 130 Liberty,
New York, New York 10006, is a wholly owned subsidiary of Bankers Trust New
York Corporation whose principal offices are also at 130 Liberty Street,
New York, New York 10006. BT was founded in 1903. As of December 31,
1996, Bankers Trust New York Corporation was the seventh largest bank
holding company in the United States with total assets of approximately
$120 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 with approximately $227
billion in assets under management globally. Of that total, approximately
$82 million are in United States equity index assets. When bond and
international funds are included, BT manages over $94 billion in total
index assets. This makes BT one of the nation's leading managers of index
funds.
Information regarding the advisory or sub-advisory fees, net assets, and
total expenses of funds with investment objectives similar the fund and
advised or sub-advised by BT is contained in Exhibit _ beginning on page
__.
The name, address and principal occupation of each Director and the
principal executive officer of BT is provided in Exhibit 3 beginning on
page 39.
No officer or trustee of the fund is an officer, employee or director of
BT. [No officer or trustee of the fund owns any securities of, or has any
other material direct or indirect interest in, BT or any of its affiliates.
During the period March 1, 1996 through June 30, 1997, no material
transactions were entered into by any trustee of the fund to which BT or
any of its affiliates is or was a party.] There is no arrangement or
understanding in connection with the New Sub-Advisory Agreement with
respect to the composition of the Board of Trustees of the fund or of BT or
with respect to the selection or appointment of any person to any office of
either BT or the fund.
Payments [were/were not] made to BT or affiliates by the fund in last
fiscal year [in the amount of $______].
[BT has been advised by counsel that BT currently may perform the services
for each 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.]
PRESENT MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also 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 and state
laws; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Trustees. Services provided by affiliates of FMR will continue under
the proposed management contract described in proposal 1(a).
In addition to the management fee payable to FMR, the fund pays transfer
agent fees to Fidelity Investments Institutional Operations Company
(FIIOC), and price and bookkeeping fees to Fidelity Service Company, Inc.
(FSC), affiliates of FMR. Although the fund's current management contract
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices and reports to
shareholders, the trust, on behalf of the fund has entered into a revised
transfer agent agreement with FIIOC, pursuant to which FIIOC bears the
costs of providing these services to existing shareholders. Other expenses
paid by the fund include interest, taxes, brokerage commissions, and the
fund's proportionate share of insurance premiums and Investment Company
Institute dues. 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 FIIOC and FSC by the fund
for fiscal 1997 amounted to $11,637,199 and $812,536, respectively. FSC
also received fees for administering the fund's securities lending program.
Securities lending fees are based on the number and duration of individual
securities loans. Securities lending fees for fiscal 1997 were $2,590.
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 January
13, 1988 which was approved by shareholders on October 19, 1988. For the
services of FMR under the contract, the fund pays FMR a monthly management
fee at the annual rate of 0.28% of the average net assets of the fund
throughout the month.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's operating expenses (exclusive of 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. Expense reimbursements
by FMR will increase the fund's total returns and repayment of the
reimbursement by the fund will lower its total returns.
Currently, FMR voluntarily limits the total operating expenses (including
management fees but excluding interest, taxes, brokerage commissions, and
other transaction costs or extraordinary expenses) of the fund to 0.19% of
the fund's average net assets. This agreement will continue through
December 31, 1999.
PORTFOLIO TRANSACTIONS
Currently, all orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by FMR pursuant to authority contained in the
fund's management contract.
Currently, FMR may place agency transactions with National Financial
Services Corporation (NFSC) and Fidelity Brokerage Services (FBS), indirect
subsidiaries of FMR Corp., if the commissions are fair, reasonable, and
comparable to commissions charged by non-affiliated, qualified brokerage
firms for similar services.
During fiscal 1997 the fund paid brokerage commissions of $4,436 to NFSC
and $0 to FBS. During fiscal 1997, this amounted to approximately 4.29% and
0.00%, respectively, 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 _________, 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 Reports you wish
to receive in order to supply copies to the beneficial owners of the
respective shares.
EXHIBIT 1
FORM OF MANAGEMENT CONTRACT
The language to be added to the current contract is ((underlined)) and
material to be deleted is set forth in [brackets].
MANAGEMENT CONTRACT
BETWEEN
FIDELITY [INSTITUTIONAL] ((CONCORD STREET)) TRUST:
[FIDELITY] ((SPARTAN)) U.S. EQUITY INDEX [PORTFOLIO] ((FUND))
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[AGREEMENT] ((MODIFICATION)) made this [13th day of January 1988] ((1st
day of December 1997)), by and between Fidelity [Institutional] ((Concord
Street)) Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of [Fidelity] ((Spartan)) U.S. Equity Index [Portfolio] ((Fund))
(hereinafter called the "Portfolio"), and Fidelity Management & Research
Company, a Massachusetts corporation (hereinafter called the "Adviser")
((as set forth in its entirety below)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, ((any
sub-advisers,)) custodians, depositories, transfer and pricing agents,
accountants, attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary or desirable; (iii)
preparing all general shareholder communications, including shareholder
reports; (iv) conducting shareholder relations; (v) maintaining the Fund's
existence and its records; (vi) during such times as shares are publicly
offered, maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the development
of and developing and implementing, if appropriate, management and
shareholder services designed to enhance the value or convenience of the
Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser[, at its own expense,] shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best
efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable
in relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the Adviser and its
affiliates have with respect to accounts over which they exercise
investment discretion. The Trustees of the Fund shall periodically review
the commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. For the services and facilities to be furnished hereunder, the Adviser
shall receive a monthly management fee at the annual [fate] ((rate)) of
[.28%] ((0.24%)) of the average daily net assets of the Portfolio (computed
in the manner set forth in the Declaration of Trust) throughout the month;
provided that in the case of initiation or termination of the Contract
[druing] ((during)) any month, the fee for that month shall be reduced
proportionately on the basis of the number of business days during which it
is in effect and the fee computed upon the average net assets for the
business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses [other
than those expressly stated to be payable by the Adviser hereunder], which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal [obligationwhich] ((obligation which)) the Portfolio may have
to indemnify the Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security ((or other
investment instrument)).
((6. Subject to the prior written approval of the Trustees of the Trust,
satisfaction of all applicable requirements under the 1940 Act, and such
other terms and conditions as the Trustees may impose, the Adviser may
appoint (and may from time to time remove) one or more unaffiliated persons
as agent to perform any or all of the services specified hereunder and to
carry out such provisions of this Agreement as the Adviser may from time to
time direct and may delegate to such unaffiliated persons the authority
vested in the Adviser pursuant to this Agreement to the extent necessary to
enable such persons to perform the services requested of such person by the
Adviser, provided however, that the appointment of any such agent shall not
relieve the Adviser of any of its liabilities hereunder.))
[6] ((7)). (a) Subject to prior termination as provided in sub-paragraph
(d) of this paragraph [6] ((7)), this Contract shall continue in force
until [July 31, 1988] ((July 31, 1998)) and indefinitely thereafter, but
only so long as the continuance after such date shall be specifically
approved at least annually by vote of the Trustees of the Fund or by vote
of a majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph [6] ((7)), the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
[7] ((8)). The Adviser is hereby expressly put on notice of the limitation
of shareholder liability as set forth in the Fund's Declaration of Trust
((or other organizational document)) and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all cases
to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such obligations
from the Trustees or any individual Trustee. The Adviser understands that
the rights and obligations of any Portfolio under the Declaration of Trust
((or other organizational document)) are separate and distinct from those
of any and all other Portfolios.
((9. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving effect
to the choice of laws provisions thereof.))
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED]
EXHIBIT 2
FORM OF SUB-ADVISORY AGREEMENT
SUBADVISORY AGREEMENT
This Agreement is entered into as of the ___ day of _____, 1997, among
[________] Trust, a Massachusetts business trust (the "Trust"), on behalf
of [______ 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 July __, 1997, with Manager (the "Management
Contract"), pursuant to which Manager has agreed to provide certain
management and administrative services to the Portfolio; and
WHEREAS, Manager desires to appoint Subadviser as investment subadviser to
provide the investment advisory and administrative services to the
Portfolio specified herein, and Subadviser is willing to serve the
Portfolio in such capacity; and
WHEREAS, the trustees of the Trust (the "Trustees"), including a majority
of the Trustees who are not "interested persons" (as such term is defined
below) of any party to this Agreement, and the shareholder(s) of the
Portfolio, have each consented to such an arrangement;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
I. APPOINTMENT OF SUBADVISER; COMPENSATION
1.1 Appointment as Subadviser. Subject to and in accordance with the
provisions hereof, Manager hereby appoints Subadviser as investment
subadviser to perform the various investment advisory and other services to
the Portfolio set forth herein and, subject to the restrictions set forth
herein, hereby delegates to Subadviser the authority vested in Manager
pursuant to the Management Contract to the extent necessary to enable
Subadviser to perform its obligations under this Agreement.
1.2 Scope of Investment Authority. (a) The Subadviser is hereby
authorized, on a discretionary basis, to manage the investments and
determine the composition of the assets of the Portfolio, subject at all
times to (i) the supervision and control of the Trustees, (ii) the
requirements of the Investment Company Act of 1940, as amended (the
"Investment Company Act") and the rules thereunder, (iii) the investment
objective, policies and limitations, as provided in the Portfolio's
Prospectus and other governing documents, and (iv) such instructions,
policies and limitations relating to the Portfolio as the Trustees or
Manager may from time to time adopt and communicate in writing to
Subadviser. Notwithstanding anything herein to the contrary, Subadviser is
not authorized to take any action, including the purchase and sale of
portfolio securities, in contravention of any restriction, limitation,
objective, policy or instruction described in the previous sentence.
(b) It is understood and agreed that, for so long as this Agreement shall
remain in effect, Subadviser shall retain discretionary investment
authority over the manner in which the Portfolio's assets are invested, and
Manager shall not have the right to overrule any investment decision with
respect to a particular security made by Subadviser, provided that the
Trustees and Manager shall at all times have the right to monitor the
Portfolio's investment activities and performance, require Subadviser to
make reports and give explanations as to the manner in which the
Portfolio's assets are being invested, and, should either Manager or the
Trustees become dissatisfied with 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; (viii) 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)
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; 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 _________, 1997.
(b) Subject to prior termination pursuant to Section 9.2 below, this
Agreement shall continue in force until July 31, 1998, and indefinitely
thereafter, but only so long as the continuance after such date shall be
specifically approved at least annually by vote of the Trustees or by a
vote of a majority of the outstanding voting securities of the Portfolio,
provided that in either event such continuance shall also be approved by
the vote of a majority of the Trustees who are not "interested persons" (as
such term is defined in the Investment Company Act) of any party to this
Agreement cast in person at a meeting called for the purpose of voting on
such approval.
(c) The required shareholder approval of this Agreement or any
continuance of this Agreement shall be effective with respect to the
Portfolio if a majority of the outstanding voting securities of the series
(as defined in Rule 18f-2(h) under the Investment Company Act) of shares of
the Portfolio votes to approve this Agreement or its continuance.
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.
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 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.
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 without
prior review and approval by Subadviser, which approval will not be
unreasonably withheld or delayed.
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 without prior review and
approval by Manager, which approval will not be unreasonably withheld or
delayed.
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. The Declaration of Trust establishing the
Trust, dated __________, a copy of which, together with all amendments, is
on file in the office of the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is not
executed on behalf of any of the Trustees as individuals and no Trustee,
shareholder, officer, employee or agent of the Trust shall be held to any
personal liability, nor shall resort be had to their private property, for
the satisfaction of any obligation or claim, in connection with the affairs
of the Trust or the Portfolio, but only the assets belonging to the
Portfolio shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
[_________ Trust, on behalf of ____________ Fund]
By:___________________________
Name:
Title:
Fidelity Management & Research Company
By:___________________________
Name:
Title:
Bankers Trust Company
By:___________________________
Name:
Title:
APPENDIX A
Pursuant to Section 1.6 of the Subadvisory Agreement among [__________]
Trust (the "Trust"), on behalf of [__________ 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 0.0X% (X 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
BANKERS TRUST COMPANY - DIRECTORS
Name Principal Occupation Business Address
George B. Beitzel Director of Various 29 King Street
Corporations Chappaqua, NY
10514-3432
Phillip A. Griffiths Director, Institute for Institute for Advanced
Advanced Study Study
Olden Lane
Princeton, NJ 08540
William R. Howell Chairman Emeritus, J.C. Penney Company, Inc.
J.C. Penney P.O. Box 10001
Company, Inc. Plano, TX 753001-0001
Vernon E. Jordan, Senior Partner, Akin, Akin, Gump, Strauss,
Jr. Gump, Strauss, Hauer & Feld, LLP
Hauer & Feld, LLP 1333 New Hampshire Ave.
NW
Suite 400
Washington, DC 20036
Hamish Maxwell Retired Chairman Philip Morris Companies
and Chief Executive Inc.
Officer, Philip Morris 100 Park Ave. - 10th Flr.
Companies, Inc. New York, NY 10017
Frank N. Newman Chairman of the Bankers Trust Company
Board, Chief 130 Liberty Street
Executive Officer New York, NY 10006
and President,
Bankers Trust
Company and
Bankers Trust New
York Corporation
N.J. Nicholas Jr. Investor 15 West 53rd Street #34F
New York, NY 10019
Russell E. Palmer Chairman and Chief The Palmer Group
Executive Officer, 3600 Market Street, Suite
The Palmer Group 530
Philadelphia, PA 19104
Donald L. Staheli Chairman of the Bankers Trust Company
Board and Chief c/o Office of the Secretary
Executive Officer 130 Liberty Street,
(Retired), MS2310
Continental Grain New York, NY 10006
Company
Patricia Carry Former Vice Bankers Trust Company
Stewart President, The Edna c/o Office of the Secretary
McConnell Clark 130 Liberty Street,
Foundation MS2310
New York, NY 10006
George J. Vojta Vice Chairman of Bankers Trust Company
the Board, Bankers 130 Liberty Street
Trust Company and New York, NY 10006
Bankers Trust New
York Corporation
Paul A. Volcker Director of Various 599 Lexington Avenue
Corporations 40th Floor
New York, NY 10022
EXHIBIT 4
[TABLE WILL BE UPDATED IN A SUBSEQUENT FILING]
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS (A)
<TABLE>
<CAPTION>
INVESTMENT FISCAL AVERAGE RATIO OF NET RATIO OF
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES EXPENSES TO
(MILLIONS)(B) TO AVERAGE AVERAGE NET
NET ASSETS ASSETS (C)
PAID
TO FMR (C)
<S> <C> <C> <C> <C> <C> <C>
GROWTH AND
INCOME
Variable Insurance
Products:
Equity-Income 12/31/93 $ 952.1 0.53% 0.62%
Variable Insurance
Products II:
Index 500 12/31/93 20.8 -* 0.28*
Equity-Income ((pound)) 1/31/94 6,040.5 0.38 0.66
Real Estate ((pound)) 1/31/94 417.9 0.63 1.13*
Utilities Fund((pound))((psi)) 1/31/94 1,394.4 0.53 0.86*
U.S. Equity Index 2/28/94 1,647.0 -* 0.28*
Market Index 4/30/94 300.9 0.45 0.45
Fidelity Fund ((pound)) 6/30/94 1,545.0 0.41 0.65*
Balanced ((pound)) 7/31/94 4,835.3 0.52 1.01*
Dividend Growth ((pound)) 7/31/94 74.0 0.67 1.40*
Global Balanced 7/31/94 322.0 0.77 1.67*
((rex-all))
Growth & Income 7/31/94 7,818.3 0.52 0.82*
Puritan ((pound)) 7/31/94 9,378.9 0.53 0.79*
Advisor Income & 10/31/94 2,556.9 0.52 1.58*
Growth - Class A
International Growth 10/31/94 1,327.7 0.77 1.21
& Income ((sigma))
Advisor Equity
Portfolio Income :
Class A ((pound)) 11/30/94 88.6 0.50 1.64*
Class B ((pound)) 11/30/94** 15.7 0.50 2.18(dagger)*
Institutional Class 11/30/94 183.2 0.50 0.71*
((pound))
Convertible 11/30/94 974.5 0.52 0.85*
Securities ((pound))
Equity-Income II ((pound)) 11/30/94 6,253.8 0.52 0.81*
Congress Street 12/31/93 63.4 0.46 0.61
Contrafund ((pound)) 12/31/93 4,138.1 0.69 1.06*
Exchange 12/31/93 187.7 0.54 0.57
Trend ((pound)) 12/31/93 1,296.7 0.65 0.92*
Variable Insurance
Products:
Growth 12/31/93 1,016.0 0.63 0.71
Overseas ((sigma)) 12/31/93 398.7 0.77 1.03
Mid-Cap Stock ((pound)) 1/31/95** 46.1 0.62(dagger) 1.61(dagger)*
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or as of
November 30,1994, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets of
each fund 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) Reflects reductions for any expense reimbursement paid by or due from
FMR pursuant to voluntary or state expense limitations, or paid by or due
from brokers to which certain portfolio trades have been directed. Funds so
affected are indicated by an (*).
(dagger) Annualized
# Year end changed
** Less than a complete fiscal year
((rex-all)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity Management
& Research (U.K.) Inc. (FMR U.K.), Fidelity Management & Research (Far
East) Inc. (FMR Far East), Fidelity Investments Japan Ltd. (FIJ), Fidelity
International Investment Advisors (FIIA), and Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.), with respect to the fund.
((sigma)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: FMR U.K., FMR Far
East, FIJ (New Markets Income and Advisor Emerging Markets only), FIIA, and
FIIAL U.K., with respect to the fund.
((pound)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect to the
fund.
((psi)) Effective April 25, 1994, Select Broadcast and Media Portfolio has
been renamed to Multimedia Portfolio. Effective August 3, 1994, Utilities
Income Fund and Select Utilities Portfolio have been renamed to Utilities
Fund and Utilities Growth Portfolio, respectively.
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- --------------------
FIDELITY CONCORD STREET TRUST: SPARTAN(registered trademark) U.S. EQUITY
INDEX FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Ralph F. Cox, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of Fidelity
Concord Street Trust: Spartan U.S. Equity 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 November 19, 1997 at 10:45 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 _____________, 1997
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 315911206/fund# 650
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- --------------------
__________________________________________________________________________
___________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1(a). To approve an amended Management Contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 1(a).
fund.
1(b). To approve a new sub-advisory agreement for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 1(b).
fund.
</TABLE>
UEI-PXC-0997 cusip # 315911206/fund# 650
