SUPPLEMENT TO THE SPARTAN(registered trademark) U.S. EQUITY INDEX FUND
APRIL 29, 1997 PROSPECTUS
Pursuant to approval of shareholders of Spartan U.S. Equity Index Fund
at a shareholder meeting held on November 19, 1997, effective December
5, 1997 Bankers Trust Company (BT) has been appointed as the fund's
sub-adviser.
The following information replaces similar information found in the
"Who May Want to Invest" section on page P-3:
Because the fund seeks to track, rather than beat, the performance of
the S&P 500, the fund is not managed in the same manner as other
mutual funds. Bankers Trust Company (BT) generally does not judge the
merits of any particular stock as an investment. Therefore, you should
not expect to achieve the potentially greater results that could be
obtained by a fund that aggressively seeks growth.
The following information replaces similar information found in the
"Expenses" section on page P-3:
ANNUAL OPERATING EXPENSES are paid out of the fund's assets. The fund
pays management fees to FMR and BT. The fund also incurs other
expenses for services such as maintaining shareholder records and
furnishing shareholder account statements and financial reports.
The following figures are based on historical expenses, adjusted to
reflect current fees, of the fund and are calculated as a percentage
of average net assets of the fund.
Management fee (after reimbursement) 0.00%
12b-1 fee (Distribution Fee) None
Other expenses (after reimbursement) 0.19%
Total operating expenses 0.19%
(after reimbursement)
FMR has voluntarily agreed to reimburse the fund to the extent that
total operating expenses exceed 0.19% of its average net assets. This
agreement will continue through December 31, 1999. If this agreement
were not in effect, the management fee, other expenses, and total
operating expenses, as a percentage of average net assets, would have
been 0.24%, 0.27%, and 0.51% for the fund. Expenses eligible for
reimbursement do not include interest, taxes, brokerage commissions,
and extraordinary expenses. In addition, sub-advisory fees paid by the
fund associated with securities lending are not eligible for
reimbursement.
The following information replaces similar information found in the
"Charter" section on page P-7:
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
fund's activities, review contractual arrangements with companies that
provide services to the fund, and review the fund's performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity or BT.
The following information replaces similar information found under the
heading "FMR and Its Affiliates" in the "Charter" section on page P-7:
The fund is managed by FMR, which handles its business affairs. BT,
the fund's sub-adviser, chooses the fund's investments. FMR supervises
the sub-adviser, and in conjunction with the Board of Trustees,
reviews the performance of its duties.
The following information found under the heading "FMR and Its
Affiliates" in the "Charter" section on page P-7 has been removed:
Jennifer Farrelly is Vice President and manager of Spartan U.S. Equity
Index, which she has managed since January 1994. She also manages
other Fidelity funds. Ms. Farrelly joined Fidelity in 1988 as a
portfolio manager.
The following information supplements information found in the
"Charter" section on page P-7:
BT AND ITS AFFILIATES
BT is the sub-adviser of the fund, and acts as the fund's custodian.
BT, a New York banking corporation with principal offices at 130
Liberty Street, New York, New York 10006, is a wholly-owned subsidiary
of Bankers Trust New York Corporation.
BT, subject to the supervision and direction of the Board of Trustees
and FMR, makes investment decisions for the fund, places orders to
buy, sell and lend the fund's investments and manages the fund in
accordance with its investment objective and policies. BT may utilize
the expertise of any of its worldwide subsidiaries and affiliates to
assist in its role as sub-adviser. BT places orders for portfolio
transactions with broker-dealers and other firms of its choosing,
which may include affiliates of BT or FMR.
BT investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
The following information replaces similar information found in the
final paragraph under the heading "FMR and Its Affiliates" in the
"Charter" section on page P-7:
BT may use FMR and BT broker-dealer affiliates and other firms that
sell fund shares to carry out a fund's transactions, provided that the
fund receives brokerage services and commission rates comparable to
those of other broker-dealers.
Each use of the term "FMR" under the heading "The Fund's Investment
Approach" in the "Investment Principles and Risks" section beginning
on page P-7 is replaced with the term "BT", except for the two uses in
the following sentences which are unchanged.
At some time in the future, FMR may, subject to shareholders' approval
and 30 days' notice, select another index if such a standard of
comparison is deemed to be more representative of the performance of
U.S. common stocks.
FMR monitors correlation between the performance of the fund and that
of the S&P 500 on a monthly basis.
The following information replaces similar information found in the
"Securities and Investment Practices" section beginning on page P-8:
The following pages contain more detailed information about types of
instruments in which the fund may invest, strategies BT may employ in
pursuit of the fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of the fund's limitations and more
detailed information about the fund's investments are contained in the
fund's SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
BT may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with the fund's investment
objective and policies and that doing so will help the fund achieve
its goal. Fund holdings and recent investment strategies are detailed
in the fund's financial reports, which are sent to shareholders twice
a year. For a free SAI or financial report, call Fidelity Client
Services at the appropriate number listed on the front cover.
The following information replaces similar information found in the
"Securities and Investment Practices" section beginning on page P-9:
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contacts, entering into swap agreements, and purchasing indexed
securities.
BT can use these practices in its efforts to track the return of the
S&P 500. If BT judges market conditions incorrectly or employs a
strategy that does not correlate well with the fund's investments,
these techniques could result in a loss, regardless of whether the
intent was to reduce risk or increase return. These techniques may
increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition,
these techniques could result in a loss if the counterparty to the
transaction does not perform as promised.
ILLIQUID SECURITIES. Some investments may be determined by BT, under
the supervision of the Board of Trustees and FMR, to be illiquid,
which means that they may be difficult to sell promptly at an
acceptable price. Difficulty in selling securities may result in a
loss or may be costly to the fund.
CASH MANAGEMENT. The fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income while maintaining a stable $1.00
share price. The fund may also invest in similar money market funds
managed by BT or other investment managers. A major change in interest
rates or a default on a money market fund's investments could cause
its share price to change.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. BT receives a portion of securities lending
income as a sub-advisory fee. Securities lending could result in a
loss or a delay in recovering the fund's securities. The fund may also
lend money to other funds advised by FMR.
The following information replaces similar information found in the
"Breakdown of Expenses" section beginning on page P-10:
Like all mutual funds, the fund pays fees related to its daily
operations. Expenses paid out of the fund's assets are reflected in
its share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR and the fund pay sub-advisory fees to BT for
managing the funds investments, administering its securities lending
program, and for custodial services. The fund also pays OTHER
EXPENSES, which are explained below.
MANAGEMENT AND SUB-ADVISORY FEES
Management and sub-advisory fees are calculated and paid every month
to FMR and BT, respectively. The fund pays the fees at the annual rate
of 0.24% of its average net assets. These fees include a management
fee of 0.24% payable to FMR, and estimated sub-advisory fees of less
than 0.01% payable to BT (representing 40% of net income from
securities lending).
BT IS THE FUND'S SUB-ADVISER under an agreement with FMR and the fund.
BT is paid a sub-advisory fee for providing investment management,
securities lending and custodial services to the fund.
For investment management, securities lending and custodial services
to the fund, FMR pays BT fees at an annual rate of 0.006% of the
average net assets of the fund. In addition, the fund pays BT fees
equal to 40% of net income from the fund's securities lending program.
The remaining 60% of net income from the fund's securities lending
program goes to the fund.
OTHER EXPENSES
While management and sub-advisory fees are a significant component of
the fund's annual operating costs, the fund has other expenses as
well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for the fund. Fidelity Service Company, Inc. (FSC)
calculates the net asset value per share (NAV) and dividends for the
fund and maintains the fund's general accounting records.
The fund has adopted a DISTRIBUTION AND SERVICE PLAN. This plan
recognizes that FMR may use its resources, including management fees,
to pay expenses associated with the sale of fund shares. This may
include reimbursing FDC for payments to third parties, such as banks
or broker-dealers, that provide shareholder support services or engage
in the sale of the fund's shares. The Board of Trustees has authorized
such payments.
The fund also pays other expenses, such as legal and audit fees; in
some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity.
The fund's portfolio turnover rate for the fiscal year ended February
1997 was 3%. This rate varies from year to year.
The following information replaces similar information found in the
"Dividends, Capital Gains, and Taxes" section beginning on page P-18:
For federal tax purposes, the fund's income and short-term capital
gains are distributed as dividends and taxed as ordinary income;
capital gain distributions are taxed as long-term capital gains.
Every January, Fidelity will send you and the IRS a statement showing
the tax characterization of distributions paid to you in the previous
year.
