SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the [X]
Registrant
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant
to Sec. 240.14a-11(c) or
Sec. 240.14a-12
(Name of Registrant as Specified In Its Charter)
Fidelity Concord Street Trust
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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[X] No fee required.
[ ] Fee computed on table below
per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of
securities to which
transaction applies:
(2) Aggregate number of
securities to which
transaction applies:
(3) Per unit price or other
underlying value of
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computed pursuant to Exchange
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value of transaction:
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preliminary materials.
[ ] Check box if any part of the
fee is offset as provided by
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and identify the filing for
which the offsetting fee was
paid previously. Identify the
previous filing by
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number, or the Form or
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its filing.
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(4) Date Filed:
SPARTAN(registered trademark) U.S. EQUITY INDEX FUND
SPARTAN TOTAL MARKET INDEX FUND
SPARTAN EXTENDED MARKET INDEX FUND
SPARTAN INTERNATIONAL INDEX FUND
FUNDS OF
FIDELITY CONCORD STREET TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Spartan U.S. Equity Index Fund, Spartan Total Market Index
Fund, Spartan Extended Market Index Fund, and Spartan International
Index Fund (the funds) will be held at the office of Fidelity Concord
Street Trust (the trust), 82 Devonshire Street, Boston, Massachusetts
02109 on September 15, 1999, at 10:00 a.m. The purpose of the Meeting
is to consider and act upon the following proposals, and to transact
such other business as may properly come before the Meeting or any
adjournments thereof.
1(a). To approve an interim sub-advisory agreement with Bankers Trust
Company for each fund.
1(b). To approve a new sub-advisory agreement with Bankers Trust
Company for each fund.
2. To approve a new "manager-of-managers" arrangement for each fund.
The Board of Trustees has fixed the close of business on July 19,
1999 as the record date for the determination of the shareholders of
each of the funds entitled to notice of, and to vote at, such Meeting
and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
July 19, 1999
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC Corp. John Smith, Treasurer
2) ABC Corp. John Smith, Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins, Trustee
2) ABC Trust Ann B. Collins, Trustee
3) Ann B. Collins, Trustee Ann B. Collins, Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY CONCORD STREET TRUST:
SPARTAN U.S. EQUITY INDEX FUND
SPARTAN TOTAL MARKET INDEX FUND
SPARTAN EXTENDED MARKET INDEX FUND
SPARTAN INTERNATIONAL INDEX FUND
TO BE HELD ON SEPTEMBER 15, 1999
This Proxy Statement is furnished in connection with a solicitation
of proxies made by, and on behalf of, the Board of Trustees of
Fidelity Concord Street Trust (the trust) to be used at the Special
Meeting of Shareholders of Spartan U.S. Equity Index Fund, Spartan
Total Market Index Fund, Spartan Extended Market Index Fund, and
Spartan International Index Fund (the funds) and at any adjournments
thereof (the Meeting), to be held on September 15, 1999 at 10:00 a.m.,
at 82 Devonshire Street, Boston, Massachusetts 02109, the principal
executive office of the trust and Fidelity Management & Research
Company (FMR), the funds' investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is being made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about July 19, 1999.
Supplementary solicitations may be made by mail, telephone, telegraph,
facsimile, electronic means or by personal interview by
representatives of the trust. In addition, Management Information
Services Corp. (MIS) and D.F. King & Co., Inc. may be paid on a
per-call basis to solicit shareholders on behalf of the funds at an
anticipated cost of approximately $11,000 (Spartan U.S. Equity
Index Fund), $2,000 (Spartan Total Market Index Fund), $2,000
(Spartan Extended Market Index Fund), and $2,000 (Spartan
International Index Fund). The expenses in connection with preparing
this Proxy Statement and its enclosures and of all solicitations will
be borne by Bankers Trust Company (BT), sub - adviser to the
funds, or the funds, provided a fund's expenses do not exceed the
fund's existing expense cap listed on page 10. Fund expenses exceeding
a fund's expense cap will be paid by FMR. BT, the funds, or FMR
will reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to the beneficial owners
of shares. The principal business address of Fidelity
Distributors Corporation (FDC), the funds' principal underwriter and
distribution agent, is 82 Devonshire Street, Boston, Massachusetts
02109. The principal business address of BT is 130 Liberty Street, New
York, New York 10006.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written
notification received by the trust, by the execution of a later-dated
proxy card, by the trust's receipt of a subsequent valid telephonic
vote or by attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and are
not revoked, will be voted at the Meeting. Shares represented by such
proxies will be voted in accordance with the instructions thereon. If
no specification is made on a proxy card, it will be voted FOR the
matters specified on the proxy card. Only proxies that are voted will
be counted towards establishing a quorum. Broker non-votes are not
considered voted for this purpose. Shareholders should note that while
votes to ABSTAIN will count toward establishing a quorum, passage of
any proposal being considered at the Meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly,
votes to ABSTAIN and votes AGAINST will have the same effect in
determining whether the proposal is approved.
The funds may also arrange to have votes recorded by telephone. The
expenses in connection with telephone voting will be borne by BT or
the funds, provided a fund's expenses do not exceed the fund's
existing expense cap listed on page 10. Fund expenses exceeding a
fund's expense cap will be paid by FMR. If the funds record votes
by telephone, they will use procedures designed to authenticate
shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to
confirm that their instructions have been properly recorded. Proxies
voted by telephone may be revoked at any time before they are voted in
the same manner that proxies voted by mail may be revoked. D.F. King &
Co., Inc. may be paid on a per-call basis for vote-by-phone
solicitations on behalf of the funds at an anticipated cost of
approximately $ 13,000 (Spartan U.S. Equity Index Fund),
$ 3,000 (Spartan Total Market Index Fund), $ 3,000
(Spartan Extended Market Index Fund), and $ 3,000 (Spartan
International Index Fund).
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
AGAINST the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate.
Shares of each fund issued and outstanding as of May 31, 1999 are
indicated in the following table:
Spartan U.S. Equity Index Fund 370,569,231
Spartan Total Market Index Fund 10,522,195
Spartan Extended Market Index Fund 2,834,262
Spartan International Index Fund 1,622,134
As of May 31, 1999, the Trustees and officers of the trust owned, in
the aggregate, less than 1% of the funds' outstanding shares.
To the knowledge of the trust, no shareholder owned of record or
beneficially more than 5% of the outstanding shares of each fund on
that date.
Shareholders of record at the close of business on July 19, 1999 will
be entitled to vote at the Meeting. Each such shareholder will be
entitled to one vote for each dollar of net asset value held on that
date.
FOR A FREE COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED FEBRUARY 28, 1999, CALL 1-800- 544 - 8888 OR WRITE TO
FIDELITY DISTRIBUTORS CORPORATION AT 82 DEVONSHIRE STREET, BOSTON,
MASSACHUSETTS 02109.
VOTE REQUIRED: APPROVAL OF EACH OF PROPOSALS 1(A), 1(B), AND 2
REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" OF THE APPROPRIATE 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.
OVERVIEW OF PROPOSALS
OVERVIEW OF PROPOSALS 1(A) AND 1(B). Bankers Trust Company ("BT"),
the funds' current sub-adviser, is a wholly-owned subsidiary of
Bankers Trust Corporation ("BT Corporation"). On June 4 , 1999,
a wholly-owned subsidiary of Deutsche Bank AG ("Deutsche Bank") merged
with BT Corporation (the "BT Merger"). The BT Merger may be
considered a change of control of BT, resulting in the assignment and
automatic termination of the sub-advisory agreements dated December 5,
1997 (Spartan U.S. Equity Index Fund) and November 3, 1997 (Spartan
Total Market Index Fund, Spartan Extended Market Index Fund, and
Spartan International Index Fund), among FMR, BT, and the trust, on
behalf of the funds (the "Old Sub-Advisory Agreements").
The Board of Trustees, including a majority of the Trustees who are
not interested persons of the trust or of FMR (the "Independent
Trustees"), has approved, and recommends that shareholders of each
fund approve, an interim sub-advisory agreement among FMR, BT, and the
trust, on behalf of the fund (the "Interim Sub-Advisory Agreement"),
as described in Proposal 1(a). Under each fund's Interim Sub-Advisory
Agreement, BT (subject to the supervision and direction of the Board
of Trustees and/or FMR) is required to provide the same investment
management and securities lending services to the fund as under
the Old Sub-Advisory Agreement. OTHER THAN THE COMMENCEMENT AND
TERMINATION DATES, EACH FUND'S INTERIM SUB-ADVISORY AGREEMENT IS
IDENTICAL TO I TS OLD SUB-ADVISORY AGREEMENT. Under each fund's
Interim Sub-Advisory Agreement, BT receives fees at the same
rate, and expects to continue to provide the same level and
quality of services , as under the Old Sub-Advisory Agreement.
On May 25, 1999, the Securities and Exchange Commission (the
" SEC ") granted BT an exemptive order (the "BT Exemptive
Order") permitting each fund's Interim Sub-Advisory Agreement to take
effect, without prior shareholder approval, on June 4,
1999. The BT Exemptive Order permits each fund's Interim
Sub-Advisory Agreement to remain in effect, for an interim period of
up to 150 days, through the date on which it is approved (or
disapproved) by shareholders.
The Board of Trustees, including a majority of the Independent
Trustees, also has approved, and recommends that shareholders of each
fund approve, a new sub-advisory agreement among FMR, BT, and the
trust, on behalf of the fund (the "New Sub-Advisory Agreement"), as
described in Proposal 1(b). If approved, each fund's New Sub-Advisory
Agreement would replace its Interim Sub-Advisory Agreement. If a
fund's shareholders approve Proposal 1(b), BT (subject to the
supervision and direction of the Board of Trustees and/or FMR) will
continue to provide investment management and securities lending
services to the fund, but these services will no longer be covered by
the same contract. While each fund's Interim Sub-Advisory Agreement
currently requires BT to provide both investment management and
securities lending services to the fund, each fund's New Sub-Advisory
Agreement would require BT to provide only investment management
services to the fund. Under each fund's New Sub-Advisory Agreement,
FMR (not the fund) would pay BT for providing these services.
In conjunction with each fund's New Sub-Advisory Agreement, BT and the
trust, on behalf of the fund, would enter into, and BT would continue
to provide securities lending services to the fund under, a new,
separate securities lending agreement (the "New Securities Lending
Agreement"). As discussed below, the arrangement pursuant to which
BT and each fund share income from the fund's securities lending
activities is expected to be more favorable to the fund under the New
Securities Lending Agreement than it is under the Interim Sub-Advisory
Agreement. S hareholders are not being asked to approve the New
Securities Lending Agreements.
OVERVIEW OF PROPOSAL 2. Shareholder approval of the Interim
Sub-Advisory Agreements would not be necessary if the funds currently
operated under a so-called "manager-of-managers" arrangement. As
described in Proposal 2, a manager-of-managers arrangement would,
among other things, permit FMR, with the approval of the Board of
Trustees, to enter into a new sub-advisory agreement if a current
agreement is assigned and automatically terminated, such as in the
case of the BT Merger. Thus, the proposed arrangement would avoid the
expenses and delays associated with holding a shareholder meeting to
approve the new agreement. Such an arrangement also would permit FMR,
with the approval of the Board of Trustees, to hire, terminate, or
replace sub-advisers (including BT), and to materially
modify a sub-advisory agreement , all without shareholder
approval.
On May 19, 1999, FMR and the trust, on behalf of each fund, filed
with the SEC an exemptive application seeking authorization for each
fund to operate under a manager-of-managers arrangement, subject to
shareholder approval and certain other conditions. Although each fund
cannot implement such an arrangement unless it receives the necessary
SEC authorization, the Board of Trustees is taking this opportunity to
seek shareholder approval of the proposed arrangement. There can be
no assurance that the SEC will grant the requested authorization.
Proposals 1(a), 1(b), and 2 do not affect the funds' management
fee rates payable to FMR under the present management contracts
dated December 5, 1997 (Spartan U.S. Equity Index Fund) and November
3, 1997 (Spartan Total Market Index Fund, Spartan Extended Market
Index Fund, and Spartan International Index Fund) between FMR and the
trust, on behalf of the funds (the "Present Management Contracts").
Refer to each proposal below for more detailed information.
1(A). TO APPROVE AN INTERIM SUB-ADVISORY AGREEMENT WITH BT FOR EACH
FUND.
The Board of Trustees, including a majority of the Independent
Trustees, has approved, and recommends that shareholders of each fund
approve, an Interim Sub-Advisory Agreement with BT .
THE OLD SUB-ADVISORY AGREEMENTS. As discussed above, prior to the
effective date of the BT Merger, BT served as the funds' sub-adviser
pursuant to the Old Sub-Advisory Agreements. Spartan U.S. Equity Index
Fund's shareholders approved the fund's Old Sub-Advisory Agreement at
a special meeting held on November 19, 1997. FMR, as the then sole
shareholder of each of Spartan Total Market Index Fund, Spartan
Extended Market Index Fund, and Spartan International Index Fund,
approved each fund's Old Sub-Advisory Agreement on September 5, 1997.
Shareholders (or FMR, as the then sole shareholder, as the case may
be) of each fund approved the appointment of BT as sub-adviser of the
fund to handle the day-to-day management of the fund's investments and
to provide securities lending services to the fund. FMR proposed, and
the Board of Trustees approved, BT's appointment as part of FMR's
efforts to provide services to the funds efficiently and at low cost.
Under each fund's Old Sub-Advisory Agreement, BT directed the fund's
investments in accordance with its investment objective, policies, and
limitations; voted the fund's portfolio securities; and administered
the fund's securities lending program. Under each fund's Old
Sub-Advisory Agreement , FMR paid BT monthly fees at an annual rate
of 0.006% (Spartan U.S. Equity Index Fund), 0.0125% (Spartan Total
Market Index Fund and Spartan Extended Market Index Fund), or 0.065%
(Spartan International Index Fund) of the fund's average net assets.
For Spartan International Index Fund, FMR also paid BT monthly fees of
$35 per portfolio transaction (up to a maximum of $200,000 annually).
Each fund paid BT monthly fees equal to 40% (and retained the
remaining 60%) of net income from the fund's securities lending
activities. Securities lending is a means of earning a modest
amount of income by lending the fund's securities to other parties
temporarily. The party borrowing the securities (typically a
broker-dealer or other institution) provides collateral to secure the
loan, agrees to return the securities to the fund upon notice, and
pays the fund a fee for the loan (and/or allows it to earn income on
the collateral). Because the fees that each fund paid BT were
based on a percentage of net income from securities lending, each fund
paid the fees only to the extent that it earned income from securities
lending. For the fiscal year ended February 28, 1999, FMR, on behalf
of each fund, paid BT sub-advisory fees of $ 775,210 (Spartan
U.S. Equity Index Fund), $12, 275 (Spartan Total Market Index
Fund), $6, 104 (Spartan Extended Market Index Fund), and
$8 5,284 (Spartan International Index Fund), and each fund paid
BT sub-advisory fees of $380,000 (Spartan U.S. Equity Index Fund),
$22,253 (Spartan Total Market Index Fund), $30,583 (Spartan Extended
Market Index Fund), and $2,632 (Spartan International Index Fund).
IMPACT OF BT MERGER ON OLD SUB-ADVISORY AGREEMENTS. Generally,
Section 15(a) of the 1940 Act requires that a fund's shareholders
approve all agreements pursuant to which persons serve as investment
advisers or sub-advisers to the fund. Section 15(a) also requires that
such an agreement automatically terminate if it is assigned. An
assignment of a sub-advisory agreement may be deemed to occur due to a
change of control of the sub-adviser. Because BT became an indirect,
wholly-owned subsidiary of Deutsche Bank as a result of the BT Merger,
the BT Merger may be considered a change of control of BT,
resulting in the assignment and automatic termination of the Old
Sub-Advisory Agreements.
THE INTERIM SUB-ADVISORY AGREEMENTS. As discussed above, the BT
Exemptive Order permitted each fund's Interim Sub-Advisory Agreement
to become effective, without prior shareholder approval, on
June 4 , 1999. OTHER THAN THE COMMENCEMENT AND
TERMINATION DATES, EACH FUND'S INTERIM SUB-ADVISORY AGREEMENT IS
IDENTICAL TO ITS OLD SUB-ADVISORY AGREEMENT. Under each fund's
Interim Sub-Advisory Agreement, BT receives fees at the same rate,
and expects to continue to provide the same level and quality of
services , as under the Old Sub-Advisory Agreement.
Under the terms of the BT Exemptive Order, BT is permitted to earn
fees under each fund's Interim Sub-Advisory Agreement, provided that
the fees are held in escrow pending shareholder approval of the
Interim Sub-Advisory Agreement. In accordance with the BT Exemptive
Order, the fees that BT has earned to date under each fund's Interim
Sub-Advisory Agreement have been held in escrow, and any additional
such fees will be held in escrow, until shareholders approve (or
disapprove) the Interim Sub-Advisory Agreement. As of June 30 ,
1999, the amount in escrow totaled $94,926 (Spartan U.S. Equity Index
Fund), $3,954 (Spartan Total Market Index Fund), $967 (Spartan
Extended Market Index Fund), and $2,933 (Spartan International
Index Fund). If shareholders of a fund approve that fund's Interim
Sub-Advisory Agreement, the fees held in escrow, together with any
interest thereon, will be released to BT. If shareholders of a fund do
not approve that fund's Interim Sub-Advisory Agreement, the fees held
in escrow, together with any interest thereon, will be released to the
fund.
A copy of each fund's Interim Sub-Advisory Agreement is supplied as
Exhibit 1 on page 15. Each fund's Interim Sub-Advisory Agreement
became effective on June 4 , 1999. If shareholders of a fund
approve the fund's New Sub-Advisory Agreement (see Proposal 1(b)
below), the fund's New Sub-Advisory Agreement will become effective on
October 1, 1999 (or on the first day of the first month following
approval), and the fund's Interim Sub-Advisory Agreement will
terminate on that date. If shareholders of a fund approve the fund's
Interim Sub-Advisory Agreement, but do not approve the fund's New
Sub-Advisory Agreement, the fund's Interim Sub-Advisory Agreement will
remain in effect through July 31, 2000 (unless terminated
earlier) , and from year to year thereafter, but only as long as
its continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the
Independent Trustees, and (ii) the vote of either a majority of the
Trustees or a majority of the outstanding shares of the fund. Each
fund's Interim Sub-Advisory Agreement may be terminated on 60 days'
written notice by the Board of Trustees and will terminate
automatically in the event of its assignment. In addition, each fund's
Interim Sub-Advisory Agreement may be modified subject to both Board
and shareholder approval.
MATTERS CONSIDERED BY THE BOARD. At meetings held on March 18, 1999
and May 20, 1999, the Board of Trustees, including the Independent
Trustees, discussed the BT Merger and its implications for the funds
and considered the Interim Sub-Advisory Agreements. In approving the
Interim Sub-Advisory Agreements and recommending that they be
presented to shareholders for their approval, the Trustees ,
including the Independent Trustees, considered the best interests
of the shareholders and took into account all factors that they deemed
relevant. The Board of Trustees received materials relating to the
Interim Sub-Advisory Agreements in advance of the meeting s at
which the Interim Sub-Advisory Agreements were considered, and had the
opportunity to ask questions and request further information in
connection with such consideration. During their deliberations, the
Trustees considered that the Interim Sub-Advisory Agreements have
substantially the same terms and conditions as the Old Sub-Advisory
Agreements. The Trustees also considered that, under the Interim
Sub-Advisory Agreements, BT receives fees at the same rate , and
expects to continue to provide the same level and quality of services
to the funds, as under the Old Sub-Advisory Agreements. The Trustees
further considered that the fees payable to BT under the Interim
Sub-Advisory Agreements during the interim period would be deposited
in an interest-bearing escrow account and released to BT if
shareholders approve the Interim Sub-Advisory Agreements or to the
funds if shareholders do not approve the Interim Sub-Advisory
Agreements. In addition, the Board was informed that BT
recently pleaded guilty to misstating entries in the bank's books and
records, but that the events leading up to BT's guilty plea did not
arise out of the investment advisory or mutual fund activities of BT
or its affiliates (see "Activities and Management of B T "
beginning on page below).
CONCLUSION. The Board of Trustees has concluded that each fund's
Interim Sub-Advisory Agreement will benefit the fund and its
shareholders. The Board of Trustees, including a majority of the
Independent Trustees, recommends that shareholders of each fund vote
FOR the Interim Sub-Advisory Agreement. If shareholders of a fund
approve the fund's Interim Sub-Advisory Agreement, the Interim
Sub-Advisory Agreement will continue in effect as described above.
If shareholders of a fund do not approve the fund's Interim
Sub-Advisory Agreement, the Board of Trustees will consider what other
action is in the best interest of the fund and its shareholders.
1(B). TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH BT FOR EACH FUND.
The Board of Trustees, including a majority of the Independent
Trustees, has approved, and recommends that shareholders of each fund
approve, a New Sub-Advisory Agreement with BT .
The main purpose of this proposal is to separate into different
contracts the investment management and securities lending services
that BT currently provides to each fund under a single contract. Thus,
if shareholders of a fund approve this proposal, BT will continue
to provide investment management services to the fund under the New
Sub-Advisory Agreement, but will provide securities lending services
to the fund under the New Securities Lending Agreement. Shareholders
are not being asked to approve the New Securities Lending
Agreemen t, and shareholder approval would not be required to amend
the New Securities Lending Agreement. It is anticipated that each fund
will benefit by separating the investment management and securities
lending services into different contracts.
INTERIM SUB-ADVISORY AGREEMENTS. As stated above, under each fund's
Interim Sub-Advisory Agreement, BT directs the fund's investments in
accordance with its investment objective, policies, and limitations;
votes the fund's portfolio securities; and administers the fund's
securities lending program. Under each fund's Interim Sub-Advisory
Agreement, FMR (not the fund) pays BT monthly fees at an
annual rate of 0.006% (Spartan U.S. Equity Index Fund), 0.0125%
(Spartan Total Market Index Fund and Spartan Extended Market Index
Fund), or 0.065% (Spartan International Index Fund) of the fund's
average net assets. For Spartan International Index Fund, FMR also
pays BT monthly fees of $35 per portfolio transaction (up to a maximum
of $200,000 annually). Each fund pays BT monthly fees equal to 40%
(and retains the remaining 60% ) of net income from its
securities lending activities. Each fund's Interim Sub-Advisory
Agreement explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
NEW SUB-ADVISORY AGREEMENTS. If approved, under each fund's New
Sub-Advisory Agreement, BT will continue to direct the fund's
investments in accordance with its investment objective, policies, and
limitations , and vote the fund's portfolio securities . Under
each fund's New Sub-Advisory Agreement , FMR (not the fund)
will pay BT monthly fees at an annual rate of 0.006% (Spartan U.S.
Equity Index Fund), 0.0125% (Spartan Total Market Index Fund and
Spartan Extended Market Index Fund), or 0.065% (Spartan International
Index Fund) of the fund's average net assets. For Spartan
International Index Fund, FMR also will pay BT monthly fees of $35 per
portfolio transaction (up to a maximum of $200,000 annually). These
are the same rates as under the Interim Sub-Advisory Agreements.
BT expects to provide the same level and quality of investment
management services to each fund under the fund's New Sub-Advisory
Agreement as it currently provides under the fund's Interim
Sub-Advisory Agreement. Unlike each fund's Interim Sub-Advisory
Agreement, each fund's New Sub-Advisory Agreement would not include
securities lending provisions.
Generally, Section 15(a) of the 1940 Act requires that a fund's
shareholders approve all agreements pursuant to which persons serve as
investment advisers or sub-advisers to the fund. Thus, each fund's
New Sub-Advisory Agreement is subject to the requirements of
Section 15(a) and shareholders are being asked to approve the New
Sub-Advisory Agreement. If shareholders of a fund approve the fund's
New Sub-Advisory Agreement, BT and the trust, on behalf of the fund,
will enter into the New Securities Lending Agreement, pursuant to
which BT will continue to administer the fund's securities lending
program. (See "New Securities Lending Agreements" on page 12 below.)
Each fund's New Sub-Advisory Agreement would allow FMR, BT, and the
trust, on behalf of the fund, to amend the New Sub-Advisory Agreement
subject to the provisions of Section 15 of the 1940 Act, as modified
or interpreted by the SEC. In contrast, each fund's Interim
Sub-Advisory Agreement explicitly requires the vote of a majority of
the outstanding voting securities of the fund to authorize all
amendments. Generally, each fund's New Sub-Advisory Agreement's
amendment provisions would allow amendment of the New Sub-Advisory
Agreement without shareholder vote ONLY IF THE 1940 ACT SO PERMITS. In
short, each fund's New Sub-Advisory Agreement's amendment provisions
give FMR, BT, and the trust added flexibility to amend the New
Sub-Advisory Agreement subject to 1940 Act constraints. Any
amendments to each fund's New Sub-Advisory Agreement would require the
approval of the Board of Trustees.
A copy of each fund's form of New Sub-Advisory Agreement (marked
to show changes from the Interim Sub-Advisory Agreement) is
supplied as Exhibit 2 on page 22. Except for the differences discussed
above, each fund's New Sub-Advisory Agreement is substantially
identical to the fund's Interim Sub-Advisory Agreement. If approved by
shareholders of a fund, the fund's New Sub-Advisory Agreement will
replace the fund's Interim Sub-Advisory Agreement and take effect on
October 1, 1999 (or on the first day of the first month following
approval), and will remain in effect through July 31, 2000 (unless
terminated earlier) , and from year to year thereafter, but only as
long as its continuance is approved at least annually by (i) the vote,
cast in person at a meeting called for the purpose, of a majority of
the Independent Trustees, and (ii) the vote of either a majority of
the Trustees or a majority of the outstanding shares of the fund. If
shareholders of a fund do not approve the fund's New Sub-Advisory
Agreement, but do approve the fund's Interim Sub-Advisory Agreement,
the fund's Interim Sub-Advisory Agreement will continue in effect as
described in Proposal 1(a) above. Each fund's New Sub-Advisory
Agreement may be terminated on 60 days' written notice by the Board of
Trustees and will terminate automatically in the event of its
assignment.
NEW SECURITIES LENDING AGREEMENTS. As stated above, if shareholders
of a fund approve the fund's New Sub-Advisory Agreement, BT and the
trust, on behalf of the fund, will enter into the New Securities
Lending Agreement, pursuant to which BT will continue to administer
the fund's securities lending program. Under the New Securities
Lending Agreement, it is currently anticipated that each fund will
receive from BT at least 70% (and BT will retain no more than 30%) of
net income from the fund's securities lending activities. As stated
above, under the Interim Sub-Advisory Agreement, each fund pays BT
monthly fees equal to 40% (and retains the remaining 60%) of net
income from the fund's securities lending activities. Thus, the
arrangement pursuant to which BT and each fund share income from the
fund's securities lending activities is expected to be more favorable
to the fund under the New Securities Lending Agreement than it is
under the Interim Sub-Advisory Agreement. For the fiscal year ended
February 28, 1999, fees paid to BT from securities lending income
amounted to 0.0029% (Spartan U.S. Equity Index Fund), 0.0225% (Spartan
Total Market Index Fund), 0.0620% (Spartan Extended Market Index
Fund), and 0.0078% (Spartan International Index Fund) of the funds'
average net assets.
Section 15(a) of the 1940 Act does not apply to agreements for the
provision of non-advisory services. Thus, each fund's New
Securities Lending Agreement is not subject to the requirements of
Section 15(a) and shareholders are not being asked to approve
the New Securities Lending Agreement. Shareholder approval would not
be required to amend each fund's New Securities Lending
Agreement. A ny amendments to each fund's New Securities Lending
Agreement would , however, require the approval of the Board of
Trustees.
MATTERS CONSIDERED BY THE BOARD. At a meeting held on May 20, 1999,
the Board of Trustees, including the Independent Trustees, considered
the New Sub-Advisory Agreements. In approving the New Sub-Advisory
Agreements and recommending that they be presented to shareholders for
their approval, the Trustees , including the Independent
Trustees, considered the best interests of the shareholders and
took into account all factors that they deemed relevant. The Board of
Trustees received materials relating to the New Sub-Advisory
Agreements in advance of the meeting at which the New Sub-Advisory
Agreements were considered, and had the opportunity to ask questions
and request further information in connection with such consideration.
During their deliberations, the Trustees considered that the New
Sub-Advisory Agreements have substantially the same terms and
conditions as the Interim Sub-Advisory Agreements, except that the New
Sub-Advisory Agreements do not provide for securities lending services
or for shareholder approval of amendments to the agreements. The
Trustees also considered that, under the New Sub-Advisory Agreements,
BT receives fee s at the same rate from FMR, and expects to
continue to provide the same level and quality of investment
management services to the funds, as under the Interim Sub-Advisory
Agreements. The Board also determined that the securities lending
services currently provided for in the Interim Sub-Advisory Agreements
are best provided for in separate securities lending agreements. The
Board of Trustees considered that the arrangement pursuant to which
BT and each fund share income from the fund's securities lending
activities is expected to be more favorable to the fund under the New
Securities Lending Agreement than it is under the Interim Sub-Advisory
Agreement. With regard to the amendment provisions, the Board of
Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's, BT's and the trust's increased flexibility
(within 1940 Act constraints) to amend the New Sub-Advisory Agreements
without the delays and potential costs of a proxy solicitation. In
addition, the Board was informed that BT recently pleaded
guilty to misstating entries in the bank's books and records, but that
the events leading up to BT's guilty plea did not arise out of the
investment advisory or mutual fund activities of BT or its affiliates
(see "Activities and Management of B T " beginning on page
below).
CONCLUSION. The Board of Trustees has concluded that each fund's New
Sub-Advisory Agreement will benefit the fund and its shareholders. The
Board of Trustees, including a majority of the Independent Trustees,
recommends that shareholders of each fund vote FOR the New
Sub-Advisory Agreement. If approved, the New Sub-Advisory Agreement
will take effect on the first day of the first month following
shareholder approval.
2. TO APPROVE A NEW "MANAGER-OF-MANAGERS" ARRANGEMENT FOR EACH FUND.
At a meeting on March 18, 1999, the Board of Trustees, including a
majority of the Independent Trustees, voted to approve the submission
of a so-called "manager-of-managers" proposal to shareholders of each
fund. Such an arrangement, if approved, would permit FMR, with the
approval of the Board of Trustees, to hire, terminate, or replace
sub-advisers (including BT) , and to modify material terms and
conditions of a sub-advisory agreement (including the fees payable
thereunder) , all without shareholder approval. (Hence, FMR
would act as a "manager-of-managers.")
As discussed below, the arrangement may enable each fund to operate
more efficiently because FMR would be able to make these kinds of
sub-advisory changes from time to time without the expenses and delays
associated with obtaining shareholder approval of the changes. If
shareholders approve the arrangement, the Board will consider and
approve any sub-advisory changes that FMR proposes under the
arrangement to ensure that the changes are in the best interests of
each fund and its shareholders. For these and other reasons discussed
below, the Board of Trustees recommends that shareholders of each fund
vote FOR the proposal.
Generally, Section 15(a) of the 1940 Act requires that a fund's
shareholders approve all agreements pursuant to which persons serve as
investment advisers or sub-advisers to the fund. On May 19, 1999, FMR
and the trust, on behalf of each fund, filed with the SEC an
application (the "Application") seeking, among other relief, an
exemption from Section 15(a) (and certain other provisions of the 1940
Act) to permit FMR, with the approval of the Board of Trustees, to
hire, terminate, or replace sub-advisers, and to modify material terms
and conditions of a sub-advisory agreement (including the fees payable
thereunder) without shareholder approval. If granted, the requested
relief would not, however, permit FMR to enter into an agreement with
a sub-adviser that is an affiliate of FMR, the trust, or a fund (other
than by reason of serving as sub-adviser to the fund) or to change the
sub-advisory fee to be paid to an affiliated sub-adviser, without
shareholder approval.
The Application currently is pending at the SEC. There can be no
assurance that the SEC will grant the requested relief. One of the
SEC's conditions to implementing such relief, if granted, with respect
to each fund is expected to be that the proposed arrangement be
approved by a majority of the fund's outstanding voting securities.
Because the BT Merger required the Board of Trustees to call a special
meeting of each fund's shareholders to seek approval of the fund's
Interim Sub-Advisory Agreement, the Board of Trustees is taking this
opportunity to seek shareholder approval of the proposed
manager-of-managers arrangement, as well. If the SEC grants the
requested relief and shareholders of a fund approve the proposal, it
is expected that the trust and FMR will be required to comply with
certain additional SEC conditions in order for the fund to implement
and operate under the arrangement. For example, it is expected that a
fund will be required to provide shareholders with relevant
information (that otherwise would be provided in a proxy statement)
within a specified period of time after hiring a new sub-adviser.
Under each fund's Present Management Contract, FMR provides the fund
with investment research, advice, and supervision, and furnishes an
investment program for the fund consistent with the fund's investment
objectives and policies. Each fund's Present Management Contract
expressly permits FMR to appoint sub-advisers to perform any or all of
the services specified in the contract. FMR is responsible for
recommending to the Board of Trustees the hiring, termination, and
replacement of sub-advisers; supervising and evaluating the
performance of sub-advisers; and negotiating and, as circumstances
warrant, renegotiating the terms and conditions of any sub-advisory
agreement (including the fees payable thereunder). Although FMR and
the Board of Trustees currently may not appoint a new sub-adviser
without shareholder approval, they may terminate the Sub-Advisory
Agreements or begin the process of selecting a new sub-adviser for the
funds at any time, including prior to the Meeting.
REASONS FOR PROPOSAL. The Board of Trustees believes that allowing
FMR to negotiate and renegotiate sub-advisory arrangements for the
funds without incurring the expenses or delays of obtaining
shareholder approval is in the best interests of each fund's
shareholders and will allow each fund to operate more efficiently.
Currently, in order for FMR to appoint a sub-adviser or materially
modify a sub-advisory agreement, the trust must hold a special
shareholder meeting and solicit votes from a fund's shareholders.
Without having to hold shareholder meetings, the Board of
Trustees would be able to act more quickly and with less expense to
appoint a sub-adviser when the Board and FMR believe that the
appointment would benefit a fund and its shareholders. Furthermore,
the Board of Trustees believes that it is appropriate to allow FMR
to negotiate and renegotiate sub-advisory arrangements for the funds
in light of FMR's significant experience and expertise.
Moreover, the Board will provide oversight of the sub-adviser
selection process to help ensure that shareholders' interests are
protected if FMR selects a new sub-adviser or modifies a sub-advisory
agreement. The Board, including a majority of the Independent
Trustees, will evaluate and approve all new sub-advisory agreements,
as well as any modifications to all sub-advisory agreements. In its
review, the Board will analyze all factors that it considers to be
relevant to the determination, including the nature, quality and scope
of services provided by the sub-advisers. The Board of Trustees
believes that its review will ensure that FMR continues to act in the
best interest of each fund and its shareholders.
The Board of Trustees received materials relating to the
manager-of-managers arrangement in advance of the meetings at which
the arrangement was considered, and had the opportunity to ask
questions and request further information in connection with such
consideration. Based on their consideration of the above factors and
other information that they deemed relevant, the Board of Trustees,
including the Independent Trustees, voted to approve the submission of
the manager-of-managers proposal to shareholders of each fund for
their approval.
CONCLUSION. The Board of Trustees, including a majority of the
Independent Trustees , recommends that shareholders of each fund
vote FOR the proposal. As stated above, each fund's implementation of
a manager-of-managers arrangement is also conditioned upon receipt of
the requested exemptive relief from the SEC. If the SEC declines to
grant the relief requested in the Application, a fund will not
implement the proposed arrangement.
OTHER BUSINESS
The Board knows of no other business to be brought before the
Meeting. However, if any other matters properly come before the
Meeting, it is the intention that proxies that do not contain specific
instructions to the contrary will be voted on such matters in
accordance with the judgment of the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to
a number of investment companies. Information concerning the advisory
fees and average net assets of funds with investment objectives
similar to Spartan U.S. Equity Index Fund, Spartan Total Market Index
Fund, Spartan Extended Market Index Fund, and Spartan International
Index Fund and advised by FMR is contained in the Table of Average Net
Assets and Expense Ratios in Exhibit 3 beginning on page 31.
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions that have occurred to date have included mortgages
and personal and general business loans. In the judgment of FMR, the
terms and conditions of those transactions were not influenced by
existing or potential custodial or other fund relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter
S. Lynch, Vice Chairman. Each of the Directors is also a Trustee of
the trust. Messrs. Johnson 3d, Pozen, J. Gary Burkhead, John H.
Costello, Matthew N. Karstetter, Eric D. Roiter, Richard A. Silver,
Leonard M. Rush, and Robert A. Lawrence are currently officers of the
trust and officers or employees of FMR or FMR Corp. With the exception
of Mr. Costello and Mr. Karstetter, all of these persons hold or have
options to acquire stock of FMR Corp. The principal business address
of each of the Directors of FMR is 82 Devonshire Street, Boston,
Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore,
under the 1940 Act may be deemed to form a controlling group with
respect to FMR Corp.
During the period March 1, 1998, through May 31, 1999, 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 B T
BT, a New York banking corporation with principal offices at 130
Liberty Street, New York, New York 10006, is a wholly owned subsidiary
of Bankers Trust Corporation (formerly Bankers Trust New York
Corporation) ("BT Corporation"), whose principal offices are also at
130 Liberty Street, New York, New York 10006. BT was founded in 1903.
As of March 31, 1999, BT Corporation was the eighth largest
bank holding company in the United States with total assets of
approximately $127 billion. BT is a worldwide merchant bank that
conducts a variety of general banking and trust activities and is a
major wholesale supplier of financial services to the international
and domestic institutional markets. Investment management is a core
business of BT. As of March 31, 1999, BT had over $378 billion in
assets under management globally. Of that total, over $183 billion was
in U.S. equity index assets. This makes BT one of the nation's leading
managers of index funds.
In conjunction with its global custodial services, BT operates one
of the largest and most extensive securities lending programs. BT
serves as securities lending agent with respect to loan transactions
involving a daily average in excess of $57 billion on loan.
Approximately 90 lenders participated in BT's program during 1998.
On November 30, 1998, BT Corporation, Deutsche Bank AG ("Deutsche
Bank"), and Circle Acquisition Corporation ("Circle Corporation"), a
wholly owned subsidiary of Deutsche Bank, entered into a merger
agreement ("BT Merger Agreement"). Pursuant to the terms of the BT
Merger Agreement, Circle Corporation merged with BT Corporation on
June 4 , 1999, with BT Corporation continuing as the surviving
entity ("BT Merger"). Although the direct corporate ownership of BT
was not affected by the BT Merger and BT remains a wholly owned
subsidiary of BT Corporation, as of the date of the BT Merger, BT
became an indirect, wholly owned subsidiary of Deutsche Bank. Deutsche
Bank is a major global banking institution that is engaged in a
wide range of financial services, including investment management,
mutual funds, retail and commercial banking, investment banking, and
insurance. Deutsche Bank's principal offices are located at
Taunusanlage 12, D-60325 Frankfurt am Main, Federal Republic of
Germany. As of March 31, 1999 , Deutsche Bank and its
affiliates had total assets of approximately $ 727 billion, with
over $ 245 billion in assets under management.
Information concerning the advisory or sub-advisory fees and average
net assets of mutual funds with investment objectives similar
to Spartan U.S. Equity Index Fund, Spartan Total Market Index Fund,
Spartan Extended Market Index Fund, and Spartan International Index
Fund and advised or sub-advised by BT is contained in the Table of
Average Net Assets and Expense Ratios in Exhibit 4 beginning on page
33. The name, address and principal occupation of each director of BT
is provided in Exhibit 5 beginning on page 39.
No officer or Trustee of the trust is an officer, employee or
director of BT. No officer or Trustee of the trust owns any securities
of, or has any other material direct or indirect interest in, BT, BT
Corporation, or any entity controlled by or under common control with
BT. During the period March 1, 1998 through May 31, 1999, no material
transactions were entered into by any Trustee of the trust to which
BT, BT Corporation, or any entity controlled by or under common
control with BT is or was a party.
BT has been advised by counsel that BT currently may perform the
services for 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.
On March 11, 1999, BT announced that it had reached an agreement with
the United States Attorney's Office in the Southern District of New
York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record keeping problems that occurred
between 1994 and early 1996. Pursuant to its agreement with the U.S.
Attorney's Office, BT pleaded guilty to misstating entries in the
bank's books and records and agreed to pay a $60 million fine to
federal authorities. Separately, BT agreed to pay a $3.5 million fine
to the State of New York. The events leading up to the guilty plea did
not arise out of the investment advisory or mutual fund activities of
BT or its affiliates. As a result of the plea, absent an order from
the SEC , BT would not be able to continue to provide investment
advisory services to the fund. The SEC has granted BT a
temporary order to permit BT and its affiliates to continue to provide
investment advisory services to registered investment companies ,
and BT has filed an application for a permanent order . However,
t here is no assurance that the SEC will grant a permanent
order. If a permanent order is not granted, FMR and the Board of
Trustees will consider appropriate actions, including selecting,
approving, and submitting for shareholder approval (if required at the
time) a replacement sub-adviser.
PRESENT MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other
services. FMR provides each fund with all necessary office facilities
and personnel for servicing the fund's investments, compensates all
officers of each fund and all Trustees who are "interested persons" of
the trust or of FMR, and all personnel of each 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 each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
BT is the sub-adviser of each fund and acts as each fund's custodian.
Under its management contract with each fund, FMR acts as investment
adviser. Under the Interim Sub-Advisory Agreements, and subject to the
supervision of the Board of Trustees, BT directs the investments of
each fund in accordance with its investment objective, policies, and
limitations, and administers the securities lending program of
each fund .
In addition to the management fee payable to FMR, the sub-advisory
fee payable to BT, and the fees payable to the transfer, dividend
disbursing, and shareholder servicing agent and pricing and
bookkeeping agent, each fund pays all of its expenses that are not
assumed by those parties. Each fund pays for the typesetting,
printing, and mailing of its proxy materials to shareholders, legal
expenses, and the fees of the auditor and non-interested Trustees.
Each fund's management contract further provides that the fund will
pay for typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of each fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders. Other expenses paid by each fund include interest,
taxes, brokerage commissions, the fund's proportionate share of
insurance premiums and Investment Company Institute dues, and the
costs of registering shares under federal securities laws and making
necessary filings under state securities laws. Each 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, including reimbursement for out-of-pocket
expenses, paid to Fidelity Investments Institutional Operations
Company, Inc. (FIIOC), an affiliate of FMR, by Spartan U.S. Equity
Index Fund for the fiscal year ended February 28, 1999, amounted to
$21,46 5,000 . Transfer agent fees, including reimbursement for
out-of-pocket expenses, paid to Fidelity Service Company, Inc. (FSC),
an affiliate of FMR, by Spartan Total Market Index Fund, Spartan
Extended Market Index Fund, and Spartan International Index Fund for
the fiscal year ended February 28, 1999, amounted to $150,265,
$72,869, and $40,925, respectively. Pricing and bookkeeping fees,
including reimbursement for out-of-pocket expenses, paid to FSC by the
funds for the fiscal year ended February 28, 1999, amounted to:
Spartan U.S. Equity Index Fund $ 87 1,000
Spartan Total Market Index Fund $ 68,663
Spartan Extended Market Index Fund $ 60,602
Spartan International Index Fund $ 60,345
Each 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. Each
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 Spartan U.S. Equity Index Fund's manager pursuant to a
management contract dated December 5, 1997, which was last approved by
shareholders on November 19, 1997. At that time, shareholder approval
had been obtained to amend the management contract to (1) expressly
permit FMR to delegate investment advisory authority to an investment
adviser, and (2) reduce the fund's management fee payable to FMR from
0.28% to 0.24% of the fund's average net assets. FMR is Spartan Total
Market Index Fund 's , Spartan Extended Market Index
Fund 's , and Spartan International Index Fund's manager pursuant
to management contracts dated November 3, 1997, which were approved by
FMR, as the then sole shareholder of the funds, on September 5, 1997.
For the services of FMR under each management contract, each of
Spartan U.S. Equity Index Fund, Spartan Total Market Index Fund, and
Spartan Extended Market Index Fund pays FMR a monthly management fee
at the annual rate of 0.24% of its average net assets throughout the
month and Spartan International Index Fund pays FMR a monthly
management fee at the annual rate of 0.34% of its average net assets
throughout the month. The fees received by FMR for the fiscal year
ended February 28, 1999 from each fund were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Management Fee Before Amount of Management Fee
Reimbursement Reimbursement
Spartan U.S. Equity Index Fund $ 31,457,000 $ 30,350,000
Spartan Total Market Index Fund $ 237,120 $ 237,120
Spartan Extended Market Index $ 118,445 $ 118,445
Fund
Spartan International Index $ 115,955 $ 115,955
Fund
</TABLE>
FMR may, from time to time, voluntarily reimburse all or a portion of
each fund's total operating expenses (exclusive of sub-advisory fees
associated with securities lending, interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
FMR has agreed to reimburse the funds to the extent that their total
operating expenses (with the exceptions noted below), as a percentage
of their respective average net assets, exceed the following rates:
Fund Rate Effective Date
Spartan U.S. Equity Index Fund 0.19% April 18, 1997
Spartan Total Market Index Fund 0.25% November 5, 1997
Spartan Extended Market Index 0.25% November 5, 1997
Fund
Spartan International Index 0.35% November 5, 1997
Fund
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, extraordinary expenses or , for Spartan
Total Market Index Fund, Spartan Extended Market Index Fund, and
Spartan International Index Fund, other transaction costs. In
addition, sub-advisory fees paid by the funds associated with
securities lending are not eligible for reimbursement. These
arrangements will remain in effect through December 31, 1999.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by BT pursuant to authority contained in
the fund's management contract and sub-advisory agreement.
BT may use research services provided by and place agency
transactions with National Financial Services Corporation (NFSC) and
Fidelity Brokerage Services (Japan), LLC (FBSJ), indirect subsidiaries
of FMR Corp., and BT Brokerage Corporation and BT Futures Corp.,
indirect subsidiaries of Deutsche Bank , if the commissions are
fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services.
For the fiscal year ended February 28, 1999, the funds paid no
brokerage commissions to affiliated brokers.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to
the Secretary of the Trust, 82 Devonshire Street, Boston,
Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Investments
Institutional Operations Company, Inc. , 82 Devonshire Street,
Boston, Massachusetts 02109 (Spartan U.S. Equity Index Fund) or
Fidelity Service Company, Inc., P.O. Box 789, Boston, Massachusetts
02109 (Spartan Total Market Index Fund, Spartan Extended Market Index
Fund, and Spartan International Index Fund), 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
The proper name of each fund, Spartan U.S. Equity Index Fund, Spartan
Total Market Index Fund, Spartan Extended Market Index Fund, or
Spartan International Index Fund, as the case may be, will be inserted
in that fund's contract where indicated by "{NAME OF PORTFOLIO}."
SUBADVISORY AGREEMENT
This Agreement is entered into as of the 4th day of June,
1999, among Fidelity Concord Street Trust, a Massachusetts
business trust (the "Trust"), on behalf of {NAME OF PORTFOLIO}, 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 {FOR SPARTAN U.S. EQUITY INDEX FUND:
December 5} {FOR SPARTAN TOTAL MARKET INDEX FUND, SPARTAN EXTENDED
MARKET INDEX FUND, AND SPARTAN INTERNATIONAL INDEX FUND: November 3},
1997, with Manager (the "Management Contract"), pursuant to which
Manager has agreed to provide certain management and administrative
services to the Portfolio; and
WHEREAS, Manager desires to appoint Subadviser as investment
subadviser to provide the investment advisory and administrative
services to the Portfolio specified herein, and Subadviser is willing
to serve the Portfolio in such capacity; and
WHEREAS, the trustees of the Trust (the "Trustees"), including a
majority of the Trustees who are not "interested persons" (as such
term is defined below) of any party to this Agreement, and the
shareholder(s) of the Portfolio, have each consented to such an
arrangement;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
I. APPOINTMENT OF SUBADVISER; COMPENSATION
1.1 Appointment as Subadviser. Subject to and in accordance with the
provisions hereof, Manager hereby appoints Subadviser as investment
subadviser to perform the various investment advisory and other
services to the Portfolio set forth herein and, subject to the
restrictions set forth herein, hereby delegates to Subadviser the
authority vested in Manager pursuant to the Management Contract to the
extent necessary to enable Subadviser to perform its obligations under
this Agreement.
1.2 Scope of Investment Authority. (a) The Subadviser is hereby
authorized, on a discretionary basis, to manage the investments and
determine the composition of the assets of the Portfolio, subject at
all times to (i) the supervision and control of the Trustees, (ii) the
requirements of the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "Investment Company
Act"), (iii) the investment objective, policies and limitations, as
provided in the Portfolio's Prospectus and other governing documents,
and (iv) such instructions, policies and limitations relating to the
Portfolio as the Trustees or Manager may from time to time adopt and
communicate in writing to Subadviser. Notwithstanding anything herein
to the contrary, Subadviser is not authorized to take any action,
including the purchase and sale of portfolio securities, in
contravention of any restriction, limitation, objective, policy or
instruction described in the previous sentence.
(b) It is understood and agreed that, for so long as this Agreement
shall remain in effect, Subadviser shall retain discretionary
investment authority over the manner in which the Portfolio's assets
are invested, and Manager shall not have the right to overrule any
investment decision with respect to a particular security made by
Subadviser, provided that the Trustees and Manager shall at all times
have the right to monitor the Portfolio's investment activities and
performance, require Subadviser to make reports and give explanations
as to the manner in which the Portfolio's assets are being invested,
and, should either Manager or the Trustees become dissatisfied with
Subadviser's performance in any way, terminate this Agreement in
accordance with the provisions of Section 9.2 hereof.
1.3 Appointment as Proxy Voting Agent. Subject to and in accordance
with the provisions hereof, the Trustees hereby appoint Subadviser as
the Portfolio's proxy voting agent, and hereby delegate to Subadviser
discretionary authority to vote all proxies solicited by or with
respect to issuers of securities in which the assets of the Portfolio
may be invested from time to time. Upon written notice to Subadviser,
the Trustees may at any time withdraw the authority granted to
Subadviser pursuant to this Section 1.3 to perform any or all of the
proxy voting services contemplated hereby.
1.4 Governing Documents. Manager will provide Subadviser with copies
of (i) the Trust's Declaration of Trust and By-laws, as currently in
effect, (ii) the Portfolio's currently effective prospectus and
statement of additional information, as set forth in the Trust's
registration statement under the Investment Company Act and the
Securities Act of 1933, as amended, (iii) any instructions, investment
policies or other restrictions adopted by the Trustees or Manager
supplemental thereto, and (iv) the Management Contract. Manager will
provide Subadviser with such further documentation and information
concerning the investment objectives, policies and restrictions
applicable to the Portfolio as Subadviser may from time to time
reasonably request.
1.5 Subadviser's Relationship. Notwithstanding anything herein to the
contrary, Subadviser shall be an independent contractor and will have
no authority to act for or represent the Trust, the Portfolio or
Manager in any way or otherwise be deemed an agent of any of them,
except to the extent expressly authorized by this Agreement or in
writing by the Trust or Manager.
1.6 Compensation. Subadviser shall be compensated for the services it
performs on behalf of the Portfolio in accordance with the terms set
forth in Appendix A to this Agreement.
II. SERVICES TO BE PERFORMED BY SUBADVISER
2.1 Investment Advisory Services. (a) In fulfilling its obligations
to manage the assets of the Portfolio, Subadviser will:
(i) formulate and implement a continuous investment program for the
Portfolio, including, without limitation, implementation of a
securities lending program in accordance with the provisions of
Article III hereof;
(ii) take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities and other
investments, including the selection of brokers or dealers, the
placing of orders for such purchases and sales in accordance with the
provisions of paragraph (b) below and assuring that such purchases and
sales are properly settled and cleared;
(iii) provide such reports with respect to the implementation of
the Portfolio's investment program as the Trustees or Manager shall
reasonably request; and
(iv) provide advice and assistance to Manager as to the
determination of the fair value of certain securities where market
quotations are not readily available for purposes of calculating net
asset value of the Portfolio in accordance with valuation procedures
and methods established by the Trustees.
(b) The Subadviser shall place all orders for the purchase and sale
of portfolio securities for the Portfolio's account with brokers and
dealers selected by Subadviser. Such brokers and dealers may include
brokers or dealers that are "affiliated persons" (as such term is
defined in the Investment Company Act) of the Trust, the Portfolio,
Manager or Subadviser, provided that Subadviser shall only place
orders on behalf of the Portfolio with such affiliated persons in
accordance with procedures adopted by the Trustees pursuant to Rule
17e-1 under the Investment Company Act. The Subadviser shall use its
best efforts to seek to execute portfolio transactions at prices which
are advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or other
accounts over which Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a broker or dealer who
provided such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if Subadviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Subadviser and its affiliates have in respect to accounts over which
they exercise investment discretion. The Trustees shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods were reasonable in
relation to the benefits to the Portfolio.
2.2. Administrative and Other Services. (a) Subadviser will, at its
expense, furnish (i) all necessary investment and management
facilities, including salaries of personnel required for it to execute
its duties faithfully, and (ii) administrative facilities, including
bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Portfolio
(excluding determination of net asset values and shareholder
accounting services).
(b) Subadviser will maintain all accounts, books and records with
respect to the Portfolio as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act
and the rules thereunder. Subadviser agrees that such records are the
property of the Trust, and will be surrendered to the Trust promptly
upon request. The Manager shall be granted reasonable access to the
records and documents in Subadviser's possession relating to the
Portfolios.
(c) Subadviser shall provide such information as is necessary to
enable Manager to prepare and update the Trust's registration
statement (and any supplement thereto) and the Portfolio's financial
statements. Subadviser understands that the Trust and Manager will
rely on such information in the preparation of the Trust's
registration statement and the Portfolio's financial statements, and
hereby covenants that any such information approved by Subadviser
expressly for use in such registration and/or financial statements
shall be true and complete in all material respects.
(d) Subadviser will vote the Portfolio's investment securities in
the manner in which Subadviser believes to be in the best interests of
the Portfolio, and shall review its proxy voting activities on a
periodic basis with the Trustees.
(e) Subadviser will provide custodian services to the Portfolio in
accordance with the provisions of a separate Custodian Agreement,
dated as of the date hereof, between the Trust, on behalf of the
Portfolio, and Subadviser.
III. SECURITIES LENDING
3.1. Appointment as Agent. For as long as this Agreement shall remain
in effect, Subadviser is hereby authorized as the Portfolio's agent to
lend on a disclosed basis the Portfolio's securities. Subadviser is
further authorized as the Portfolio's agent to sign agreements with
borrowers, ownership or other certificates as may be required by the
Internal Revenue Service or any other tax authorities, and to take any
other actions necessary to effect such loans.
3.2. Indemnification. (a) In the event that any securities lending
transaction is terminated and the loaned securities or any portion
thereof shall not have been returned to the Portfolio by or on behalf
of the borrower within the time specified by Subadviser's agreement
with the borrower (the "Delivery Date"), Subadviser shall, at its
expense, within one (1) business day after the Delivery Date replace
the loaned securities (or any portion thereof not so returned) with a
like amount of the loaned securities of the same issuer, class and
denomination, and hold the Portfolio, the Trustees and Manager
harmless from any brokerage commission, fees, taxes or other expenses
incurred by Subadviser in the purchase of such replacement securities.
If Subadviser is unable to purchase such replacement securities on the
open market within one business day after the Delivery Date (the
"Reimbursement Date"), Subadviser shall credit the Portfolio's account
by the close of business on the Reimbursement Date with an amount of
cash in U.S. dollars equal to (i) if the Portfolio shall continue to
hold such unreturned loaned securities, the Market Value (as defined
below) of such unreturned loaned securities determined at the close of
business as of the Reimbursement Date, plus all financial benefits
derived from the beneficial ownership of the unreturned loaned
securities which have accrued on such securities whether or not
received from borrower, or (ii) if the Portfolio shall have sold such
securities prior to the Reimbursement Date, (x) the sale proceeds in
respect of such sale, to the extent not received by the Portfolio,
plus (y) any interest, penalties, fees or other costs, if any,
incurred by the Portfolio as a direct result of a failure to settle
such sale on a timely basis, provided that such interest, penalties,
fees or other costs shall not include any consequential or special
damages which may arise out of such failure to settle such sale on a
timely basis. The "Market Value" of any securities on any given day
shall be the fair market value of such security on such day, as
determined in accordance with the Portfolio's valuation procedures and
methods, as adopted by the Trustees.
(b) In the event that Subadviser shall be required to make any
payment to the Portfolio or shall incur any loss or expense pursuant
to paragraph (a) above, it shall, to the extent of such payment or
loss or expense, be subrogated to, and succeed to, all of the
Portfolio's rights against the borrower and to the collateral
involved. To the extent the collateral consists of cash or securities
issued or guaranteed by the United States Government or its agencies,
the Portfolio shall contemporaneously with any such payment to the
Portfolio by Subadviser surrender same to Subadviser for its sole
disposition.
(c) Notwithstanding the foregoing, in no event shall Subadviser
incur liability pursuant to paragraph (a) above if Subadviser is
prevented, forbidden or delayed from causing a loaned security to be
returned to the Portfolio by the applicable Delivery Date by reason of
(i) any provision of any present or future law or regulation or order
of the United States of America, or any state thereof, or of any
foreign country, or political subdivision thereof, or of any court of
competent jurisdiction; or (ii) any act of God or war or other similar
circumstance beyond the control of Subadviser unless, in each case,
such delay or nonperformance is caused by (A) the negligence,
misfeasance or misconduct of Subadviser or any of its directors,
officers, employees or agents, or (B) a malfunction or failure of
equipment operated or utilized by Subadviser other than a malfunction
or failure beyond Subadviser's control and which could not have been
reasonably anticipated and/or prevented by Subadviser.
3.3. Market Risk. The Portfolio acknowledges that any cash collateral
provided by a borrower in respect of a securities lending transaction
may be invested by Subadviser on the Portfolio's behalf at the
Portfolio's risk, and if, upon termination of any loan, the cash
collateral held by Subadviser for Portfolio's account is less than the
amount required to be returned to the borrower under Subadviser's
agreement with the borrower, the Portfolio will provide borrower with
cash in the amount of any such deficiency.
3.4. Subadviser's Relationships with Borrowers. The Portfolio
acknowledges that Subadviser or its affiliates may be a creditor of,
for its own account or in a fiduciary capacity, or generally engage in
any kind of commercial or investment banking business with, a
borrower, to whom Subadviser has lent the Portfolio's securities.
Without limiting the generality of the foregoing, Subadviser shall not
be required to disclose to the Portfolio or Manager any financial
information about a borrower obtained in the course of its
relationship with such borrower.
3.5 Securities Lending Procedures. Subadviser's securities lending
activities on behalf of the Portfolio shall be governed by such
procedures as shall be adopted by the Trustees or Manager, as the same
may be amended from time to time.
IV. COMPLIANCE; CONFIDENTIALITY
4.1 Compliance. (a) Subadviser will comply with (i) all applicable
state and federal laws and regulations governing the performance of
the Subadviser's duties hereunder, (ii) the investment objective,
policies and limitations, as provided in the Portfolio's Prospectus
and other governing documents, and (iii) such instructions, policies
and limitations relating to the Portfolio as the Trustees or Manager
may from time to time adopt and communicate in writing to subadviser.
(b) Subadviser will adopt a written code of ethics complying with
the requirements of Rule 17j-1 under the Investment Company Act and
will provide the Trust with a copy of such code of ethics, evidence of
its adoption and copies of any supplemental policies and procedures
implemented to ensure compliance therewith.
4.2 Confidentiality. The parties to this Agreement agree that each
shall treat as confidential all information provided by a party to the
others regarding such party's business and operations, including
without limitation the investment activities or holdings of the
Portfolio. All confidential information provided by a party hereto
shall be used by any other parties hereto solely for the purposes of
rendering services pursuant to this Agreement and, except as may be
required in carrying out the terms of this Agreement, shall not be
disclosed to any third party without the prior consent of such
providing party. The foregoing shall not be applicable to any
information that is publicly available when provided or which
thereafter becomes publicly available other than in contravention of
this Section 4.2 or which is required to be disclosed by any
regulatory authority in the lawful and appropriate exercise of its
jurisdiction over a party, any auditor of the parties hereto, by
judicial or administrative process or otherwise by applicable law or
regulation.
V. LIABILITY OF SUBADVISER
5.1 Liability; Standard of Care. Notwithstanding anything herein to
the contrary, except as provided in Section 3.2 hereof, neither
Subadviser, nor any of its directors, officers or employees, shall be
liable to Manager or the Trust for any loss resulting from
Subadviser's acts or omissions as Subadviser to the Portfolio, except
to the extent any such losses result from bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of the
Subadviser or any of its directors, officers or employees in the
performance of the Subadviser's duties and obligations under this
Agreement.
5.2 Indemnification. (a) Subadviser agrees to indemnify and hold the
Trust and Manager harmless from any and all direct or indirect
liabilities, losses or damages (including reasonable attorneys fees)
suffered by the Trust or Manager resulting from (i) Subadviser's
breach of its duties hereunder, or (ii) bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of the
Subadviser or any of its directors, officers or employees in the
performance of the Subadviser's duties and obligations under this
Agreement, except to the extent such loss results from the Trust's or
Manager's own willful misfeasance, bad faith, reckless disregard or
negligence in the performance of their respective duties and
obligations under the Management Contract or this Agreement.
(b) Manager hereby agrees to indemnify and hold Subadviser harmless
from any and all direct or indirect liabilities, losses or damages
(including reasonable attorney's fees) suffered by Subadviser
resulting from (i) Manager's breach of its duties under Management
Contract, or (ii) bad faith, willful misfeasance, reckless disregard
or gross negligence on the part of Manager or any of its directors,
officers or employees in the performance of Manager's duties and
obligations under this Agreement, except to the extent such loss
results from Subadviser's own willful misfeasance, bad faith, reckless
disregard or negligence in the performance of Subadviser's duties and
obligations under this Agreement.
VI. SUPPLEMENTAL ARRANGEMENTS; EXPENSES; INSURANCE
6.1 Supplemental Arrangements. Subject to the prior written consent
of the Trustees and Manager, Subadviser may enter into arrangements
with other persons affiliated with Subadviser to better fulfill its
obligations under this Agreement for the provision of certain
personnel and facilities to Subadviser, provided that such
arrangements do not rise to the level of an advisory contract subject
to the requirements of Section 15 of the Investment Company Act.
6.2 Expenses. It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by Subadviser
hereunder or by Manager under the Management Agreement. Subadviser
expressly agrees to pay the cost of all custody services required by
the Portfolio. Expenses paid by the Portfolios will include, but not
be limited to, (i) interest and taxes; (ii) brokerage commissions and
other costs in connection with the purchase or sale of securities and
other investment instruments; (iii) fees and expenses of the Trustees
other than those who are "interested persons" of the Trust, Manager or
Subadviser; (iv) legal and audit expenses; (v) registrar and transfer
agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares
for distribution under state and federal securities laws; (vii)
expenses of printing and mailing reports and notices and proxy
material to shareholders of the Portfolio; (viii) all other expenses
incidental to holding meetings of the Portfolio's shareholders,
including proxy solicitations therefor; (ix) a pro rata share based on
the relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management
Contracts with the Manager, of 50% of insurance premiums for fidelity
bond and other coverage; (x) investment management fees; (xi) expenses
of typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and any legal obligation that the Portfolio may have to
indemnify the Trustees, officers and/or employees or agents with
respect thereto. Subadviser shall not cause the Trust or the
Portfolios to incur any expenses, other than those reasonably
necessary for Subadviser to fulfill its obligations under this
Agreement, unless Subadviser has first notified Manager of its
intention to do so.
6.3 Insurance. Subadviser shall maintain for the duration hereof,
with an insurer acceptable to Manager, a blanket bond and professional
liability (errors and omissions) insurance in amounts reasonably
acceptable to Manager. Subadviser agrees that such insurance shall be
considered primary and Subadviser shall assure that such policies pay
claims prior to similar policies that may be maintained by Manager. In
the event Subadviser fails to have in force such insurance, that
failure will not exclude Subadviser's responsibility to pay up to the
limit Subadviser would have had to pay had said insurance been in
force.
VII. CONFLICTS OF INTEREST
7.1 Conflicts of Interest. It is understood that the Trustees,
officers, agents and shareholders of the Trust are or may be
interested in Subadviser as directors, officers, stockholders or
otherwise; that directors, officers, agents and stockholders of
Subadviser are or may be interested in the Trust as trustees,
officers, shareholders or otherwise; that Subadviser may be interested
in the Trust; and that the existence of any such dual interest shall
not affect the validity of this Agreement or of any transactions
hereunder except as otherwise provided in the Trust's Declaration of
Trust and the Articles of Incorporation of Subadviser, respectively,
or by specific provisions of applicable law.
VIII. REGULATION
8.1 Regulation. Subadviser shall submit to all regulatory and
administrative bodies having jurisdiction over the services provided
pursuant to this Agreement any information, reports or other material
which any such body by reason of this Agreement may reasonably request
or require pursuant to applicable laws and regulations.
IX. DURATION AND TERMINATION OF AGREEMENT
9.1 Effective Date; Duration; Continuance. (a) This Agreement shall
become effective on June 4 , 1999.
(b) Subject to prior termination pursuant to Section 9.2 below, this
Agreement shall continue in force until July 31, 1999 , and
indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of
the Trustees or by a vote of a majority of the outstanding voting
securities of the Portfolio, provided that in either event such
continuance shall also be approved by the vote of a majority of the
Trustees who are not "interested persons" (as such term is defined in
the Investment Company Act) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
(c) Shareholder approval of this Agreement or any continuance of
this Agreement, if required, shall be effective with respect to the
Portfolio if a majority of the outstanding voting securities of the
series (as defined in Rule 18f-2(h) under the Investment Company Act)
of shares of the Portfolio votes to approve this Agreement or its
continuance.
9.2 Termination and Assignment. This Agreement may be terminated at
any time, upon sixty days' written notice, without the payment of any
penalty, (i) by the Trustees, (ii) by the vote of a majority of the
outstanding voting securities of the Portfolio; (iii) by Manager, or
(iv) by Subadviser.
(b) This Agreement will terminate automatically, without the payment
of any penalty, (i) in the event of its assignment (as defined in the
Investment Company Act) or (ii) in the event the Management Contract
is terminated for any reason.
9.3 Definitions. The terms "registered investment company," "vote of
a majority of the outstanding voting securities," "assignment," and
"interested persons," when used herein, shall have the respective
meanings specified in the Investment Company Act as now in effect or
as hereafter amended, and subject to such orders or no-action letters
as may be granted by the Securities and Exchange Commission.
X. REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 Representations of the Portfolio. The Trust, on behalf of the
Portfolio, represents and warrants that:
(i) the Trust is a business trust established pursuant to the laws
of the Commonwealth of Massachusetts;
(ii) the Trust is duly registered as an investment company under
the Investment Company Act and the Portfolio is a duly constituted
series portfolio thereof;
(iii) the execution, delivery and performance of this Agreement are
within the Trust's powers, have been and remain duly authorized by all
necessary action (including without limitation all necessary approvals
and other actions required under the Investment Company Act) and will
not violate or constitute a default under any applicable law or
regulation or of any decree, order, judgment, agreement or instrument
binding on the Trust or the Portfolio;
(iv) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding
obligation enforceable against the Trust and the Portfolio in
accordance with its terms.
10.2 Representations of the Manager. The Manager represents, warrants
and agrees that:
(i) Manager is a corporation established pursuant to the laws of
the Commonwealth of Massachusetts;
(ii) Manager is duly registered as an "investment adviser" under
the Investment Advisers Act of 1940 ("Advisers Act");
(iii) Manager has been duly appointed by the Trustees and
Shareholders of the Portfolio to provide investment services to the
Portfolio as contemplated by the Management Contract;
(iv) the execution, delivery and performance of this Agreement are
within Manager's powers, have been and remain duly authorized by all
necessary corporate action and will not violate or constitute a
default under any applicable law or regulation or of any decree,
order, judgment, agreement or instrument binding on Manager;
(v) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(vi) this Agreement constitutes a legal, valid and binding
obligation enforceable against Manager.
10.3 Representations of Subadviser. Subadviser represents, warrants
and agrees that:
(i) Subadviser is a New York banking corporation established
pursuant to the laws of the State of New York;
(ii) Subadviser is duly registered as an "investment adviser" under
the Advisers Act; or is a "bank" as defined in Section 202 (a) (2) of
the Advisers Act or an "insurance company" as defined in Section 202
(a) (2) of the Advisers Act.
(iii) the execution, delivery and performance of this Agreement are
within Subadviser's powers, have been and remain duly authorized by
all necessary corporate action and will not violate or constitute a
default under any applicable law or regulation or of any decree,
order, judgment, agreement or instrument binding on Subadviser;
(iv) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding
obligation enforceable against Subadviser.
10.4 Covenants of Subadviser. (a) Subadviser will promptly notify the
Trust and Manager in writing of the occurrence of any event which
could have a material impact on the performance of its obligations
pursuant to this Agreement, including without limitation:
(i) the occurrence of any event which could disqualify Subadviser
from serving as an investment adviser of a registered investment
company pursuant to Section 9 (a) of the Investment Company Act or
otherwise;
(ii) any material change in the Subadviser's overall business
activities that may have a material adverse affect on the Subadviser's
ability to perform under its obligations under this Agreement;
(iii) any event that would constitute a change in control of
Subadviser;
(iv) any change in the portfolio manager of the Portfolio; and
(v) the existence of any pending or threatened audit,
investigation, complaint, examination or other inquiry (other than
routine regulatory examinations or inspections) relating to the
Portfolio conducted by any state or federal governmental regulatory
authority.
(b) Subadviser agrees that it will promptly supply Manager with
copies of any material changes to any of the documents provided by
Subadviser pursuant to Section 4.1.
XI. MISCELLANEOUS PROVISIONS
11.1 Use of Subadviser's Name. Neither the Trust nor Manager will use
the name of Subadviser, or any affiliate of Subadviser, in any
prospectus, advertisement sales literature or other communication to
the public except in accordance with such policies and procedures as
shall be mutually agreed to in writing by the Subadviser and the
Manager.
11.2 Use of Trust or Manager's Name. Subadviser will not use the name
of Manager, the Trust or the Portfolio in any prospectus,
advertisement, sales literature or other communication to the public
except in accordance with such policies and procedures as shall be
mutually agreed to in writing by the Subadviser and the Manager.
11.3 Amendments. This Agreement may only be amended with the prior
written consent of each of the parties hereto and if such amendment is
specifically approved (i) by the vote of a majority of the outstanding
voting securities of the Portfolio, and (ii) by the vote of a majority
of the Trustees who are not interested persons (as such term is
defined in the Investment Company Act) of any person to this Agreement
cast in person at a meeting called for the purpose of voting on such
approval. The required shareholder approval shall be effective with
respect to the Portfolio if a majority of the outstanding voting
securities of the Portfolio vote to approve the amendment.
11.4 Entire Agreement. This Agreement contains the entire
understanding and agreement of the parties with respect to the subject
hereof.
11.5 Captions. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a
part of the Agreement.
11.6 Notices. All notices required to be given pursuant to this
Agreement shall be delivered or mailed to the last known business
address of the Trust, Manager or Subadviser, as the case may be, in
person or by registered mail or a private mail or delivery service
providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this Section
11.6.
11.7 Severability. Should any portion of this Agreement, for any
reason, be held to be void at law or in equity, the Agreement shall be
construed, insofar as is possible, as if such portion had never been
contained herein.
11.8 Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the
Commonwealth of Massachusetts (without giving effect to the choice of
law provisions thereof), or any of the applicable provisions of the
Investment Company Act. To the extent that the laws of the
Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment
Company Act, the latter shall control.
11.9 Limitation of Liability. A copy of the Declaration of Trust
establishing the Trust, dated July 10, 1987, together with all
amendments, is on file in the office of the Secretary of the
Commonwealth of Massachusetts, and notice is hereby given that this
Agreement is not executed on behalf of any of the Trustees as
individuals and no Trustee, shareholder, officer, employee or agent of
the Trust shall be held to any personal liability, nor shall resort be
had to their private property, for the satisfaction of any obligation
or claim, in connection with the affairs of the Trust or the
Portfolio, but only the assets belonging to the Portfolio shall be
liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their duly authorized officers as of the
date first mentioned above.
SIGNATURE LINES OMITTED
APPENDIX A
Pursuant to Section 1.6 of the Subadvisory Agreement among Fidelity
Concord Street Trust (the "Trust"), on behalf of {NAME OF PORTFOLIO}
(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 {FOR SPARTAN U.S. EQUITY INDEX FUND:
0.006% (0.6 basis points)} {FOR SPARTAN TOTAL MARKET INDEX FUND:
0.0125% (1.25 basis points)} {FOR SPARTAN EXTENDED MARKET INDEX FUND:
0.0125% (1.25 basis points)} {FOR SPARTAN INTERNATIONAL INDEX FUND:
0.065% (6.5 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. {FOR SPARTAN INTERNATIONAL INDEX FUND
ONLY: In addition, Manager shall pay Subadviser a monthly fee equal to
$35 for each securities transaction executed on behalf of the
Portfolio during such month, provided that such transaction fee shall
not exceed in the aggregate $200,000 per annum.}
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 2
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
The proper name of each fund, Spartan U.S. Equity Index Fund, Spartan
Total Market Index Fund, Spartan Extended Market Index Fund, or
Spartan International Index Fund, as the case may be, will be inserted
in that fund's contract where indicated by "{NAME OF PORTFOLIO}."
FORM OF
SUBADVISORY AGREEMENT
This Agreement is entered into as of the [4th]
(( ___ )) day of [ June ] (( ______ )) ,
1999, among Fidelity Concord Street Trust, a Massachusetts business
trust (the "Trust"), on behalf of {NAME OF PORTFOLIO}, 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 {FOR SPARTAN U.S. EQUITY INDEX FUND:
December 5} {FOR SPARTAN TOTAL MARKET INDEX FUND, SPARTAN EXTENDED
MARKET INDEX FUND, AND SPARTAN INTERNATIONAL INDEX FUND: November 3},
1997, with Manager (the "Management Contract"), pursuant to which
Manager has agreed to provide certain management and administrative
services to the Portfolio; and
WHEREAS, Manager desires to appoint Subadviser as investment
subadviser to provide the investment advisory and administrative
services to the Portfolio specified herein, and Subadviser is willing
to serve the Portfolio in such capacity; and
WHEREAS, the trustees of the Trust (the "Trustees"), including a
majority of the Trustees who are not "interested persons" (as such
term is defined below) of any party to this Agreement, and the
shareholder(s) of the Portfolio, have each consented to such an
arrangement;
NOW , THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows:
I. APPOINTMENT OF SUBADVISER; COMPENSATION
1.1 Appointment as Subadviser. Subject to and in accordance with the
provisions hereof, Manager hereby appoints Subadviser as investment
subadviser to perform the various investment advisory and other
services to the Portfolio set forth herein and, subject to the
restrictions set forth herein, hereby delegates to Subadviser the
authority vested in Manager pursuant to the Management Contract to the
extent necessary to enable Subadviser to perform its obligations under
this Agreement.
1.2 Scope of Investment Authority. (a) The Subadviser is hereby
authorized, on a discretionary basis, to manage the investments and
determine the composition of the assets of the Portfolio, subject at
all times to (i) the supervision and control of the Trustees, (ii) the
requirements of the Investment Company Act of 1940 [and rules
thereunder] , as amended [from time to time] (the
"Investment Company Act") ((and the rules thereunder)) , (iii)
the investment objective, policies and limitations, as provided in the
Portfolio's Prospectus and other governing documents, and (iv) such
instructions, policies and limitations relating to the Portfolio as
the Trustees or Manager may from time to time adopt and communicate in
writing to Subadviser. Notwithstanding anything herein to the
contrary, Subadviser is not authorized to take any action, including
the purchase and sale of portfolio securities, in contravention of any
restriction, limitation, objective, policy or instruction described in
the previous sentence.
(b) It is understood and agreed that, for so long as this Agreement
shall remain in effect, Subadviser shall retain discretionary
investment authority over the manner in which the Portfolio's assets
are invested, and Manager shall not have the right to overrule any
investment decision with respect to a particular security made by
Subadviser, provided that the Trustees and Manager shall at all times
have the right to monitor the Portfolio's investment activities and
performance, require Subadviser to make reports and give explanations
as to the manner in which the Portfolio's assets are being invested,
and, should either Manager or the Trustees become dissatisfied with
Subadviser's performance in any way, terminate this Agreement in
accordance with the provisions of Section [9.2] ((8.2)) hereof.
1.3 Appointment as Proxy Voting Agent. Subject to and in accordance
with the provisions hereof, the Trustees hereby appoint Subadviser as
the Portfolio's proxy voting agent, and hereby delegate to Subadviser
discretionary authority to vote all proxies solicited by or with
respect to issuers of securities in which the assets of the Portfolio
may be invested from time to time. Upon written notice to Subadviser,
the Trustees may at any time withdraw the authority granted to
Subadviser pursuant to this Section 1.3 to perform any or all of the
proxy voting services contemplated hereby.
1.4 Governing Documents. Manager will provide Subadviser with copies
of (i) the Trust's Declaration of Trust and By-laws, as currently in
effect, (ii) the Portfolio's currently effective prospectus and
statement of additional information, as set forth in the Trust's
registration statement under the Investment Company Act and the
Securities Act of 1933, as amended, (iii) any instructions, investment
policies or other restrictions adopted by the Trustees or Manager
supplemental thereto, and (iv) the Management Contract. Manager will
provide Subadviser with such further documentation and information
concerning the investment objectives, policies and restrictions
applicable to the Portfolio as Subadviser may from time to time
reasonably request.
1.5 Subadviser's Relationship. Notwithstanding anything herein to the
contrary, Subadviser shall be an independent contractor and will have
no authority to act for or represent the Trust, the Portfolio or
Manager in any way or otherwise be deemed an agent of any of them,
except to the extent expressly authorized by this Agreement or in
writing by the Trust or Manager.
1.6 Compensation. Subadviser shall be compensated for the services it
performs on behalf of the Portfolio in accordance with the terms set
forth in Appendix A to this Agreement.
II. SERVICES TO BE PERFORMED BY SUBADVISER
2.1 Investment Advisory Services. (a) In fulfilling its obligations
to manage the assets of the Portfolio, Subadviser will:
(i) formulate and implement a continuous investment program for the
Portfolio [, including, without limitation, implementation of a
securities lending program in accordance with the provisions of
Article III hereof];
(ii) take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities and other
investments, including the selection of brokers or dealers, the
placing of orders for such purchases and sales in accordance with the
provisions of paragraph (b) below and assuring that such purchases and
sales are properly settled and cleared;
(iii) provide such reports with respect to the implementation of
the Portfolio's investment program as the Trustees or Manager shall
reasonably request; and
(iv) provide advice and assistance to Manager as to the
determination of the fair value of certain securities where market
quotations are not readily available for purposes of calculating net
asset value of the Portfolio in accordance with valuation procedures
and methods established by the Trustees.
(b) The Subadviser shall place all orders for the purchase and sale
of portfolio securities for the Portfolio's account with brokers and
dealers selected by Subadviser. Such brokers and dealers may include
brokers or dealers that are "affiliated persons" (as such term is
defined in the Investment Company Act) of the Trust, the Portfolio,
Manager or Subadviser, provided that Subadviser shall only place
orders on behalf of the Portfolio with such affiliated persons in
accordance with procedures adopted by the Trustees pursuant to Rule
17e-1 under the Investment Company Act. The Subadviser shall use its
best efforts to seek to execute portfolio transactions at prices which
are advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or other
accounts over which Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a broker or dealer who
provided such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if Subadviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Subadviser and its affiliates have in respect to accounts over which
they exercise investment discretion. The Trustees shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods were reasonable in
relation to the benefits to the Portfolio.
2.2 Administrative and Other Services. (a) Subadviser will, at its
expense, furnish (i) all necessary investment and management
facilities, including salaries of personnel required for it to execute
its duties faithfully, and (ii) administrative facilities, including
bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Portfolio
(excluding determination of net asset values and shareholder
accounting services).
(b) Subadviser will maintain all accounts, books and records with
respect to the Portfolio as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act
and the rules thereunder. Subadviser agrees that such records are the
property of the Trust, and will be surrendered to the Trust promptly
upon request. The Manager shall be granted reasonable access to the
records and documents in Subadviser's possession relating to the
Portfolio.
(c) Subadviser shall provide such information as is necessary to
enable Manager to prepare and update the Trust's registration
statement (and any supplement thereto) and the Portfolio's financial
statements. Subadviser understands that the Trust and Manager will
rely on such information in the preparation of the Trust's
registration statement and the Portfolio's financial statements, and
hereby covenants that any such information approved by Subadviser
expressly for use in such registration and/or financial statements
shall be true and complete in all material respects.
(d) Subadviser will vote the Portfolio's investment securities in
the manner in which Subadviser believes to be in the best interests of
the Portfolio, and shall review its proxy voting activities on a
periodic basis with the Trustees.
(e) Subadviser will provide custodian services to the Portfolio in
accordance with the provisions of a separate Custodian Agreement,
dated as of the date hereof, between the Trust, on behalf of the
Portfolio, and Subadviser.
[III. SECURITIES LENDING
3.1 Appointment as Agent. For as long as this Agreement shall
remain in effect, Subadviser is hereby authorized as the Portfolio's
agent to lend on a disclosed basis the Portfolio's securities.
Subadviser is further authorized as the Portfolio's agent to sign
agreements with borrowers, ownership or other certificates as may be
required by the Internal Revenue Service or any other tax authorities,
and to take any other actions necessary to effect such loans.
3.2 Indemnification. (a) In the event that any securities lending
transaction is terminated and the loaned securities or any portion
thereof shall not have been returned to the Portfolio by or on behalf
of the borrower within the time specified by Subadviser's agreement
with the borrower (the "Delivery Date"), Subadviser shall, at its
expense, within one (1) business day after the Delivery Date replace
the loaned securities (or any portion thereof not so returned) with a
like amount of the loaned securities of the same issuer, class and
denomination, and hold the Portfolio, the Trustees and Manager
harmless from any brokerage commission, fees, taxes or other expenses
incurred by Subadviser in the purchase of such replacement securities.
If Subadviser is unable to purchase such replacement securities on the
open market within one business day after the Delivery Date (the
"Reimbursement Date"), Subadviser shall credit the Portfolio's account
by the close of business on the Reimbursement Date with an amount of
cash in U.S. dollars equal to (i) if the Portfolio shall continue to
hold such unreturned loaned securities, the Market Value (as defined
below) of such unreturned loaned securities determined at the close of
business as of the Reimbursement Date, plus all financial benefits
derived from the beneficial ownership of the unreturned loaned
securities which have accrued on such securities whether or not
received from borrower, or (ii) if the Portfolio shall have sold such
securities prior to the Reimbursement Date, (x) the sale proceeds in
respect of such sale, to the extent not received by the Portfolio,
plus (y) any interest, penalties, fees or other costs, if any,
incurred by the Portfolio as a direct result of a failure to settle
such sale on a timely basis, provided that such interest, penalties,
fees or other costs shall not include any consequential or special
damages which may arise out of such failure to settle such sale on a
timely basis. The "Market Value" of any securities on any given day
shall be the fair market value of such security on such day, as
determined in accordance with the Portfolio's valuation procedures and
methods, as adopted by the Trustees.
(b) In the event that Subadviser shall be required to make any
payment to the Portfolio or shall incur any loss or expense pursuant
to paragraph (a) above, it shall, to the extent of such payment or
loss or expense, be subrogated to, and succeed to, all of the
Portfolio's rights against the borrower and to the collateral
involved. To the extent the collateral consists of cash or securities
issued or guaranteed by the United States Government or its agencies,
the Portfolio shall contemporaneously with any such payment to the
Portfolio by Subadviser surrender same to Subadviser for its sole
disposition.
(c) Notwithstanding the foregoing, in no event shall Subadviser
incur liability pursuant to paragraph (a) above if Subadviser is
prevented, forbidden or delayed from causing a loaned security to be
returned to the Portfolio by the applicable Delivery Date by reason of
(i) any provision of any present or future law or regulation or order
of the United States of America, or any state thereof, or of any
foreign country, or political subdivision thereof, or of any court of
competent jurisdiction; or (ii) any act of God or war or other similar
circumstance beyond the control of Subadviser unless, in each case,
such delay or nonperformance is caused by (A) the negligence,
misfeasance or misconduct of Subadviser or any of its directors,
officers, employees or agents, or (B) a malfunction or failure of
equipment operated or utilized by Subadviser other than a malfunction
or failure beyond Subadviser's control and which could not have been
reasonably anticipated and/or prevented by Subadviser.
3.3 Market Risk. The Portfolio acknowledges that any cash
collateral provided by a borrower in respect of a securities lending
transaction may be invested by Subadviser on the Portfolio's behalf at
the Portfolio's risk, and if, upon termination of any loan, the cash
collateral held by Subadviser for Portfolio's account is less than the
amount required to be returned to the borrower under Subadviser's
agreement with the borrower, the Portfolio will provide borrower with
cash in the amount of any such deficiency.
3.4 Subadviser's Relationships with Borrowers. The Portfolio
acknowledges that Subadviser or its affiliates may be a creditor of,
for its own account or in a fiduciary capacity, or generally engage in
any kind of commercial or investment banking business with, a
borrower, to whom Subadviser has lent the Portfolio's securities.
Without limiting the generality of the foregoing, Subadviser shall not
be required to disclose to the Portfolio or Manager any financial
information about a borrower obtained in the course of its
relationship with such borrower.
3.5 Securities Lending Procedures. Subadviser's securities lending
activities on behalf of the Portfolio shall be governed by such
procedures as shall be adopted by the Trustees or Manager, as the same
may be amended from time to time.]
[IV.] ((III.)) COMPLIANCE; CONFIDENTIALITY
[4.1] ((3.1)) Compliance. (a) Subadviser will comply with (i)
all applicable state and federal laws and regulations governing the
performance of the Subadviser's duties hereunder, (ii) the investment
objective, policies and limitations, as provided in the Portfolio's
Prospectus and other governing documents, and (iii) such instructions,
policies and limitations relating to the Portfolio as the Trustees or
Manager may from time to time adopt and communicate in writing to
subadviser.
(b) Subadviser will adopt a written code of ethics complying with
the requirements of Rule 17j-1 under the Investment Company Act and
will provide the Trust with a copy of such code of ethics, evidence of
its adoption and copies of any supplemental policies and procedures
implemented to ensure compliance therewith.
[4.2] ((3.2)) Confidentiality. The parties to this Agreement
agree that each shall treat as confidential all information provided
by a party to the others regarding such party's business and
operations, including without limitation the investment activities or
holdings of the Portfolio. All confidential information provided by a
party hereto shall be used by any other parties hereto solely for the
purposes of rendering services pursuant to this Agreement and, except
as may be required in carrying out the terms of this Agreement, shall
not be disclosed to any third party without the prior consent of such
providing party. The foregoing shall not be applicable to any
information that is publicly available when provided or which
thereafter becomes publicly available other than in contravention of
this Section [4.2] ((3.2)) or which is required to be disclosed
by any regulatory authority in the lawful and appropriate exercise of
its jurisdiction over a party, any auditor of the parties hereto, by
judicial or administrative process or otherwise by applicable law or
regulation.
[V.] ((IV.)) LIABILITY OF SUBADVISER
[5.1] ((4.1)) Liability; Standard of Care. Notwithstanding
anything herein to the contrary, [except as provided in Section 3.2
hereof,] neither Subadviser, nor any of its directors, officers or
employees, shall be liable to Manager or the Trust for any loss
resulting from Subadviser's acts or omissions as Subadviser to the
Portfolio, except to the extent any such losses result from bad faith,
willful misfeasance, reckless disregard or gross negligence on the
part of the Subadviser or any of its directors, officers or employees
in the performance of the Subadviser's duties and obligations under
this Agreement.
[5.2] ((4.2)) Indemnification. (a) Subadviser agrees to
indemnify and hold the Trust and Manager harmless from any and all
direct or indirect liabilities, losses or damages (including
reasonable attorneys fees) suffered by the Trust or Manager resulting
from (i) Subadviser's breach of its duties hereunder, or (ii) bad
faith, willful misfeasance, reckless disregard or gross negligence on
the part of the Subadviser or any of its directors, officers or
employees in the performance of the Subadviser's duties and
obligations under this Agreement, except to the extent such loss
results from the Trust's or Manager's own willful misfeasance, bad
faith, reckless disregard or negligence in the performance of their
respective duties and obligations under the Management Contract or
this Agreement.
(b) Manager hereby agrees to indemnify and hold Subadviser harmless
from any and all direct or indirect liabilities, losses or damages
(including reasonable attorney's fees) suffered by Subadviser
resulting from (i) Manager's breach of its duties under Management
Contract, or (ii) bad faith, willful misfeasance, reckless disregard
or gross negligence on the part of Manager or any of its directors,
officers or employees in the performance of Manager's duties and
obligations under this Agreement, except to the extent such loss
results from Subadviser's own willful misfeasance, bad faith, reckless
disregard or negligence in the performance of Subadviser's duties and
obligations under this Agreement.
[VI.] ((V.)) SUPPLEMENTAL ARRANGEMENTS; EXPENSES; INSURANCE
[6.1] ((5.1)) Supplemental Arrangements. Subject to the prior
written consent of the Trustees and Manager, Subadviser may enter into
arrangements with other persons affiliated with Subadviser to better
fulfill its obligations under this Agreement for the provision of
certain personnel and facilities to Subadviser, provided that such
arrangements do not rise to the level of an advisory contract subject
to the requirements of Section 15 of the Investment Company Act.
[6.2] ((5.2)) Expenses. It is understood that the Portfolio
will pay all of its expenses other than those expressly stated to be
payable by Subadviser hereunder or by Manager under the Management
Agreement. Subadviser expressly agrees to pay the cost of all custody
services required by the Portfolio. Expenses paid by the Portfolios
will include, but not be limited to, (i) interest and taxes; (ii)
brokerage commissions and other costs in connection with the purchase
or sale of securities and other investment instruments; (iii) fees and
expenses of the Trustees other than those who are "interested persons"
of the Trust, Manager or Subadviser; (iv) legal and audit expenses;
(v) registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Trust
and the Portfolio's shares for distribution under state and federal
securities laws; (vii) expenses of printing and mailing reports and
notices and proxy material to shareholders of the Portfolio; (viii)
all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share based on the relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or
Management Contracts with the Manager, of 50% of insurance premiums
for fidelity bond and other coverage; (x) investment management fees;
(xi) expenses of typesetting for printing Prospectuses and Statements
of Additional Information and supplements thereto; (xii) expenses of
printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise,
including those relating to actions, suits or proceedings to which the
Portfolio is a party and any legal obligation that the Portfolio may
have to indemnify the Trustees, officers and/or employees or agents
with respect thereto. Subadviser shall not cause the Trust or the
Portfolio to incur any expenses, other than those reasonably necessary
for Subadviser to fulfill its obligations under this Agreement, unless
Subadviser has first notified Manager of its intention to do so.
[6.3] ((5.3)) Insurance. Subadviser shall maintain for the
duration hereof, with an insurer acceptable to Manager, a blanket bond
and professional liability (errors and omissions) insurance in amounts
reasonably acceptable to Manager. Subadviser agrees that such
insurance shall be considered primary and Subadviser shall assure that
such policies pay claims prior to similar policies that may be
maintained by Manager. In the event Subadviser fails to have in force
such insurance, that failure will not exclude Subadviser's
responsibility to pay up to the limit Subadviser would have had to pay
had said insurance been in force.
[VII.] ((VI.)) CONFLICTS OF INTEREST
[7.1] ((6.1)) Conflicts of Interest. It is understood that the
Trustees, officers, agents and shareholders of the Trust are or may be
interested in Subadviser as directors, officers, stockholders or
otherwise; that directors, officers, agents and stockholders of
Subadviser are or may be interested in the Trust as trustees,
officers, shareholders or otherwise; that Subadviser may be interested
in the Trust; and that the existence of any such dual interest shall
not affect the validity of this Agreement or of any transactions
hereunder except as otherwise provided in the Trust's Declaration of
Trust and the Articles of Incorporation of Subadviser, respectively,
or by specific provisions of applicable law.
[VIII.] ((VII.)) REGULATION
[8.1] ((7.1)) Regulation. Subadviser shall submit to all
regulatory and administrative bodies having jurisdiction over the
services provided pursuant to this Agreement any information, reports
or other material which any such body by reason of this Agreement may
reasonably request or require pursuant to applicable laws and
regulations.
[IX.] ((VIII.)) DURATION AND TERMINATION OF AGREEMENT
[9.1] ((8.1)) Effective Date; Duration; Continuance. (a) This
Agreement shall become effective on [June 4] ((_______)), 1999.
(b) Subject to prior termination pursuant to Section [9.2]
((8.2)) below, this Agreement shall continue in force until July
31, [1999] ((2000)) , and indefinitely thereafter, but only so
long as the continuance after such date shall be specifically approved
at least annually by vote of the Trustees or by a vote of a majority
of the outstanding voting securities of the Portfolio, provided that
in either event such continuance shall also be approved by the vote of
a majority of the Trustees who are not "interested persons" (as such
term is defined in the Investment Company Act) of any party to this
Agreement cast in person at a meeting called for the purpose of voting
on such approval.
(c) ((The required)) [S]((s)) hareholder approval of this
Agreement or any continuance of this Agreement [, if required,]
shall be effective with respect to the Portfolio if a majority of the
outstanding voting securities of the series (as defined in Rule
18f-2(h) under the Investment Company Act) of shares of the Portfolio
votes to approve this Agreement or its continuance.
[9.2] ((8.2)) Termination and Assignment . (((a))) This
Agreement may be terminated at any time, upon sixty days' written
notice, without the payment of any penalty, (i) by the Trustees, (ii)
by the vote of a majority of the outstanding voting securities of the
Portfolio; (iii) by Manager, or (iv) by Subadviser.
(b) This Agreement will terminate automatically, without the payment
of any penalty, (i) in the event of its assignment (as defined in the
Investment Company Act) or (ii) in the event the Management Contract
is terminated for any reason.
[9.3] ((8.3)) Definitions. The terms "registered investment
company," "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the Investment Company Act as now
in effect or as hereafter amended, and subject to such orders or
no-action letters as may be granted by the Securities and Exchange
Commission ((("Commission"))).
[X.] ((IX.)) REPRESENTATIONS, WARRANTIES AND COVENANTS
[10.1] ((9.1)) Representations of the Portfolio. The Trust, on
behalf of the Portfolio, represents and warrants that:
(i) the Trust is a business trust established pursuant to the laws
of the Commonwealth of Massachusetts;
(ii) the Trust is duly registered as an investment company under the
Investment Company Act and the Portfolio is a duly constituted series
portfolio thereof;
(iii) the execution, delivery and performance of this Agreement are
within the Trust's powers, have been and remain duly authorized by all
necessary action (including without limitation all necessary approvals
and other actions required under the Investment Company Act) and will
not violate or constitute a default under any applicable law or
regulation or of any decree, order, judgment, agreement or instrument
binding on the Trust or the Portfolio;
(iv) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding obligation
enforceable against the Trust and the Portfolio in accordance with its
terms.
[10.2] ((9.2)) Representations of the Manager. The Manager
represents, warrants and agrees that:
(i) Manager is a corporation established pursuant to the laws of the
Commonwealth of Massachusetts;
(ii) Manager is duly registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act");
(iii) Manager has been duly appointed by the Trustees and
Shareholders of the Portfolio to provide investment services to the
Portfolio as contemplated by the Management Contract.
(iv) the execution, delivery and performance of this Agreement are
within Manager's powers, have been and remain duly authorized by all
necessary corporate action and will not violate or constitute a
default under any applicable law or regulation or of any decree,
order, judgment, agreement or instrument binding on Manager;
(v) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(vi) this Agreement constitutes a legal, valid and binding
obligation enforceable against Manager.
[10.3] ((9.3)) Representations of Subadviser. Subadviser
represents, warrants and agrees that:
(i) Subadviser is a New York banking corporation established
pursuant to the laws of the State of New York;
(ii) Subadviser is duly registered as an "investment adviser" under
the Advisers Act; or is a "bank" as defined in Section 202 (a) (2) of
the Advisers Act or an "insurance company" as defined in Section 202
(a) (2) of the Advisers Act.
(iii) the execution, delivery and performance of this Agreement are
within Subadviser's powers, have been and remain duly authorized by
all necessary corporate action and will not violate or constitute a
default under any applicable law or regulation or of any decree,
order, judgment, agreement or instrument binding on Subadviser;
(iv) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding obligation
enforceable against Subadviser.
[10.4] ((9.4)) Covenants of the Subadviser. (a) Subadviser
will promptly notify the Trust and Manager in writing of the
occurrence of any event which could have a material impact on the
performance of its obligations pursuant to this Agreement, including
without limitation:
(i) the occurrence of any event which could disqualify Subadviser
from serving as an investment adviser of a registered investment
company pursuant to Section 9 (a) of the Investment Company Act or
otherwise;
(ii) any material change in the Subadviser's overall business
activities that may have a material adverse affect on the Subadviser's
ability to perform under its obligations under this Agreement;
(iii) any event that would constitute a change in control of
Subadviser;
(iv) any change in the portfolio manager of the Portfolio; and
(v) the existence of any pending or threatened audit,
investigation, complaint, examination or other inquiry (other than
routine regulatory examinations or inspections) relating to the
Portfolio conducted by any state or federal governmental regulatory
authority.
(b) Subadviser agrees that it will promptly supply Manager with
copies of any material changes to any of the documents provided by
Subadviser pursuant to Section [4.1] ((3.1)) .
[XI.] ((X.)) MISCELLANEOUS PROVISIONS
[11.1] ((10.1)) Use of Subadviser's Name. Neither the Trust
nor Manager will use the name of Subadviser, or any affiliate of
Subadviser, in any prospectus, advertisement sales literature or other
communication to the public except in accordance with such policies
and procedures as shall be mutually agreed to in writing by the
Subadviser and the Manager.
[11.2] ((10.2)) Use of Trust or Manager's Name. Subadviser
will not use the name of Manager, the Trust or the Portfolio in any
prospectus, advertisement, sales literature or other communication to
the public except in accordance with such policies and procedures as
shall be mutually agreed to in writing by the Subadviser and the
Manager.
[11.3] ((10.3)) Amendments. This Agreement may [only be amended
with the prior written consent of each of the parties hereto and if
such amendment is specifically approved (i) by the vote of a majority
of the outstanding voting securities of the Portfolio, and (ii) by the
vote of a majority of the Trustees who are not interested persons (as
such term is defined in the Investment Company Act) of any person to
this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be
effective with respect to the Portfolio if a majority of the
outstanding voting securities of the Portfolio vote to approve the
amendment] ((be modified by mutual consent of the Manager, the
Subadviser and the Portfolio subject to the provisions of Section 15
of the Investment Company Act, as modified by or interpreted by any
applicable order or orders of the Commission or any rules or
regulations adopted by, or interpretive releases of, the Commission)).
[11.4] ((10.4)) Entire Agreement. This Agreement contains the
entire understanding and agreement of the parties with respect to the
subject hereof.
[11.5] ((10.5)) Captions. The headings in the sections of this
Agreement are inserted for convenience of reference only and shall not
constitute a part of the Agreement.
[11.6] ((10.6)) Notices. All notices required to be given
pursuant to this Agreement shall be delivered or mailed to the last
known business address of the Trust, Manager or Subadviser, as the
case may be, in person or by registered mail or a private mail or
delivery service providing the sender with notice of receipt. Notice
shall be deemed given on the date delivered or mailed in accordance
with this Section [11.6] ((10.6)) .
[11.7] ((10.7)) Severability. Should any portion of this
Agreement, for any reason, be held to be void at law or in equity, the
Agreement shall be construed, insofar as is possible, as if such
portion had never been contained herein.
[11.8] ((10.8)) Governing Law. The provisions of this
Agreement shall be construed and interpreted in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to
the choice of law provisions thereof), or any of the applicable
provisions of the Investment Company Act. To the extent that the laws
of the Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment
Company Act, the latter shall control.
[11.9] ((10.9)) Limitation of Liability. A copy of the
Declaration of Trust establishing the Trust, dated July 10,
19 87 , together with all amendments, is on file in the office of
the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this Agreement is not executed on behalf of any of
the Trustees as individuals and no Trustee, shareholder, officer,
employee or agent of the Trust shall be held to any personal
liability, nor shall resort be had to their private property, for the
satisfaction of any obligation or claim, in connection with the
affairs of the Trust or the Portfolio, but only the assets belonging
to the Portfolio shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their duly authorized officers as of the
date first mentioned above.
SIGNATURE LINES OMITTED
APPENDIX A
Pursuant to Section 1.6 of the Subadvisory Agreement among Fidelity
Concord Street Trust (the "Trust"), on behalf of {NAME OF PORTFOLIO}
(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 {FOR SPARTAN U.S. EQUITY INDEX FUND:
0.006% (0.6 basis points)} {FOR SPARTAN TOTAL MARKET INDEX FUND:
0.0125% (1.25 basis points)} {FOR SPARTAN EXTENDED MARKET INDEX FUND:
0.0125% (1.25 basis points)} {FOR SPARTAN INTERNATIONAL INDEX FUND:
0.065% (6.5 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. {FOR SPARTAN INTERNATIONAL INDEX FUND
ONLY: In addition, Manager shall pay Subadviser a monthly fee equal to
$35 for each securities transaction executed on behalf of the
Portfolio during such month, provided that such transaction fee shall
not exceed in the aggregate $200,000 per annum.}
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
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE
RATIOS (A)
<TABLE>
<CAPTION>
INVESTMENT OBJECTIVE AND FUND FISCAL YEAR END (A) AVERAGE NET ASSETS RATIO OF NET ADVISORY FEES
(MILLIONS)(B) TO AVERAGE NET ASSETS PAID
TO FMR (C)(D)
<S> <C> <C> <C>
INDEX FUNDS
Variable Insurance Products II: 12/31/98 $ 2,874.6 0.17%*
Index 500
Spartan Extended Market Index 2/28/99 49.4 0.00*
Spartan International Index 2/28/99 33.9 0.00*
Spartan Total Market Index 2/28/99 98.8 0.00*
Spartan U.S. Equity Index 2/28/99 13,107.3 0.01*
Spartan Market Index 4/30/99 6,539.8 0.03*
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart.
(b) Average net assets are computed on the basis of average net
assets of each fund at the close of business on each business day
throughout its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or
due from FMR pursuant to voluntary or state expense limitations. Funds
so affected are indicated by an (*).
(d) For Spartan Extended Market Index, Spartan International Index,
and Spartan Total Market Index, the funds paid sub-advisory fees of
0.06%, 0.01%, and 0.02%, respectively, of their average net assets to
Bankers Trust Company. For Variable Insurance Products II: Index 500,
Spartan U.S. Equity Index, and Spartan Market Index, the funds paid
sub-advisory fees of less than 0.01% of their average net assets to
Bankers Trust Company. Sub-advisory fees paid by the funds associated
with securities lending are not eligible for reimbursement.
EXHIBIT 4
BANKERS TRUST COMPANY PROPRIETARY FUNDS
<TABLE>
<CAPTION>
<S> <C> <C>
FUND NET ASSETS UNDER MANAGEMENT ADVISORY FEES PAYABLE TO BT
5-31-99
S&P INDEX FUNDS
Equity Index Portfolio (a) (b) $ 6,607,007,085 0.075%
Includes the following feeder
funds:
BT Inst'l: Equity 500 Index $ 2,391,761,781
Fund (c)
BT Pyramid Investment Equity $ 929,474,411
500 Index (d)
USAA S&P 500 Index (e) $ 2,713,859,248
Amer AADV: S&P 500 - AMR $ 322,610,586
Class (f)
Amer AADV: S&P 500 - $ 3,632,960
Mileage Fund (f)
Scudder S&P 500 Index (g) $ 244,805,518
BT Insur: Equity 500 Index $ 111,273,342 0.20%
(Variable Annuity) (a) (h)
EAFE INDEX FUNDS
BT Inv Port: EAFE Equity $ 58,523,081 0.25%
Index Portfolio (a) (b)
Includes the following feeder
fund:
BT ADV: EAFE Equity Index $ 58,545,887
Fund - Inst'l Cl (c)
BT Insur: EAFE Equity Index $ 42,502,488 0.45%
Fund (Variable Annuity) (a)
(h)
RUSSELL 2000 INDEX FUNDS
BT Inv Port: Small Cap Index $ 120,320,401 0.15%
Portfolio (a) (b)
Includes the following feeder
fund:
BT ADV: Small Cap Index Fund $ 89,651,365
- - Inst'l Cl (c)
BT Insur: Small Cap Index $ 31,853,002 0.35%
Fund (Variable Annuity) (a)
(h)
</TABLE>
(a) Information pertaining to advisory fees is shown before expense
waivers and/or reimbursements, if any, are applied.
(b) Master portfolio not available for direct retail purchase.
(c) Feeder fund available to institutional investors through
BT.
(d) Feeder fund available to retail investors through BT.
(e) Feeder fund available to customers of United States Automobile
Association and retail public.
(f) Feeder fund available to customers of American Airlines.
(g) Feeder fund available to customers of Scudder, Stevens & Clark:
commenced operations on August 29, 1997.
(h) Available only through variable annuity products: the EAFE
Equity Index Fund and Small Cap Index Fund of the BT Insurance Funds
Trust commenced operations on August 22, 1997.
BANKERS TRUST COMPANY THIRD PARTY SUB-ADVISED FUNDS
<TABLE>
<CAPTION>
FUND ASSETS UNDER MANAGEMENT 5-31-99 FEE SCHEDULE
<S> <C> <C>
VALIC - American General A monthly fee computed at the
Series Portfolio: $ 814,774,297 annual rate of 0.03% on the
MidCap Index Fund (a) first $300 million and 0.02%
on assets over $300 million
for the MidCap Index Fund,
0.02% on the first $2
billion and 0.01% on assets
over $2 billion for the
Stock Index Fund and 0.03%
on the first $150 million
and 0.02% on assets over
$150 million for the Small
Cap Index Fund.
Notwithstanding the above
provision, VALIC is required
to pay a minimum annual
sub-advisory fee of $50,000
to BT for the Small Cap
Index Fund. There are no
minimum sub-advisory fees
for the Stock Index Fund or
the MidCap Index Fund. The
Investment Sub-Advisory
Agreements require that each
Sub-Adviser promptly reduce
its monthly fee by the
amount of any commission,
tender and exchange offer
solicitation fees, other
fees or similar payments
received by the Sub-Adviser,
or any affiliated person of
the Sub-Adviser, in
connection with Sub-Advised
Fund portfolio transactions.
Stock Index Fund (a) $ 4,624,973,419
Small Cap Index Fund (a) $ 223,185,980
VALIC - American General A monthly fee computed at the
Series Portfolio Company 2 $ 12,489,608 annual rate of 0.03% of the
(Class A Shares, Class B average daily net asset
Shares): values of the portion of the
Stock Index Fund (a) Small Cap Value Fund
portfolio that BT manages.
With respect to the Stock
Index Fund, VALIC shall pay
to BT a monthly fee computed
at the annual rate of 0.02%
of the first $2 billion and
0.01% of average daily net
asset values on the excess
over $2 billion. VALIC
shall pay BT a monthly fee
computed at the annual rate
of 0.03% of the first $300
million and 0.02% of average
daily net asset values on
the excess over $300 million
of the MidCap Index Fund,
and 0.03% of the first $150
million and 0.02% of average
daily net asset values on
the excess over $150 million
of the Small Cap Index Fund.
MidCap Index Fund (a) $ 6,585,995
Small Cap Index Fund (a) $ 6,109,550
Small Cap Value Fund (a) (b) $ 2,904,138
American General Series A monthly fee computed at the
Portfolio Company 3: $ 3,273,066 annual rate of 0.03% of the
Small Cap Value Fund (a) (b) average daily net asset
value of the portion of the
Small Cap Value Fund
portfolio that BT manages.
EQ Advisors Trust:
BT Equity 500 Index Fund (a) $ 392,561,486 0.05% of the Portfolio's
average daily net assets
BT Small Company Index Fund (a) $ 41,807,938 0.05% of the Portfolio's
average daily net assets
BT International Equity Index $ 62,195,249 0.15% of the Portfolio's
Fund (a) average daily net assets
FUND ASSETS UNDER MANAGEMENT 5-31-99 FEE SCHEDULE
Pacific Mutual: A fee is paid at the
Equity Index Portfolio (a) $ 1,808,280,989 beginning of each calendar
quarter, based on an annual
percentage of the combined
daily net assets of the
Equity Index and Small-Cap
Index Portfolios, according
to the following schedule,
subject to a minimum annual
fee of $100,000: 0.08% on
first $100 million; 0.04% on
next $100 million; 0.02% on
excess.
Small-Cap Index Portfolio (a) $ 42,738,313
Scudder Kemper Investments The fee paid to the
Inc.: $ 464,922,428 Sub-Adviser is calculated on
AARP U.S. Stock Index Fund (a) a quarterly basis and
depends on the level of
total assets in the AARP
U.S. Stock Index Fund. The
fee rate decreases as the
level of total assets for
the Fund increases. The fee
rate for each level of
assets is: 0.07% of the
first $100 million of
average daily net assets,
0.03% of such assets in
excess of $100 million, and
0.01% of such assets in
excess of $200 million with
a minimum annual fee of
$75,000.
SunAmerica Asset Management
Corporation: $ 5,142,375 0.10% - first $500 million
Large-Cap Growth Portfolio 0.03% - over $500 million
(a) (b)
Large-Cap Composite $ 5,308,328 0.05% - first $500 million
Portfolio (a) (b) 0.03% - over $500 million
Large-Cap Value Portfolio $ 5,470,359 0.10% - first $500 million
(a) (b) 0.03% - over $500 million
Mid-Cap Growth Portfolio (a) $ 5,380,426 0.10% - first $500 million
(b) 0.03% - over $500 million
Mid-Cap Value Portfolio (a) $ 5,504,588 0.10% - first $500 million
(b) 0.03% - over $500 million
Small-Cap Portfolio (a) (b) $ 5,350,213 0.07% - first $500 million
0.03% - over $500 million
International Equity $ 5,069,965 0.15% - first $500 million
Portfolio (a) (b) 0.05% - over $500 million
Diversified Fixed Income $ 5,245,870 0.12% - first $500 million
Portfolio (a) (b) 0.08% - over $500 million
For all SunAmerica Portfolios
listed here, the aggregate
annual fees paid to
Sub-Adviser are subject to
the following minimum:
First Year (April 1999
through March 2000) - no
minimum; Second Year (April
2000 through March 2001) -
$300,000 total for the
Portfolios combined; Third
Year (April 2001, through
March 2002) - $600,000 total
for the Portfolios combined;
Fourth Year (April 2002,
through March 2003) -
$850,000 total for the
Portfolios combined; Each
Subsequent Year (beginning
April 2003) - $850,000 total
for the Portfolios combined.
</TABLE>
(a) Information pertaining to advisory fees is shown before expense
waivers and/or reimbursements, if any, are applied.
(b) BT acts as Sub-Adviser of the portion of the portfolio of this
fund which invests according to an investment strategy that seeks to
replicate a securities index.
EXHIBIT 5
BANKERS TRUST COMPANY - DIRECTORS
NAME AND PRINCIPAL OCCUPATION BUSINESS ADDRESS
Mr. Josef Ackermann, Member, Deutsche Bank AG Taunusanlage
Board of Managing Directors, 12 D-60262 Frankfurt am Main
Deutsche Bank AG Federal Republic of Germany
Mr. Robert B. Allardice III, Deutsche Bank Americas
Executive Vice President, Holding Corp. 31 West 52nd
Deutsche Bank Americas Street New York, New York
Holding Corp. 10019
Mr. George B. Beitzel, 29 King Street Chappaqua, NY
Director of various 10514-3432
corporations
Mr. William R. Howell, J.C. Penney Company, Inc.
Chairman Emeritus, J.C. P.O. Box 10001 Dallas, TX
Penney Company, Inc. 75301-1109
Mr. Hermann-Josef Lamberti, Deutsche Bank AG Taunusanlage
Member, Board of Managing 12 D-60262 Frankfurt am Main
Directors, Deutsche Bank AG Federal Republic of Germany
*Mr. Frank N. Newman, Bankers Trust Company 130
Chairman of the Board, Chief Liberty Street New York, NY
Executive Officer and 10006
President, Bankers Trust
Corporation and Bankers
Trust Company
Mr. John A. Ross, Regional Deutsche Bank Americas
Chief Executive Officer, Holding Corp. 31 West 52nd
Deutsche Bank Americas Street New York, New York
Holding Corp. 10019
*Effective June 30, 1999,
Frank N. Newman resigned as
Chairman of the Board, Chief
Executive Officer and
President, Bankers Trust
Corporation and Bankers
Trust Company. It is
anticipated that the
vacancies that resulted from
Mr. Newman's resignation
will be filled at the next
Board of Directors meeting,
which is currently scheduled
to take place on July 22,
1999.
CON-pxs-0799 CUSIP#315911206/FUND#650
1.720680.100 CUSIP#315911503/FUND#398
CUSIP#315911602/FUND#399
CUSIP#315911404/FUND#397
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY CONCORD STREET TRUST: SPARTAN U.S. EQUITY INDEX FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Marvin L. Mann , and Eric D. Roiter, or any one
or more of them, attorneys, with full power of substitution, to vote
all shares of FIDELITY CONCORD STREET TRUST as indicated above which
the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on September 15, 1999, at 10:00 a.m.
and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if
only one votes and acts, then by that one. This Proxy shall be voted
on the proposals described in the Proxy Statement as specified on the
reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your
name appears on this Proxy. When signing in
a fiduciary capacity, such as executor,
administrator, trustee, attorney, guardian,
etc., please so indicate. Corporate and
partnership proxies should be signed by an
authorized person indicating the person's title.
Date , 1999
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(650, 397, 398, 399 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Please fold and detach card at perforation before mailing .
- ----------------------------------------------------------------------
Please vote by filling in the boxes below.
FOR AGAINST ABSTAIN
1(a). To approve an interim [ ] [ ] [ ] 1(a).
sub-advisory agreement with
Bankers Trust Company for
the fund.
1(b). To approve a new sub-advisory [ ] [ ] [ ] 1(b).
agreement with Bankers Trust
Company for the fund.
2. To approve a new [ ] [ ] [ ] 2.
"manager-of-managers"
arrangement for the fund.
CON-pxc-0799 cusip # 315911206 # 650 HH
cusip # 315911404 # 397 HH
cusip # 315911503 # 398 HH
cusip # 315911602 # 399 HH
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY CONCORD STREET TRUST: SPARTAN EXTENDED MARKET INDEX FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Marvin L. Mann , and Eric D. Roiter, or any one
or more of them, attorneys, with full power of substitution, to vote
all shares of FIDELITY CONCORD STREET TRUST as indicated above which
the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on September 15, 1999, at 10:00 a.m.
and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if
only one votes and acts, then by that one. This Proxy shall be voted
on the proposals described in the Proxy Statement as specified on the
reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name
appears on this Proxy. When signing in a
fiduciary capacity, such as executor,
administrator, trustee, attorney,
guardian, etc., please so indicate.
Corporate and partnership proxies should
be signed by an authorized person
indicating the person's title.
Date , 1999
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(650, 397, 398, 399 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Please fold and detach card at perforation before mailing .
- ----------------------------------------------------------------------
Please vote by filling in the boxes below .
FOR AGAINST ABSTAIN
1(a). To approve an interim [ ] [ ] [ ] 1(a).
sub-advisory agreement with
Bankers Trust Company for
the fund.
1(b). To approve a new sub-advisory [ ] [ ] [ ] 1(b).
agreement with Bankers Trust
Company for the fund.
2. To approve a new [ ] [ ] [ ] 2.
"manager-of-managers"
arrangement for the fund.
CON-pxc-0799 cusip # 315911206 # 650 HH
cusip # 315911404 # 397 HH
cusip # 315911503 # 398 HH
cusip # 315911602 # 399 HH
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY CONCORD STREET TRUST: SPARTAN INTERNATIONAL INDEX FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Marvin L. Mann , and Eric D. Roiter, or any one
or more of them, attorneys, with full power of substitution, to vote
all shares of FIDELITY CONCORD STREET TRUST as indicated above which
the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on September 15, 1999, at 10:00 a.m.
and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if
only one votes and acts, then by that one. This Proxy shall be voted
on the proposals described in the Proxy Statement as specified on the
reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name
appears on this Proxy. When signing in
a fiduciary capacity, such as executor,
administrator, trustee, attorney,
guardian, etc., please so indicate.
Corporate and partnership proxies should
be signed by an authorized person
indicating the person's title.
Date , 1999
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(650, 397, 398, 399 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Please fold and detach card at perforation before mailing .
- ----------------------------------------------------------------------
Please vote by filling in the boxes below.
FOR AGAINST ABSTAIN
1(a). To approve an interim [ ] [ ] [ ] 1(a).
sub-advisory agreement with
Bankers Trust Company for
the fund.
1(b). To approve a new sub-advisory [ ] [ ] [ ] 1(b).
agreement with Bankers Trust
Company for the fund.
2. To approve a new [ ] [ ] [ ] 2.
"manager-of-managers"
arrangement for the fund.
CON-pxc-0799 cusip # 315911206 # 650 HH
cusip # 315911404 # 397 HH
cusip # 315911503 # 398 HH
cusip # 315911602 # 399 HH
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY CONCORD STREET TRUST: SPARTAN TOTAL MARKET INDEX FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Marvin L. Mann , and Eric D. Roiter, or any one
or more of them, attorneys, with full power of substitution, to vote
all shares of FIDELITY CONCORD STREET TRUST as indicated above which
the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on September 15, 1999, at 10:00 a.m.
and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if
only one votes and acts, then by that one. This Proxy shall be voted
on the proposals described in the Proxy Statement as specified on the
reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name
appears on this Proxy. When signing in a
fiduciary capacity, such as executor,
administrator, trustee, attorney,
guardian, etc., please so indicate.
Corporate and partnership proxies should
be signed by an authorized person
indicating the person's title.
Date , 1999
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(650, 397, 398, 399 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Please fold and detach card at perforation before mailing.
- ----------------------------------------------------------------------
Please vote by filling in the boxes below.
FOR AGAINST ABSTAIN
1(a). To approve an interim [ ] [ ] [ ] 1(a).
sub-advisory agreement with
Bankers Trust Company for
the fund.
1(b). To approve a new sub-advisory [ ] [ ] [ ] 1(b).
agreement with Bankers Trust
Company for the fund.
2. To approve a new [ ] [ ] [ ] 2.
"manager-of-managers"
arrangement for the fund.
CON-pxc-0799 cusip # 315911206 # 650 HH
cusip # 315911404 # 397 HH
cusip # 315911503 # 398 HH
cusip # 315911602 # 399 HH
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
SPARTAN(Registered trademark) U.S. EQUITY INDEX FUND
SPARTAN TOTAL MARKET INDEX FUND
SPARTAN EXTENDED MARKET INDEX FUND
SPARTAN INTERNATIONAL INDEX FUND
Dear Shareholder:
I am writing to let you know that a special meeting of shareholders of
the Fidelity funds mentioned above will be held on September 15, 1999.
The purpose of the meeting is to vote on several important proposals
that affect the funds and your investment in them. As a shareholder,
you have the opportunity to voice your opinion on the matters that
affect your fund(s). This package contains information about the
proposals and the materials to use when voting by mail.
Please read the enclosed materials and cast your vote on the proxy
card(s). PLEASE VOTE AND RETURN YOUR CARD(S) PROMPTLY. YOUR VOTE IS
EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE.
All of the proposals have been carefully reviewed by the Board of
Trustees. The Trustees, most of whom are not affiliated with
Fidelity, are responsible for protecting your interests as a
shareholder. The Trustees believe these proposals are in the best
interest of shareholders. They recommend that you vote FOR each
proposal.
The following Q&A is provided to assist you in understanding the
proposals. Each of the proposals is described in greater detail in
the enclosed proxy statement.
VOTING IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED. To cast
your vote, simply complete the proxy card(s) enclosed in this package.
Be sure to sign the card(s) before mailing it in the postage-paid
envelope.
If you have any questions before you vote, please call Fidelity at
1-800-544-8888. We'll be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposals
Please read the full text of the enclosed proxy statement. Below is a
brief overview of the proposals to be voted upon. Your vote is
important. We appreciate you placing your trust in Fidelity and look
forward to helping you achieve your financial goals.
WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
You are being asked to vote on the following proposals:
1(a). To approve an interim sub-advisory agreement with Bankers Trust
Company for the funds.
1(b). To approve a new sub-advisory agreement with Bankers Trust
Company for the funds.
2. To approve a new "manager-of-managers" arrangement for the funds.
WHY IS AN INTERIM SUB-ADVISORY AGREEMENT BEING PROPOSED FOR EACH FUND?
(PROPOSAL 1(A))
Each fund's current sub-adviser, Bankers Trust Company (BT), is a
wholly owned subsidiary of Bankers Trust Corporation (BT Corporation).
On June 4, 1999, a wholly owned subsidiary of Deutsche Bank AG merged
with BT Corporation (BT Merger). The BT Merger may be considered a
change of control of BT, resulting in the assignment and automatic
termination of each fund's sub-advisory agreement with BT.
On May 25, 1999, the Securities and Exchange Commission (SEC) granted
BT an exemptive order permitting each fund's interim sub-advisory
agreement to take effect, without prior shareholder approval, on June
4, 1999. Pursuant to the order, each fund's sub-advisory agreement
may remain in effect, for an interim period of up to 150 days, through
the date on which it is approved (or disapproved) by the fund's
shareholders.
Therefore, in order for BT to continue to serve as sub-adviser to a
fund, it is necessary for the fund's shareholders to approve an
interim sub-advisory agreement with BT. Other than the commencement
and termination dates, each fund's interim sub-advisory agreement is
identical to the sub-advisory agreement that was in effect with
respect to the fund prior to the BT Merger. BT receives fees at the
same rates and expects to continue to provide the same level and
quality of investment management and securities lending services to
the funds under the interim sub-advisory agreements as it did under
the prior sub-advisory agreements. Please refer to the proxy
statement for specific details of the interim sub-advisory agreement
proposal.
WHY IS A NEW SUB-ADVISORY AGREEMENT BEING PROPOSED FOR EACH FUND?
(PROPOSAL 1(B))
The main purpose of this proposal is to separate into different
contracts the investment management and securities lending services
that BT currently provides to each fund under a single contract.
Thus, if shareholders of a fund approve this proposal, BT will
continue to provide investment management services to the fund under
the new sub-advisory agreement (which would then replace the interim
sub-advisory agreement), but BT will provide securities lending
services to the fund under a separate, new securities lending
agreement. Shareholders are not being asked to approve, and
shareholder approval would not be required to amend, the new
securities lending agreement. It is anticipated that the funds will
benefit by separating the investment management and securities lending
services into different contracts. Please refer to the proxy
statement for specific details of the new sub-advisory agreement
proposal.
WHAT IS A "MANAGER-OF-MANAGERS" ARRANGEMENT? (PROPOSAL 2)
A manager-of-managers arrangement would permit FMR, with the approval
of the Board of Trustees, to hire, terminate, or replace sub-advisers
(including BT) and to materially modify a sub-advisory agreement, all
without shareholder approval. The proposed arrangement may enable a
fund to operate more efficiently because FMR would be able to make
these kinds of sub-advisory changes from time to time without the
expenses and delays associated with obtaining shareholder approval of
the changes.
If shareholders approve the arrangement, the Board of Trustees will
consider and approve any sub-advisory changes that FMR proposes under
the arrangement to ensure that the changes are in the best interest of
a fund and its shareholders. The Board of Trustees believes it is
appropriate to allow FMR to negotiate and renegotiate sub-advisory
arrangements for the funds without obtaining shareholder approval in
light of FMR's significant experience and expertise.
On May 19, 1999, FMR and the trust, on behalf of each fund, filed with
the SEC an exemptive application seeking authorization for each fund
to operate under a manager-of-managers arrangement, subject to
shareholder approval and certain other conditions. A fund cannot
implement such an arrangement unless it receives the necessary SEC
authorization. There can be no assurance that the SEC will grant the
requested authorization.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED EACH PROPOSAL?
Yes. The Board of Trustees has unanimously approved all of the
proposals and recommends that you vote to approve them.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of a fund on the record date. The record date is
July 19, 1999.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card(s) and mailing it in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposals or
how to vote your shares, please call Fidelity at 1-800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."
