SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
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☒ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☐ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material under Rule 14a-12 |
Fidelity Commonwealth Trust II
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
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☐ | 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:
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(2) | Aggregate number of securities to which transaction applies:
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
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(4) | Proposed maximum aggregate value of transaction:
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(5) | Total Fee Paid:
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☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid:
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(2) | Form, Schedule or Registration Statement No.:
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(3) | Filing Party:
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(4) | Date Filed:
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Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be held on March 8, 2017
The Letter to Shareholders, Notice of Meeting, and Proxy Statement are available at www.proxyvote.com/proxy.
FIDELITY® INTERNATIONAL ENHANCED INDEX FUND
FIDELITY® LARGE CAP CORE ENHANCED INDEX FUND
FIDELITY® LARGE CAP GROWTH ENHANCED INDEX FUND
FIDELITY® LARGE CAP VALUE ENHANCED INDEX FUND
FIDELITY® MID CAP ENHANCED INDEX FUND
FIDELITY® SMALL CAP ENHANCED INDEX FUND
FUNDS OF FIDELITY COMMONWEALTH TRUST II
245 Summer Street, Boston, Massachusetts 02210
1-800-544-8544
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 Fidelity Commonwealth Trust II (the trust) will be held at an office of the trust, 245 Summer Street, Boston, Massachusetts 02210 (at the corner of Summer Street and Dorchester Avenue, next to Boston’s South Station) on March 8, 2017, at 8:30 a.m. Eastern Time (ET).
The purpose of the Meeting is to consider and act upon the following proposals and to transact such other business as may properly come before the Meeting or any adjournments thereof.
1. | To elect a Board of Trustees. |
2A. | To approve an amended and restated management contract between each fund and FMR Co., Inc. (FMRC). |
2B. | To terminate the expense contract between each fund and FMRC. |
The Board of Trustees has fixed the close of business on January 9, 2017 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, |
MARC R. BRYANT |
Secretary |
January 9, 2017
Your vote is important - please vote your shares promptly.
Shareholders are invited to attend the Meeting in person. Admission to the Meeting will be on a first-come, first-served basis and will require picture identification. Shareholders arriving after the start of the Meeting may be denied entry. Cameras, cell phones, recording equipment and other electronic devices will not be permitted. Fidelity reserves the right to inspect any persons or items prior to admission to the Meeting.
Any shareholder who does not expect to attend the Meeting is urged to vote using the touch-tone telephone or internet voting instructions that follow or by indicating voting instructions on the enclosed proxy card, dating and signing it, and returning 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 responding promptly, no matter how large or small your holdings may be. If you wish to wait until the Meeting to vote your shares, you will need to request a paper ballot at the Meeting in order to do so.
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 accountsshould 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 |
INSTRUCTIONS FOR VOTING BY TOUCH-TONE TELEPHONE
OR THROUGH THE INTERNET
1. | Read the proxy statement, and have your proxy card or notice handy. |
2. | Call the toll-free number or visit the web site indicated on your proxy card. |
3. | Enter the number found in the box on the front of your proxy card. |
4. | Follow the recorded or on-line instructions to cast your vote. |
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY COMMONWEALTH TRUST II:
FIDELITY® INTERNATIONAL ENHANCED INDEX FUND
FIDELITY® LARGE CAP CORE ENHANCED INDEX FUND
FIDELITY® LARGE CAP GROWTH ENHANCED INDEX FUND
FIDELITY® LARGE CAP VALUE ENHANCED INDEX FUND
FIDELITY® MID CAP ENHANCED INDEX FUND
FIDELITY® SMALL CAP ENHANCED INDEX FUND
TO BE HELD ON MARCH 8, 2017
This Proxy Statement is furnished in connection with a solicitation of proxies made by, and on behalf of, the Board of Trustees of Fidelity Commonwealth Trust II (the trust) to be used at the Special Meeting of Shareholders of Fidelity International Enhanced Index Fund, Fidelity Large Cap Core Enhanced Index Fund, Fidelity Large Cap Growth Enhanced Index Fund, Fidelity Large Cap Value Enhanced Index Fund, Fidelity Mid Cap Enhanced Index Fund, and Fidelity Small Cap Enhanced Index Fund (the funds) and at any adjournments thereof (the Meeting), to be held on March 8, 2017 at 8:30 a.m. Eastern Time (ET) at 245 Summer Street, Boston, Massachusetts 02210, an office of the trust and FMR Co., Inc. (FMRC), the funds’ investment adviser.
The following table summarizes the proposals applicable to each fund:
Proposal # | Proposal Description | Applicable Fund | Page | |||
1. | To elect a Board of Trustees. | All funds (voting together). | 3 | |||
2A. | To approve an amended and restated management contract between each fund and FMRC. | Each fund (voting separately). | 6 | |||
2B. | To terminate the expense contract between each fund and FMRC. | Each fund (voting separately). | 6 |
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 January 9, 2017. Supplementary solicitations may be made by mail, telephone, facsimile, electronic means or by personal interview by representatives of the trust. In addition, D.F. King & Co., Inc. (D.F. King) may be paid on a per-call basis to solicit shareholders by telephone on behalf of the funds at an anticipated cost of approximately $6,000 per fund. The funds may also arrange to have votes recorded by telephone. D.F. King may be paid on a per-call basis for vote-by-phone solicitations on behalf of the funds at an anticipated cost of approximately $1,500 per fund.
If the funds record votes by telephone or through the internet, 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 or through the internet may be revoked at any time before they are voted at the Meeting.
The expenses in connection with preparing this Proxy Statement and its enclosures and all solicitations will be borne by FMRC. FMRC 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 FMRC, the funds’ investment adviser, is 245 Summer Street, Boston, Massachusetts 02210. The principal business address of Geode Capital Management, LLC (Geode), sub-adviser to the funds, is One Post Office Square, 20th Floor, Boston, Massachusetts 02109. The principal business address of Fidelity Distributors Corporation (FDC), each fund’s principal underwriter and distribution agent, is 100 Salem Street, Smithfield, Rhode Island 02917.
If the enclosed proxy is executed and returned, or an internet or telephonic vote is delivered, that vote 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, by the trust’s receipt of a subsequent valid internet or telephonic vote, or by attending the Meeting and voting in person.
All proxies 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 properly executed proxy, it will be voted FOR the matters specified on the proxy. All shares that are voted and votes to ABSTAIN will be counted towards establishing a quorum, as will broker non-votes. (Broker non-votes are shares for which (i) the beneficial owner has not voted and (ii) the broker holding the shares does not have discretionary authority to vote on the particular matter.)
With respect to fund shares held in Fidelity individual retirement accounts (including Traditional, Rollover, SEP, SARSEP, Roth and SIMPLE IRAs), the IRA Custodian will vote those shares for which it has received instructions from shareholders only in accordance with such instructions. If Fidelity IRA shareholders do not vote their shares, the IRA Custodian will vote their shares for them, in the same proportion as other Fidelity IRA shareholders have voted.
With respect to Proposal 1, one-third of the trust’s outstanding voting securities entitled to vote constitutes a quorum for the transaction of business at the Meeting. With respect to Proposals 2A and 2B, one-third of the impacted fund’s outstanding voting securities entitled to vote constitutes a quorum for the transaction of business at the Meeting. 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 an 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. Please visit www.fidelity.com/proxies to determine the status of this scheduled Meeting.
Shares of each fund of the trust issued and outstanding as of [ ] are indicated in the following table:
Number of Shares Outstanding as of [ ] | ||||
Fidelity International Enhanced Index Fund | ||||
Fidelity Large Cap Core Enhanced Index Fund | ||||
Fidelity Large Cap Growth Enhanced Index Fund | ||||
Fidelity Large Cap Value Enhanced Index Fund | ||||
Fidelity Mid Cap Enhanced Index Fund | ||||
Fidelity Small Cap Enhanced Index Fund |
To the knowledge of the trust, substantial (5% or more) record and/or beneficial ownership of each fund on [ ] was as follows:
Fund | Owner Name | City | State | Ownership % | ||||||||||||
Fidelity International Enhanced Index Fund | ||||||||||||||||
Fidelity Large Cap Core Enhanced Index Fund | ||||||||||||||||
Fidelity Large Cap Growth Enhanced Index Fund | ||||||||||||||||
Fidelity Large Cap Value Enhanced Index Fund | ||||||||||||||||
Fidelity Mid Cap Enhanced Index Fund | ||||||||||||||||
Fidelity Small Cap Enhanced Index Fund |
To the knowledge of the trust, no [other] shareholder owned of record or beneficially more than 5% of the outstanding shares of the funds on that date.
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Certain shares are registered to Fidelity Management & Research Company (FMR) or an FMR affiliate. To the extent that FMR and/or another entity or entities of which FMR LLC is the ultimate parent has discretion to vote, these shares will be voted at the Meeting FOR the proposals. Otherwise, these shares will be voted in accordance with the plan or agreement governing the shares. Although the terms of the plans and agreements vary, generally the shares must be voted either (i) in accordance with instructions received from shareholders or (ii) in accordance with instructions received from shareholders and, for shareholders who do not vote, in the same proportion as certain other shareholders have voted.
Shareholders of record at the close of business on January 9, 2017 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, with fractional dollar amounts entitled to a proportional fractional vote.
For a free copy of each fund’s annual and/or semiannual report, call Fidelity at 1-800-544-8544, visit Fidelity’s web site at www.fidelity.com, or write to FDC at 100 Salem Street, Smithfield, Rhode Island 02917.
VOTE REQUIRED: Approval of Proposal 1 requires the affirmative vote of a plurality of the shares of the trust voted in person or by proxy at the Meeting. Approval of Proposals 2A and 2B requires the affirmative vote of a “majority of the outstanding voting securities” of the appropriate fund. Under the Investment Company Act of 1940 (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. With respect to Proposals 2A and 2B, votes to ABSTAIN and broker non-votes will have the same effect as votes cast AGAINST the proposal. With respect to Proposal 1, votes to ABSTAIN and broker non-votes will have no effect.
PROPOSAL 1
The purpose of this proposal is to elect a new Board of Trustees.
Fidelity’s fund business continues to expand and evolve. To better position the Board oversight structure for future initiatives, Fidelity proposes to transition the funds from the Fidelity Fixed Income and Asset Allocation Board of Trustees (current Board) to the Fidelity Sector Portfolios Board of Trustees (new Board), which currently oversees certain other Fidelity funds. The Trustees of the current Board (current Trustees), together with FMRC, believe moving oversight of the funds to the new Board would consolidate oversight of certain product offerings, resulting in greater efficiencies in Board reporting across the different boards that oversee the Fidelity funds.
In connection with moving oversight of the funds to the new Board, the new Board’s Trustees (new Trustees) must be put in place to oversee the funds. The 1940 Act requires that a shareholder meeting be held to elect Trustees under such circumstances.
The funds will transition under the new Board on or about the close of business on March 31, 2017, or, if later, immediately after the last election is held to elect Trustees in connection with this proposal. If the proposal is approved by the funds’ shareholders and the funds are transitioned under the new Board, the current Trustees will be asked to resign as Trustees of the funds effective on or about the close of business on March 31, 2017. Pursuant to the provisions of the Declaration of Trust, the number of Trustees is currently fixed at 11. It is expected that prior to the change in oversight of the funds, the current Board will vote to fix the number of Trustees for the Trust at six Trustees to accommodate the new Board structure. It is intended that the enclosed proxy will be voted for the nominees listed below unless such authority has been withheld in the proxy. The current Trustees fully expect that the environment of strong governance of the funds and protection of the interests of fund shareholders will continue under the new Board.
Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. The current Independent Trustees recommended each nominee. As of November 1, 2016, except for Donald F. Donahue and Carol B. Tomé, each of the nominees oversees 82 Fidelity funds. As of November 1, 2016, Mr. Donahue is a member of the Advisory Board of 82 Fidelity funds. Effective January 1, 2017, Ms. Tomé serves as a member of the Advisory Board of 82 Fidelity funds. If elected, each Trustee will oversee 89 Fidelity funds (assuming they are elected as such as part of all pending proxy solicitations).
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In the election of Trustees, those nominees receiving the highest number of votes cast at the Meeting, provided a quorum is present, shall be elected.
The nominees you are being asked to elect as Trustees of the funds are as follows:
Interested Nominee*:
Correspondence intended for the Interested Nominee (that is, the nominee that is an interested person (as defined in the 1940 Act)) may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Chairman of the Board of Trustees (2014-present)
Mr. Hogan serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* | Determined to be an “Interested Nominee” by virtue of, among other things, his affiliation with the trust or various entities under common control with FMR. |
+ | The information includes the nominee’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the nominee’s qualifications to serve as a Trustee, which led to the conclusion that the nominee should serve as a Trustee for each fund. |
Independent Nominees:
Correspondence intended for each Independent Nominee (that is, the nominees that are not interested persons (as defined in the 1940 Act)) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Donald F. Donahue (1950)
Mr. Donahue serves as a Member of the Advisory Board of other Fidelity funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
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David A. Rosow (1942)
Mr. Rosow serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity funds (2012-2013).
Garnett A. Smith (1947)
Mr. Smith serves as Trustee of other Fidelity funds. Prior to Mr. Smith’s retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Carol B. Tomé (1957)
Effective January 1, 2017, Ms. Tomé serves as a Member of the Advisory Board of other Fidelity funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Michael E. Wiley (1950)
Chairman of the Independent Trustees (2013-present)
Mr. Wiley serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ | The information includes the nominee’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the nominee’s qualifications to serve as a Trustee, which led to the conclusion that the nominee should serve as a Trustee for each fund. |
As of [ ], the Trustees and nominees for election as Trustees and the officers of the trust and each fund owned, in the aggregate, less than 1% of each fund’s outstanding shares.
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[During the period March 1, 2015 through October 31, 2016, no transactions were entered into by Trustees and nominees as Trustee of the trust involving more than 1% of the voting common, non-voting common and equivalent stock, or preferred stock of FMR LLC.]
If elected, the Trustees will hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. In case a vacancy shall for any reason exist, the remaining Trustees will fill such vacancy by appointing another Trustee, so long as, immediately after such appointment, at least two-thirds of the Trustees have been elected by shareholders. If, at any time, less than a majority of the Trustees holding office has been elected by the shareholders, the Trustees then in office will promptly call a shareholders’ meeting for the purpose of electing a Board of Trustees. Otherwise, there will normally be no meeting of shareholders for the purpose of electing Trustees.
Following the election, it is expected that the trust’s board will include one Interested Trustee and five Independent Trustees and will meet at least four times a year at regularly scheduled meetings. The new Board met seven times during the fiscal year ended February 29, 2016. For additional information about the committees of the new Trustees, refer to Appendix A “Board Structure and Oversight Function and Standing Committees of the Funds’ New Trustees.”
For more information about the current Trustees who are not nominees in this Proxy Statement, please see “Current Trustees, Advisory Board Members, and Officers of the Funds.” For additional information about the funds’ current Board structure and risk oversight function, and current and proposed standing committees of the funds’ Trustees, refer to the section entitled “Board Structure and Oversight Function and Standing Committees of the Funds’ Current Trustees.”
The dollar range of equity securities beneficially owned as of [ ] by each nominee and Trustee in each fund and in all funds in the aggregate within the same fund family overseen or to be overseen by the nominee is included in Appendix B.
Trustee compensation information for each fund covered by this proxy statement is included in Appendix C.
PROPOSAL 2
PROPOSAL 2A: TO APPROVE AN AMENDED AND RESTATED MANAGEMENT CONTRACT
PROPOSAL 2B: TO TERMINATE THE FUND’S EXPENSE CONTRACT
Introduction. Under each fund’s current management contract (each a Current Advisory Contract, and collectively, the Current Advisory Contracts), the fund pays a management fee to FMRC at a specified annual rate and FMRC is responsible for all “fund-level” (but not “class-level”) expenses, with certain exceptions. Separately, FMRC and each fund have also entered into an expense contract (each an Expense Contract, and collectively, the Expense Contracts), which obliges FMRC to pay all class-level expenses of each fund’s current share class to limit the total annual operating expenses, with certain exceptions, to a specified rate for each fund.
In an effort to increase each fund’s appeal to potential investors and to better position the funds for future growth, Fidelity is proposing to replace the two-part expense limitation structure with a more simplified all-inclusive fee management contract pursuant to which FMRC will be responsible for all fund-level and class-level expenses of each fund, with certain exceptions. Under the proposal, each fund’s all-inclusive fee rate will be lower than the rate currently specified in the fund’s Expense Contract, which is expected to provide an immediate benefit to existing shareholders. As a result, overall expenses for each fund are expected to decrease by at least 0.01% per year compared to the fund’s total annual operating expenses as of September 30, 2016. These changes would result in an estimated $1.6 million aggregate expense reduction for fund shareholders compared to the prior fiscal year.
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To implement this new structure, Fidelity has proposed that each fund’s shareholders (A) adopt an amended and restated management contract with FMRC (each a New Advisory Contract, and collectively, the New Advisory Contracts) and (B) terminate the fund’s Expense Contract. The current Board, including the Independent Trustees, has approved, and recommends that shareholders of each fund approve, the New Advisory Contracts with FMRC and termination of the funds’ Expense Contracts. If shareholders of one of the funds do not approve its New Advisory Contract or termination of its Expense Contract, the Current Advisory Contracts and Expense Contracts for all of the funds will remain in effect.
As discussed later in this Proxy Statement, Geode serves as sub-adviser to each fund. No changes are being made to the sub-advisory agreements with Geode in connection with this proposal.
Comparison of Advisory and Expense Contracts. For each fund, the table below sets forth: (i) the annual management fee rate payable to FMRC under its Current Advisory Contract; (ii) the total annual operating expenses limit set forth in the fund’s Expense Contract; and (iii) the all-inclusive annual management fee rate payable to FMRC under its New Advisory Contract, in each case expressed as a percentage of average net assets.
Fund | Management Fee Rate (Current Advisory Contract) | Total Annual Operating Expenses Limit (Expense Contract) | All-Inclusive Management Fee Rate (New Advisory Contract) | |||
Fidelity International Enhanced Index Fund | 0.47% | 0.62% | 0.59% | |||
Fidelity Large Cap Core Enhanced Index Fund | 0.30% | 0.45% | 0.39% | |||
Fidelity Large Cap Growth Enhanced Index Fund | 0.30% | 0.45% | 0.39% | |||
Fidelity Large Cap Value Enhanced Index Fund | 0.30% | 0.45% | 0.39% | |||
Fidelity Mid Cap Enhanced Index Fund | 0.45% | 0.60% | 0.59% | |||
Fidelity Small Cap Enhanced Index Fund | 0.52% | 0.67% | 0.64% |
As noted above, under the Current Advisory Contracts, FMRC is responsible for payment of fund-level (but not class-level) expenses, with certain exceptions. Specifically, the Current Advisory Contracts provide that FMRC is responsible for payment of all operating expenses of each fund with the exception of the following: interest, taxes, brokerage commissions and other costs in connection with the purchase or sale of securities and other investment instruments, fees and expenses of the Independent Trustees, transfer agent fees, Rule 12b-1 fees and other expenses allocable at the class level, and such non-recurring or extraordinary 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. FMRC and each fund have separately entered into an Expense Contract, which obliges FMRC to pay all class-level expenses of each fund’s current share class to limit the total annual operating expenses (excluding interest, taxes, securities lending costs, brokerage commissions, fees and expenses of the Independent Trustees, and extraordinary expenses) to the rate specified above. The Expense Contracts may not be amended to increase the fees or expenses payable by each fund’s current share class except by a vote of a majority of the Board of Trustees and by a vote of a majority of the outstanding voting securities of such class. The management fee paid to FMRC by each fund is reduced by an amount equal to the fees and expenses paid by the fund to the Independent Trustees.
Under the New Advisory Contracts, FMRC will be responsible for both fund-level and class-level expenses, with certain exceptions. Specifically, the New Advisory Contracts provide that FMRC, either itself or through an affiliate,
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undertakes to pay all operating expenses of each fund with the exception of the following: interest expenses with respect to borrowings by the fund, taxes, brokerage fees and commissions, fees and expenses of the Independent Trustees, expenses of printing and mailing proxy materials, expenses incidental to holding shareholder meetings (including proxy solicitations therefor) (Proxy Expenses), Rule 12b-1 fees, if any, and such non-recurring and/or extraordinary expenses as may arise, including costs of any litigation to which the fund may be or may be threatened to be a party, and any obligation it may have to indemnify its officers and Trustees with respect to litigation. As a result, if Proposals 2A and 2B are approved by shareholders, the New Advisory Contracts will cover all fund-level and class-level expenses currently covered by the Current Advisory Contracts and the Expense Contracts collectively with the exception of Proxy Expenses, which would no longer be a contractual obligation of FMRC, but would rather be evaluated on a case-by-case basis. The management fee paid to FMRC by each fund will continue to be reduced by an amount equal to the fees and expenses paid by the fund to the Independent Trustees.
Comparison of Management Fees and Total Expense Ratios. With respect to each fund, Appendix D shows the aggregate amount paid by each fund under the Current Advisory Contract for the fiscal year ended February 29, 2016, the amount each fund would have paid for the period if the New Advisory Contract had been in effect, and the difference between the two, expressed as a percentage of the aggregate amount paid under the Current Advisory Contract. Appendix E contains information for each fund showing current fees and expenses and pro forma fees and expenses assuming effectiveness of the New Advisory Contract and termination of the Expense Contract.
Proposed Amendments to Current Advisory Contracts. A copy of the form of the New Advisory Contract is included as Appendix F. Except for the changes discussed above, the form of New Advisory Contracts is substantially identical to the Current Advisory Contracts. For a detailed discussion of the Current Advisory Contracts, please refer to the section entitled “Current Advisory Contracts.” If the proposals are approved by shareholders, the New Advisory Contracts will take effect and the Expense Contracts will be terminated the first day of the first month following approval or at a later time as FMRC may deem appropriate under the circumstances, and will remain in effect through September 30, 2017, and thereafter, but only as long as their 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 by the vote of a majority of the outstanding shares of each fund.
If the New Advisory Contracts and termination of the Expense Contracts are not approved by the funds’ shareholders, (i) the Current Advisory Contracts will continue in effect through September 30, 2017, and thereafter only as long as their continuance is approved at least annually as above; and (ii) the Expense Contracts will continue in effect so long as the Current Advisory Contracts remain in effect. Approval of the new pricing structure for the funds requires that shareholders of each fund approve that fund’s New Advisory Contract and termination of that fund’s Expense Contract.
Matters Considered By the Board.
At its November 2016 meeting, the current Board, including the Independent Trustees (for purposes of this section, the Board) voted to approve the New Advisory Contracts between FMRC and each fund to amend the management fee payable by each fund. The Board considered that each fund’s New Advisory Contract will not take effect unless the New Advisory Contracts for all of the funds are approved by the funds’ respective shareholders.
The Board noted that, under each fund’s Current Advisory Contract, the funds pay a management fee to FMRC. The Board considered that, under each fund’s New Advisory Contract, each fund will pay a monthly all-inclusive management fee to FMRC at an annual rate for the fund. The all-inclusive fee will provide shareholders with stable and fixed expenses at a lower level than shareholders currently pay and that moving to a more simplified expense structure will provide an immediate benefit to existing shareholders, increase each fund’s appeal to potential investors and better position the funds for future growth.
The Board considered that each fund’s management fee under the New Advisory Contract will continue to result in the fund’s management fee rate ranking below median of the management fee rates of its competitor funds based on the competitive mapped group data provided to the Board in connection with the annual renewal of advisory contracts in September 2016. As a result of the all-inclusive management fee rates, the Board noted that total expenses incurred by shareholders of each fund will decrease by at least one basis point and in some cases by up to six basis points.
The Board considered that the approval of the New Advisory Contracts will not result in any changes to (i) the investment process or strategies employed in the management of the funds’ assets; (ii) the nature, extent and quality of services provided to each fund; or (iii) the day-to-day management of each fund and the personnel primarily responsible for such management. The Board noted that, under the Current Advisory Contracts, FMRC or an affiliate undertakes to
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pay all operating expenses of the funds, except transfer agent fees, Independent Trustee expenses, interest, taxes, brokerage commissions and extraordinary expenses. Additionally, each fund has entered into an Expense Contract that limits the total expenses of each fund. The Board considered that the New Advisory Contracts provide that FMRC or an affiliate undertakes to pay all operating expenses of the funds including transfer agent fees but excluding Independent Trustee expenses, interest, taxes, brokerage commissions, Proxy Expenses, and extraordinary expenses. If the New Advisory Contracts are approved, each fund’s Expense Contract will be removed given the all-inclusive structure of the new contract. The Board considered that, under the proposal, the New Advisory Contracts will cover all fund- and class-level expenses currently covered by the Current Advisory Contracts and the Expense Contracts collectively with the exception of Proxy Expenses, which would no longer be a contractual obligation of FMRC, but would rather be evaluated on a case-by-case basis.
In connection with its consideration of future renewals of each fund’s New Advisory Contract, the Board will consider: (i) the nature, extent and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund’s management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders, to the extent applicable; and (iv) whether there have been economies of scale in respect of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is the potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board ultimately concluded that the management fee structures are fair and reasonable, and that each fund’s New Advisory Contract should be approved.
The Board unanimously recommends that shareholders vote FOR each of Proposals 2A and 2B. If each proposal is not approved by shareholders of each fund, each fund’s Current Advisory Contract and Expense Contract will remain in effect.
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.
CURRENT TRUSTEES AND OFFICERS OF THE FUNDS
Abigail P. Johnson, Jennifer Toolin McAuliffe, Elizabeth S. Acton, John Engler, Albert R. Gamper, Jr., Robert F. Gartland, Arthur E. Johnson, Michael E. Kenneally, James H. Keyes, Marie L. Knowles, and Mark A. Murray are currently Trustees of Fidelity Commonwealth Trust II. Marc R. Bryant, Jeffrey S. Christian, Jonathan Davis, Adrien E. Deberghes, Stephanie J. Dorsey, Howard J. Galligan III, Scott C. Goebel, Colm A. Hogan, Chris Maher, John B. McGinty, Jr., John F. Papandrea, Jason P. Pogorelec, Nancy D. Prior, Stacie M. Smith, Renee Stagnone, and Derek L. Young are officers of the funds.
The funds’ current Board, which is composed of two Interested Trustees and nine Independent Trustees, met seven times during the fiscal year ended February 29, 2016. The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
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Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Abigail P. Johnson (1961)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees (2014 to present)
Ms. Johnson also serves as Trustee of other Fidelity funds. Ms. Johnson serves as President (2013-present) and Chief Executive Officer (2014-present) of FMR LLC (diversified financial services company), President of Fidelity Financial Services (2012-present) and President of Personal, Workplace and Institutional Services (2005-present). Ms. Johnson is Chairman and Director of FMR Co., Inc. (investment adviser firm, 2011-present), Chairman and Director of FMR (investment adviser firm, 2011-present), and the Vice Chairman and Director (2007-present) of FMR LLC. Previously, Ms. Johnson served as President and a Director of FMR (2001-2005), a Trustee of other investment companies advised by FMR, Fidelity Investments Money Management, Inc. (investment adviser firm), and FMR Co., Inc. (2001-2005), Senior Vice President of the Fidelity funds (2001-2005), and managed a number of Fidelity funds. Ms. Abigail P. Johnson and Mr. Arthur E. Johnson are not related.
Jennifer Toolin McAuliffe (1959)
Year of Election or Appointment: 2016
Trustee
Ms. McAuliffe also serves as Trustee or Member of the Advisory Board of other Fidelity funds. Ms. McAuliffe previously served as Co-Head of Fixed Income of Fidelity Investments Limited (now known as FIL Limited (FIL)) (diversified financial services company). Earlier roles at FIL included Director of Research for FIL’s credit and quantitative teams in London, Hong Kong and Tokyo. Ms. McAuliffe also was the Director of Research for taxable and municipal bonds at Fidelity Investments Money Management, Inc. Ms. McAuliffe is also a director or trustee of several not-for-profit entities.
* | Determined to be an “Interested Trustee” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. |
+ | The information includes the Trustee’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee’s qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the funds. |
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
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Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Elizabeth S. Acton (1951)
Year of Election or Appointment: 2014
Trustee
Ms. Acton also serves as Trustee of other Fidelity funds. Prior to her retirement in April 2012, Ms. Acton was Executive Vice President, Finance (2011-2012), Executive Vice President, Chief Financial Officer (2002-2011), and Treasurer (2004-2005) of Comerica Incorporated (financial services). Prior to joining Comerica, Ms. Acton held a variety of positions at Ford Motor Company (1983-2002), including Vice President and Treasurer (2000-2002) and Executive Vice President and Chief Financial Officer of Ford Motor Credit Company (1998-2000). Ms. Acton currently serves as a member of the Board of Directors and Audit and Finance Committees of Beazer Homes USA, Inc. (homebuilding, 2012-present). Previously, Ms. Acton served as a Member of the Advisory Board of certain Fidelity funds (2013-2016).
John Engler (1948)
Year of Election or Appointment: 2014
Trustee
Mr. Engler also serves as Trustee of other Fidelity funds. He serves as president of the Business Roundtable (2011-present), and on the board of directors for Universal Forest Products (manufacturer and distributor of wood and wood-alternative products, 2003-present) and K12 Inc. (technology-based education company, 2012-present). Previously, Mr. Engler served as a Member of the Advisory Board of certain Fidelity funds (2014-2016), a trustee of The Munder Funds (2003-2014), president and CEO of the National Association of Manufacturers (2004-2011), member of the Board of Trustees of the Annie E. Casey Foundation (2004-2015), and as governor of Michigan (1991-2003). He is a past chairman of the National Governors Association.
Albert R. Gamper, Jr. (1942)
Year of Election or Appointment: 2014
Trustee
Mr. Gamper also serves as Trustee of other Fidelity funds. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (2002-2003). Mr. Gamper currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2000-present), and Member of the Board of Trustees of Barnabas Health Care System (1997-present). Previously, Mr. Gamper served as Chairman (2012-2015) and Vice Chairman (2011-2012) of the Independent Trustees of certain Fidelity funds and as Chairman of the Board of Governors, Rutgers University (2004-2007).
Robert F. Gartland (1951)
Year of Election or Appointment: 2014
Trustee
Mr. Gartland also serves as Trustee of other Fidelity funds. Mr. Gartland is Chairman and an investor in Gartland & Mellina Group Corp. (consulting, 2009-present). Previously, Mr. Gartland served as a partner and investor of Vietnam Partners LLC (investments and consulting, 2008-2011). Prior to his retirement, Mr. Gartland held a variety of positions at Morgan Stanley (financial services, 1979-2007) including Managing Director (1987-2007).
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Arthur E. Johnson (1947)
Year of Election or Appointment: 2014
Trustee
Vice Chairman of the Independent Trustees (2015 to present)
Mr. Johnson also serves as Trustee of other Fidelity funds. Mr. Johnson serves as a member of the Board of Directors of Eaton Corporation plc (diversified power management, 2009-present), AGL Resources, Inc. (holding company, 2002-present) and Booz Allen Hamilton (management consulting, 2011-present). Prior to his retirement, Mr. Johnson served as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor, 1999-2009). He previously served on the Board of Directors of IKON Office Solutions, Inc. (1999-2008) and Delta Airlines (2005-2007). Mr. Arthur E. Johnson is not related to Ms. Abigail P. Johnson.
Michael E. Kenneally (1954)
Year of Election or Appointment: 2014
Trustee
Mr. Kenneally also serves as Trustee of other Fidelity funds. Prior to his retirement, Mr. Kenneally served as Chairman and Global Chief Executive Officer of Credit Suisse Asset Management. Before joining Credit Suisse, he was an Executive Vice President and Chief Investment Officer for Bank of America Corporation. Earlier roles at Bank of America included Director of Research, Senior Portfolio Manager and Research Analyst, and Mr. Kenneally was awarded the Chartered Financial Analyst (CFA) designation in 1991.
James H. Keyes (1940)
Year of Election or Appointment: 2014
Trustee
Mr. Keyes also serves as Trustee of other Fidelity funds. Mr. Keyes serves as a member of the Board and Non-Executive Chairman of Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, since 2002). Previously, Mr. Keyes served as a member of the Board of Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions, 1998-2013). Prior to his retirement, Mr. Keyes served as Chairman (1993-2002) and Chief Executive Officer (1988-2002) of Johnson Controls (automotive, building, and energy) and as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008).
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Marie L. Knowles (1946)
Year of Election or Appointment: 2014
Trustee
Chairman of the Independent Trustees (2015 to present)
Ms. Knowles also serves as Trustee of other Fidelity funds. Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company (pipeline and tanker operations). Ms. Knowles currently serves as a Director and Chairman of the Audit Committee of McKesson Corporation (healthcare service, since 2002). Ms. Knowles is a member of the Board of the Santa Catalina Island Company (real estate, 2009-present). Ms. Knowles is a Member of the Investment Company Institute Board of Governors and a Member of the Governing Council of the Independent Directors Council (2014-present). She also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007), URS Corporation (engineering and construction, 2000-2003) and America West (airline, 1999-2002). Ms. Knowles previously served as Vice Chairman of the Independent Trustees of certain Fidelity funds (2012-2015).
Mark A. Murray (1954)
Year of Election or Appointment: 2016
Trustee
Mr. Murray also serves as Trustee or Member of the Advisory Board of other Fidelity funds. Mr. Murray is Vice Chairman (2013-present) of Meijer, Inc. (regional retail chain). Previously, Mr. Murray served as Co-Chief Executive Officer (2013-2016) and President (2006-2013) of Meijer, Inc. Mr. Murray serves as a member of the Board of Directors and Nuclear Review and Public Policy and Responsibility Committees of DTE Energy Company (diversified energy company, 2009-present). Mr. Murray also serves as a member of the Board of Directors of Spectrum Health (not-for-profit health system, 2015-present). Mr. Murray previously served as President of Grand Valley State University (2001-2006), Treasurer for the State of Michigan (1999-2001), Vice President of Finance and Administration for Michigan State University (1998-1999), and a member of the Board of Directors and Audit Committee and Chairman of the Nominating and Corporate Governance Committee of Universal Forest Products, Inc. (manufacturer and distributor of wood and wood-alternative products, 2004-2016). Mr. Murray is also a director or trustee of many community and professional organizations.
+ | The information includes the Trustee’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee’s qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the funds. |
Advisory Board Member and Officers:
Officers hold office without limit in time, except that any officer may resign, or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
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Name, Year of Birth; Principal Occupation
Marc R. Bryant (1966)
Year of Election or Appointment: 2015
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity’s Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin’ Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
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Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2013
President and Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Mr. Goebel serves as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
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Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
John B. McGinty, Jr. (1962)
Year of Election or Appointment: 2016
Chief Compliance Officer
Mr. McGinty also serves as Chief Compliance Officer of other funds. Mr. McGinty is Senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2016-present). Mr. McGinty previously served as Vice President, Senior Attorney at Eaton Vance Management (investment management firm, 2015-2016), and prior to Eaton Vance as global CCO for all firm operations and registered investment companies at GMO LLC (investment management firm, 2009-2015). Before joining GMO LLC, Mr. McGinty served as Senior Vice President, Deputy General Counsel for Fidelity Investments (2007-2009).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2015
Assistant Secretary
Mr. Pogorelec also serves as Assistant Secretary of other funds. Mr. Pogorelec serves as Vice President, Associate General Counsel (2010-present) and is an employee of Fidelity Investments (2006-present).
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Nancy D. Prior (1967)
Year of Election or Appointment: 2014
Vice President
Ms. Prior also serves as Vice President of other funds. Ms. Prior serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present), President (2016-present) and Director (2014-present) of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm), President, Fixed Income (2014-present), Vice Chairman of FIAM LLC (investment adviser firm, 2014-present), and is an employee of Fidelity Investments (2002-present). Previously, Ms. Prior served as Vice President of Fidelity’s Money Market Funds (2012-2014), President, Money Market and Short Duration Bond Group of Fidelity Management & Research (FMR) (investment adviser firm, 2013-2014), President, Money Market Group of FMR (2011-2013), Managing Director of Research (2009-2011), Senior Vice President and Deputy General Counsel (2007-2009), and Assistant Secretary of certain Fidelity funds (2008-2009).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Derek L. Young (1964)
Year of Election or Appointment: 2009
Vice President of Fidelity’s Asset Allocation Funds
Mr. Young also serves as an officer of other funds. He is a Director of Strategic Advisers, Inc. (investment adviser firm, 2011-present) and FMR Investment Management (U.K.) Limited (investment adviser firm, 2016-present), President of Fidelity Global Asset Allocation (GAA) (2011-present), and Vice Chairman of FIAM LLC (investment adviser firm, 2011-present). Previously, Mr. Young served as Trustee of certain funds (2012-2015), President of Strategic Advisers, Inc. (2011-2015), Chief Investment Officer of GAA (2009-2011), and as a portfolio manager.
BOARD STRUCTURE AND OVERSIGHT FUNCTION AND STANDING COMMITTEES OF THE FUNDS’ CURRENT TRUSTEES
Correspondence intended for each Independent Trustee may be sent to the attention of the individual Trustee or to the Board of Trustees at Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each Interested Trustee may be sent to the attention of the individual Trustee or to the Board of Trustees at Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. The current process for collecting and
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organizing shareholder communications requires that the Board of Trustees receive copies of all communications addressed to it. All communications addressed to the Board of Trustees or any individual Trustee are logged and sent to the Board or individual Trustee, respectively. The funds do not hold annual shareholder meetings and therefore do not have a policy with regard to Trustees’ attendance at such meetings. However, as a matter of practice, at least one Trustee attends special meetings.
Abigail P. Johnson is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the current Board. The Independent Trustees also regularly meet in executive session. Marie L. Knowles serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds’ current Board oversees Fidelity’s investment-grade bond, money market, asset allocation and certain equity funds, and other Boards oversee Fidelity’s high income, sector and other equity funds. The asset allocation funds may invest in Fidelity funds that are overseen by such other Boards. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The current Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds’ activities and associated risks. The current Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds’ business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds’ exposure to risks is mitigated but not eliminated by the processes overseen by the current Trustees. While each of the current Board’s committees has responsibility for overseeing different aspects of the funds’ activities, oversight is exercised primarily through the Operations and Audit Committees. In addition, an ad hoc Board committee of Independent Trustees has worked with FMR to enhance the current Board’s oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. Appropriate personnel, including but not limited to the funds’ Chief Compliance Officer (CCO), FMR’s internal auditor, the independent accountants, the funds’ Treasurer and portfolio management personnel, make periodic reports to the current Board’s committees, as appropriate, including an annual review of Fidelity’s risk management program for the Fidelity funds.
The current Board has established various committees to support the Independent Trustees in acting independently in pursuing the best interests of the funds and their shareholders. Currently, the Board of Trustees has four standing committees. The members of each committee are Independent Trustees. The new Board has a committee structure consisting of four standing committees: an Audit Committee, an Operations Committee, a Governance and Nominating Committee, and a Fair Valuation Committee. See Appendix A for a description of the oversight functions and standing committees of the new Board.
The Operations Committee is composed of all of the Independent Trustees, with Ms. Knowles currently serving as Chair. The committee normally meets at least six times a year, or more frequently as called by the Chair, and serves as a forum for consideration of issues of importance to, or calling for particular determinations by, the Independent Trustees. The committee considers matters involving potential conflicts of interest between the funds and FMR and its affiliates and reviews proposed contracts and the proposed continuation of contracts between the funds and FMR and its affiliates, and annually reviews and makes recommendations regarding contracts with third parties unaffiliated with FMR, including insurance coverage and custody agreements. The committee has oversight of compliance issues not specifically within
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the scope of any other committee. These matters include, but are not limited to, significant non-conformance with contract requirements and other significant regulatory matters and recommending to the current Board the designation of a person to serve as the funds’ CCO. The committee (i) serves as the primary point of contact for the CCO with regard to Board-related functions; (ii) oversees the annual performance review of the CCO; (iii) makes recommendations concerning the CCO’s compensation; and (iv) makes recommendations as needed in respect of the removal of the CCO. The committee is also responsible for definitive action on all compliance matters involving the potential for significant reimbursement by FMR. During the fiscal year ended February 29, 2016, the committee held 11 meetings.
The Audit Committee is composed of all of the Independent Trustees, with Ms. Acton currently serving as Chair. At least one committee member will be an “audit committee financial expert” as defined by the Securities and Exchange (“SEC”). The committee normally meets four times a year, or more frequently as called by the Chair or a majority of committee members. The committee meets separately, at least annually, with the funds’ Treasurer, with the funds’ Chief Financial Officer, with personnel responsible for the internal audit function of FMR LLC, with the funds’ outside auditors, and with the funds’ CCO. The committee has direct responsibility for the appointment, compensation, and oversight of the work of the outside auditors employed by the funds. The committee assists the Trustees in overseeing and monitoring: (i) the systems of internal accounting and financial controls of the funds and the funds’ service providers (to the extent such controls impact the funds’ financial statements); (ii) the funds’ auditors and the annual audits of the funds’ financial statements; (iii) the financial reporting processes of the funds; (iv) whistleblower reports; and (v) the accounting policies and disclosures of the funds. The committee considers and acts upon (i) the provision by any outside auditor of any non-audit services for any fund, and (ii) the provision by any outside auditor of certain non-audit services to fund service providers and their affiliates to the extent that such approval (in the case of this clause (ii)) is required under applicable regulations of the SEC. It is responsible for approving all audit engagement fees and terms for the funds and for resolving disagreements between a fund and any outside auditor regarding any fund’s financial reporting. Auditors of the funds report directly to the committee. The committee will obtain assurance of independence and objectivity from the outside auditors, including a formal written statement delineating all relationships between the auditor and the funds and any service providers consistent with the rules of the Public Company Accounting Oversight Board. The committee will receive reports of compliance with provisions of the auditor independence regulations relating to the hiring of employees or former employees of the outside auditors. It oversees and receives reports on the funds’ service providers’ internal controls and reviews the adequacy and effectiveness of the service providers’ accounting and financial controls, including: (i) any significant deficiencies or material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the funds’ ability to record, process, summarize, and report financial data; (ii) any change in the funds’ internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the funds’ internal control over financial reporting; and (iii) any fraud, whether material or not, that involves management or other employees who have a significant role in the funds’ or service providers internal controls over financial reporting. The committee will also review any correspondence with regulators or governmental agencies or published reports that raise material issues regarding the funds’ financial statements or accounting policies. These matters may also be reviewed by the Operations Committee. The committee reviews at least annually a report from each outside auditor describing any material issues raised by the most recent internal quality control, peer review, or Public Company Accounting Oversight Board examination of the auditing firm and any material issues raised by any inquiry or investigation by governmental or professional authorities of the auditing firm and in each case any steps taken to deal with such issues. The committee will oversee and receive reports on the funds’ financial reporting process from the funds’ Treasurer and outside auditors and will oversee the resolution of any disagreements concerning financial reporting among applicable parties. The committee will discuss with FMR, the funds’ Treasurer, outside auditors and, if appropriate, internal audit personnel of FMR LLC their qualitative judgments about the appropriateness and acceptability of accounting principles and financial disclosure practices used or proposed for adoption by the funds. The committee will review with FMR, the funds’ outside auditor, internal audit personnel of FMR LLC and legal counsel, as appropriate, matters related to the audits of the funds’ financial statements. The committee will discuss regularly and oversee the review of the internal controls of the funds and their service providers with respect to accounting, financial matters and risk management programs related to the funds. The committee will review periodically the funds’ major internal controls exposures and the steps that have been taken to monitor and control such exposures. During the fiscal year ended February 29, 2016, the committee held five meetings.
The Fair Valuation Committee is composed of all of the Independent Trustees, with Mr. Johnson currently serving as Chair. The Committee normally meets quarterly, or more frequently as called by the Chair. The Fair Valuation Committee reviews and approves annually Fair Value Committee Policies recommended by the FMR Fair Value Committee and oversees particular valuations or fair valuation methodologies employed by the FMR Fair Value Committee as circumstances may require. The Committee also reviews actions taken by the FMR Fair Value Committee. The Committee does not oversee the day-to-day operational aspects of the valuation and calculation of the net asset value of the funds, which have been delegated to the FMR Fair Value Committee and Fidelity Service Company, Inc. (FSC). During the fiscal year ended February 29, 2016, the committee held four meetings.
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The Governance and Nominating Committee is composed of Ms. Knowles (Chair) and Messrs. Johnson (Vice Chair) and Kenneally. The committee meets as called by the Chair. With respect to fund governance and board administration matters, the committee periodically reviews procedures of the current Board and its committees (including committee charters) and periodically reviews compensation of Independent Trustees. The committee monitors corporate governance matters and makes recommendations to the current Board on the frequency and structure of Board meetings and on any other aspect of Board procedures. It acts as the administrative committee under the retirement plan for Independent Trustees who retired prior to December 30, 1996 and under the fee deferral plan for Independent Trustees. It reviews the performance of legal counsel employed by the funds and the Independent Trustees. On behalf of the Independent Trustees, the committee will make such findings and determinations as to the independence of counsel for the Independent Trustees as may be necessary or appropriate under applicable regulations or otherwise. The committee is also responsible for Board administrative matters applicable to Independent Trustees, such as expense reimbursement policies and compensation for attendance at meetings, conferences and other events. The committee monitors compliance with, acts as the administrator of, and makes determinations in respect of, the provisions of the code of ethics and any supplemental policies regarding personal securities transactions applicable to the Independent Trustees. The committee monitors the functioning of each Board committee and makes recommendations for any changes, including the creation or elimination of standing or ad hoc Board committees. The committee monitors regulatory and other developments to determine whether to recommend modifications to the committee’s responsibilities or other Trustee policies and procedures in light of rule changes, reports concerning “best practices” in corporate governance and other developments in mutual fund governance. The committee meets with Independent Trustees at least once a year to discuss matters relating to fund governance. The committee recommends that the Board establish such special or ad hoc Board committees as may be desirable or necessary from time to time in order to address ethical, legal, or other matters that may arise. The committee also oversees the annual self-evaluation of the current Board and establishes procedures to allow it to exercise this oversight function. In conducting this oversight, the committee shall address all matters that it considers relevant to the performance of the Board and shall report the results of its evaluation to the Board, including any recommended amendments to the principles of governance, and any recommended changes to the funds’ or the Board’s policies, procedures, and structures. The committee reviews periodically the size and composition of the current Board as a whole and recommends, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise, and diversity required for the Board as a whole and contains at least the minimum number of Independent Trustees required by law. The committee makes nominations for the election or appointment of Independent Trustees and non-management Members of any Advisory Board, and for membership on committees. The committee has the authority to retain and terminate any third-party advisers, including authority to approve fees and other retention terms. Such advisers may include search firms to identify Independent Trustee candidates and board compensation consultants. The committee may conduct or authorize investigations into or studies of matters within the committee’s scope of responsibilities, and may retain, at the funds’ expense, such independent counsel or other advisers as it deems necessary. The committee will consider nominees to the current Board recommended by shareholders based upon the criteria applied to candidates presented to the committee by a search firm or other source. Recommendations, along with appropriate background material concerning the candidate that demonstrates his or her ability to serve as an Independent Trustee of the funds, should be submitted to the Chair of the committee at the address maintained for communications with Independent Trustees. If the committee retains a search firm, the Chair will generally forward all such submissions to the search firm for evaluation. With respect to the criteria for selecting Independent Trustees, it is expected that all candidates will possess the following minimum qualifications: (i) unquestioned personal integrity; (ii) not an interested person of the funds within the meaning of the 1940 Act; (iii) does not have a material relationship (e.g., commercial, banking, consulting, legal, or accounting) with the adviser, any sub-adviser or their affiliates that could create an appearance of lack of independence in respect of the funds; (iv) has the disposition to act independently in respect of FMR and its affiliates and others in order to protect the interests of the funds and all shareholders; (v) ability to attend regularly scheduled Board meetings during the year; (vi) demonstrates sound business judgment gained through broad experience in significant positions where the candidate has dealt with management, technical, financial, or regulatory issues; (vii) sufficient financial or accounting knowledge to add value in the complex financial environment of the funds; (viii) experience on corporate or other institutional oversight bodies having similar responsibilities, but which board memberships or other relationships could not result in business or regulatory conflicts with the funds; and (ix) capacity for the hard work and attention to detail that is required to be an effective Independent Trustee in light of the funds’ complex regulatory, operational, and marketing setting. The Governance and Nominating Committee may determine that a candidate who does not have the type of previous experience or knowledge referred to above should nevertheless be considered as a nominee if the Governance and Nominating Committee finds that the candidate has additional qualifications such that his or her qualifications, taken as a whole, demonstrate the same level of fitness to serve as an Independent Trustee. A current copy of the current Board’s Governance and Nominating Committee Charter is available at http://www.fidelity.com and is attached as Exhibit 1. During the fiscal year ended February 29, 2016, the committee held eight meetings.
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ACTIVITIES AND MANAGEMENT OF FMRC
FMRC is a wholly-owned subsidiary of FMR formed in 1999 to provide portfolio management services to certain Fidelity funds and investment advice with respect to equity and high income instruments and certain assets allocation and target date funds.
Information concerning the average net assets and advisory fees of funds with similar investment objectives to each fund and advised by FMRC is included in the Table of Average Net Assets and Advisory Fees in Appendix G.
The Directors of FMRC are Abigail P. Johnson, Chairman of the Board; Peter S. Lynch, Vice Chairman; and John J. Remondi. Ms. Johnson is also a Trustee of the trust and other funds advised by FMR; Chairman of the Board, President, Chief Executive Officer, Vice Chairman, and a Director of FMR LLC and Chairman of the Board and a Director of FMR. Mr. Lynch is also Vice Chairman and a Director of FMR and a member of the Advisory Board of other funds advised by FMR. Mr. Remondi is also a Director of FMR, Fidelity Research & Analysis Company (FRAC), and Fidelity Investments Money Management, Inc. (FIMM), and Director and Executive Vice President of FMR LLC. Each of the Directors is a stockholder of FMR LLC. The principal business address of the Directors is 245 Summer Street, Boston, Massachusetts 02210.
All of the stock of FMR is owned by its parent company, FMR LLC, 245 Summer Street, Boston, Massachusetts 02210, which was organized on October 31, 1972. The voting common shares of FMR LLC are divided into two series. Series B is held predominantly by members of the Abigail P. Johnson family, directly or through trusts, and is entitled to 49% of the vote on any matter acted upon by the voting common shares. Series A is held predominantly by non-Johnson family member employees of FMR LLC and its affiliates and is entitled to 51% of the vote on any such matter. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B shares will be voted in accordance with the majority vote of Series B shares. Under the 1940 Act, control of a company is presumed where one individual or group of individuals owns more than 25% of the voting securities of that company. Therefore, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the 1940 Act, to form a controlling group with respect to FMR LLC.
CURRENT ADVISORY CONTRACTS
Each fund has entered into a Current Advisory Contract with FMRC, pursuant to which FMRC furnishes investment advisory and other services. Each fund’s Current Advisory Contract, dated October 1, 2015, was approved by the current Board on September 17, 2015. Each Current Advisory Contract was last approved by the current Board in September 2016 in connection with the current Board’s annual review of each fund’s advisory arrangements.
Pursuant to an SEC exemptive order, FMRC intends to act as a manager of managers, meaning that FMRC has the responsibility to oversee sub-advisers and recommend their hiring, termination, and replacement. Subject to approval by the Board of Trustees but without shareholder approval, FMRC may replace or hire unaffiliated sub-advisers or amend the terms of their existing sub-advisory agreements, if any. In the event of approval of a new unaffiliated sub-adviser, you will be provided with information about the new sub-adviser and sub-advisory agreement within ninety days of appointment.
Management and Sub-Advisory Services. FMRC 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 FMRC, and compensates all personnel of each fund or FMRC performing services relating to research, statistical and investment activities.
In addition, FMRC 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.
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Geode serves as sub-adviser of each fund. Under its Current Advisory Contract with each fund, FMRC acts as investment adviser. Under the sub-advisory agreement, and subject to the supervision of the Board of Trustees, Geode directs the investments of each fund in accordance with its investment objective, policies, and limitations.
Management-Related Expenses.Under the terms of each fund’s Current Advisory Contract, FMRC is responsible for payment of all operating expenses of the fund with the exception of the following: interest, taxes, brokerage commissions and other costs in connection with the purchase or sale of securities and other investment instruments, fees and expenses of the Independent Trustees, transfer agent fees, Rule 12b-1 fees and other expenses allocable at the class level, and such non-recurring or extraordinary 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.
FMRC and each of Fidelity International Enhanced Index Fund, Fidelity Large Cap Core Enhanced Index Fund, Fidelity Large Cap Growth Enhanced Index Fund, Fidelity Large Cap Value Enhanced Index Fund, Fidelity Mid Cap Enhanced Index Fund, and Fidelity Small Cap Enhanced Index Fund have entered into an Expense Contract, which obliges FMRC to pay all class-level expenses of each fund’s current share class to limit the total annual operating expenses (excluding interest, taxes, securities lending costs, brokerage commissions, fees and expenses of the Independent Trustees, and extraordinary expenses) to 0.62% for Fidelity International Enhanced Index Fund, 0.45% for each of Fidelity Large Cap Core Enhanced Index Fund, Fidelity Large Cap Growth Enhanced Index Fund, and Fidelity Large Cap Value Enhanced Index Fund, 0.60% for Fidelity Mid Cap Enhanced Index Fund, and 0.67% for Fidelity Small Cap Enhanced Index Fund. These Expense Contracts may not be amended to increase the fees or expenses payable by each fund’s current share class except by a vote of a majority of the Board of Trustees and by a vote of a majority of the outstanding voting securities of such class. Each fund may offer other share classes in the future that may be subject to higher or lower fees and expenses.
Management Fees.
For the services of FMRC under each management contract, each fund pays FMRC a monthly management fee as a percentage of its average net assets throughout the month at the annual rate of 0.47% for Fidelity International Enhanced Index Fund; 0.30% for each of Fidelity Large Cap Core Enhanced Index Fund, Fidelity Large Cap Growth Enhanced Index Fund, and Fidelity Large Cap Value Enhanced Index Fund; 0.45% for Fidelity Mid Cap Enhanced Index Fund; and 0.52% for Fidelity Small Cap Enhanced Index Fund. The management fee paid to FMRC by each fund is reduced by an amount equal to the fees and expenses paid by the fund to the Independent Trustees.
Effective October 1, 2015, FMRC serves as each fund’s manager. Strategic Advisers, Inc., an affiliated investment adviser, served as each fund’s manager prior to October 1, 2015. The following table shows the amount of management fees paid by a fund to Strategic Advisers, Inc. for the period March 1, 2015 to September 30, 2015 and to FMRC from October 1, 2015 to February 29, 2016.
Fund | Fiscal Year Ended February 29 | Management Fees Paid to Investment Adviser | ||||
Fidelity International Enhanced Index Fund | 2016 | $ | 670,648 | |||
Fidelity Large Cap Core Enhanced Index Fund | 2016 | $ | 1,190,063 | |||
Fidelity Large Cap Growth Enhanced Index Fund | 2016 | $ | 1,289,353 | |||
Fidelity Large Cap Value Enhanced Index Fund | 2016 | $ | 4,025,394 |
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Fidelity Mid Cap Enhanced Index Fund | 2016 | $ | 3,474,998 | |||
Fidelity Small Cap Enhanced Index Fund | 2016 | $ | 2,801,067 |
FMRC may, from time to time, voluntarily reimburse all or a portion of a fund’s operating expenses. FMRC retains the ability to be repaid for these expense reimbursements in the amount that expenses fall below the limit prior to the end of the fiscal year.
Expense reimbursements will increase returns, and repayment of the reimbursement will decrease returns.
Sub-Adviser - Geode. Each fund and FMRC have entered into a sub-advisory agreement with Geode dated October 1, 2015. Pursuant to the sub-advisory agreements, FMRC has granted Geode investment management authority as well as the authority to buy and sell securities.
DISTRIBUTION AGREEMENT
Each fund has entered into a distribution agreement with FDC, an affiliate of FMRC. FDC is a broker-dealer registered under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc. The distribution agreements call for FDC to use all reasonable efforts, consistent with its other business, to secure purchasers for shares of the funds, which are continuously offered at NAV. Promotional and administrative expenses in connection with the offer and sale of shares are paid by FMRC.
FDC received no payments from each fund pursuant to Distribution and Service Plans under Rule 12b-1. The Plans do not authorize payments by the funds other than those that are to be made to FMRC under their management contracts.
If shareholders of a fund approve a New Advisory Contract between FMRC and the fund, FDC will continue to provide distribution services to the fund.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each fund has entered into a transfer agent agreement with Fidelity Investments Institutional Operations Company (FIIOC), an affiliate of FMRC, which is located at 245 Summer Street, Boston, Massachusetts 02210. Under the terms of the agreement(s), FIIOC (or an agent, including an affiliate) performs transfer agency services.
Each fund has also entered into a service agent agreement with Fidelity Service Company, Inc. (FSC), an affiliate of FMRC (or an agent, including an affiliate). Each fund has also entered into a securities lending administration agreement with FSC. Under the terms of the agreements, FSC calculates the NAV and dividends for each fund, maintains each fund’s portfolio and general accounting records, and administers each fund’s securities lending program.
Transfer agent fees paid by each fund to FIIOC for the fiscal year ended February 29, 2016, amounted to the following:
Fund | Fiscal Year Ended February 29 | Transfer Agent Fees Paid to FIIOC | ||||
Fidelity International Enhanced Index Fund | 2016 | $ | 214,201 | |||
Fidelity Large Cap Core Enhanced Index Fund | 2016 | $ | 595,771 | |||
Fidelity Large Cap Growth Enhanced Index Fund | 2016 | $ | 645,475 |
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Fidelity Large Cap Value Enhanced Index Fund | 2016 | $ | 2,015,120 | |||
Fidelity Mid Cap Enhanced Index Fund | 2016 | $ | 1,159,273 | |||
Fidelity Small Cap Enhanced Index Fund | 2016 | $ | 808,581 |
FMRC bears the cost of pricing and bookkeeping services and administration of the securities lending program under the terms of its Current Advisory Contract with each fund.
If shareholders of a fund approve a New Advisory Contract between FMRC and the fund, FIIOC will continue to provide transfer agency services to the fund and FSC will continue to provide pricing and bookkeeping services and securities lending services to the fund.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on behalf of each fund by Geode pursuant to authority contained in the Current Advisory Contracts and sub-advisory agreement. Geode may also be responsible for the placement of portfolio transactions for other investment companies and investment accounts for which it has or its affiliates have investment discretion.
Geode may place trades with certain brokers, including National Financial Services LLC (NFS) and Luminex Trading & Analytics LLC (Luminex), with whom FMRC is under common control or affiliated, provided it determines that these affiliates’ trade execution abilities and costs are comparable to those of non-affiliated, qualified brokerage firms.
In addition, Geode or its affiliates may place trades with brokers that use NFS or Fidelity Clearing Canada ULC (FCC) as a clearing agent.
The following table shows the total amount of brokerage commissions paid by each fund, comprising commissions paid on securities and/or futures transactions, as applicable, for the fiscal year ended February 29, 2016. The total amount of brokerage commissions paid is stated as a dollar amount and a percentage of the fund’s average net assets.
Fund | Fiscal Year Ended February 29 | Dollar Amount | Percentage of Average Net Assets | |||||||
Fidelity International Enhanced Index Fund | 2016 | $ | 88,980 | 0.06 | % | |||||
Fidelity Large Cap Core Enhanced Index Fund | 2016 | $ | 46,483 | 0.01 | % | |||||
Fidelity Large Cap Growth Enhanced Index Fund | 2016 | $ | 44,191 | 0.01 | % | |||||
Fidelity Large Cap Value Enhanced Index Fund | 2016 | $ | 215,777 | 0.02 | % | |||||
Fidelity Mid Cap Enhanced Index Fund | 2016 | $ | 115,544 | 0.01 | % | |||||
Fidelity Small Cap Enhanced Index Fund | 2016 | $ | 123,104 | 0.02 | % |
For the fiscal year ended February 29, 2016, each fund paid no brokerage commissions to firms for providing research or brokerage services.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of PricewaterhouseCoopers LLP (PwC) has been selected as the independent registered public accounting firm for each fund. PwC, in accordance with Public Company Accounting Oversight Board rules, has confirmed to the trust’s Audit Committee that it is the independent registered public accounting firm with respect to the funds.
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The independent registered public accounting firm audits annual financial statements for the funds and provides other audit-related, non-audit, and tax-related services to the funds. Representatives of PwC are not expected to be present at the Meeting, but have been given the opportunity to make a statement if they so desire and will be available should any matter arise requiring their presence.
The trust’s Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm relating to the operations or financial reporting of a fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust’s Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to FMR, and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the funds (Fund Service Providers) that relates directly to the operations and financial reporting of a Fidelity fund (Covered Service) are subject to approval by the Audit Committee before such service is provided. All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair’s absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) are reported to the Audit Committee on a periodic basis.
The trust’s Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the funds and its related entities and FMR’s review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Fees and Services
For each of the fiscal years ended February 29, 2016 and February 28, 2015, the fees billed by PwC for services rendered to the funds are shown in the table below.
February 29, 2016A | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | ||||||||||||
Fidelity International Enhanced Index Fund | $ | 49,000 | $ | — | $ | 6,500 | $ | 1,900 | ||||||||
Fidelity Large Cap Core Enhanced Index Fund | $ | 49,000 | $ | — | $ | 6,500 | $ | 1,900 | ||||||||
Fidelity Large Cap Growth Enhanced Index Fund | $ | 49,000 | $ | — | $ | 3,700 | $ | 1,900 | ||||||||
Fidelity Large Cap Value Enhanced Index Fund | $ | 52,000 | $ | — | $ | 3,700 | $ | 2,200 | ||||||||
Fidelity Mid Cap Enhanced Index Fund | $ | 49,000 | $ | — | $ | 4,700 | $ | 2,000 | ||||||||
Fidelity Small Cap Enhanced Index Fund | $ | 49,000 | $ | — | $ | 3,700 | $ | 2,000 |
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February 28, 2015A | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | ||||||||||||
Fidelity International Enhanced Index Fund | $ | 45,000 | $ | — | $ | 6,400 | $ | 2,100 | ||||||||
Fidelity Large Cap Core Enhanced Index Fund | $ | 45,000 | $ | — | $ | 8,200 | $ | 2,200 | ||||||||
Fidelity Large Cap Growth Enhanced Index Fund | $ | 45,000 | $ | — | $ | 3,600 | $ | 2,200 | ||||||||
Fidelity Large Cap Value Enhanced Index Fund | $ | 45,000 | $ | — | $ | 3,600 | $ | 2,300 | ||||||||
Fidelity Mid Cap Enhanced Index Fund | $ | 45,000 | $ | — | $ | 4,700 | $ | 2,200 | ||||||||
Fidelity Small Cap Enhanced Index Fund | $ | 45,000 | $ | — | $ | 3,600 | $ | 2,300 |
A | Amounts may reflect rounding. |
In each of the fiscal years ended February 29, 2016 and February 28, 2015, the fees billed by PwC that were required to be approved by the Audit Committee for services rendered on behalf of the Fund Service Providers and that relate directly to the operations and financial reporting of the funds are shown in the table below.
February 29, 2016 FeesA | Audit-Related Fees | Tax Fees | All Other Fees | |||||||||
PWC | $ | 5,695,000 | $ | — | $ | — | ||||||
February 28, 2015 FeesA | Audit-Related Fees | Tax Fees | All Other Fees | |||||||||
PWC | $ | 5,900,000 | $ | — | $ | — |
A | Amounts may reflect rounding. |
“Audit Fees” represent fees billed for services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements.
“Audit-Related Fees” represent fees billed for assurance and related services that are reasonably related to the performance of a fund audit or the review of the fund’s financial statements and that are not reported under Audit Fees.
“Tax Fees” represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
“All Other Fees” represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
For each of the fiscal years ended February 29, 2016 and February 28, 2016, the aggregate non-audit fees billed by PwC for services rendered to the funds and any Fund Service Provider are shown in the table below.
Fiscal Year End | Aggregate Non-Audit FeesA | |||||
PWC | February 29, 2016 | $ | 6,130,000 | |||
PWC | February 28, 2015 | $ | 8,145,000 |
A | Amounts may reflect rounding. |
There were no non-audit services approved or required to be approved by the trust’s Audit Committee pursuant to the de minimis exception during the funds’ last two fiscal years relating to services provided to (i) the fund or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the fund.
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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 funds, attention “Fund Shareholder Meetings,” 245 Summer Street, Mailzone V10A, Boston, Massachusetts 02210. Proposals must be received a reasonable time before a fund begins to print and send its proxy materials to be considered for inclusion in the proxy materials for the meeting. Timely submission of a proposal does not, however, necessarily mean the proposal will be included. With respect to proposals submitted on an untimely basis and presented at a shareholder meeting, persons named as proxy agents will vote in their discretion.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Investments Institutional Operations Company, Inc., 245 Summer Street, Boston, Massachusetts 02210, 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.
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EXHIBIT 1
Fixed Income and Asset Allocation Funds
Governance and Nominating Committee Charter
I. Background
The investment companies managed by Fidelity Management & Research Company or its affiliates (collectively, “FMR”) or Geode Capital Management, LLC comprising the Fixed Income and Asset Allocation Funds of the Fidelity Funds are referred to as the “Funds”1; the Boards of Trustees of the Funds are referred to collectively as the “Board of Trustees” and the members are referred to as the “Trustees”; Trustees who are not “interested persons” (as such term is defined in the Investment Company Act of 1940) of the Funds are referred to as the “Independent Trustees”; and committees of the Boards of Trustees are referred to as “Board Committees.” The Board of Trustees, including at least a majority of the Independent Trustees, have adopted this Charter, which may from time to time be amended or supplemented by vote of Board of Trustees, including at least a majority of the Independent Trustees, upon the recommendation of the Governance and Nominating Committee.
II. Organization
This Section II describes the organization and governance functions of the Governance and Nominating Committee (the “Committee”).
A. Composition of the Committee
The Committee shall be comprised solely of Independent Trustees and will have not less than three members. The members of the Committee will be determined annually, other than the Chair of the Committee, by vote of the Independent Trustees upon the recommendation of the Committee.
B. Chair; Functions of the Chair
The Chair of the Committee (the “Chair”) shall be an Independent Trustee and shall serve as lead Independent Trustee. The Chair shall be elected by majority vote of the Independent Trustees, and shall serve for a term of three years, subject to extension on a year-to-year basis by vote of the Independent Trustees. In the absence of such Chair and any Vice Chair, a majority of the members of the Committee may designate an acting Chair of the Committee (who shall also in such circumstances be the acting lead
Independent Trustee). Following the expiration of the Chair’s term, he or she shall retire from the Committee for at least one year.
The Chair shall have the following responsibilities:
(1) The Chair shall preside at all meetings of the Committee and shall be responsible for preparing meeting agendas. The Vice Chair, if any, or in such Vice Chair’s absence, any designated acting or other lead Independent Trustee alternate will preside in the Committee Chair’s absence.
(2) The Chair shall serve as Chair of the Operations Committee.
(3) The Chair shall serve as the principal liaison between the Independent Trustees and the management of FMR.
(4) At meetings of the Operations Committee or the full Board of Trustees, the Chair will report on the Committee’s recommendations on applicable resolutions and on any important actions by or discussions at the Committee.
1 | The term “Funds” includes the investment-grade bond funds, the money market funds, the asset allocation funds and certain equity funds. The term “Funds” does not include any fund not overseen by the Board of Trustees. |
(5) The Chair may make temporary assignments of members and chairs of other Board Committees to fill vacancies or to provide for absences.
(6) The Chair will coordinate with counsel for the Funds and/or counsel to the Independent Trustees on matters requiring legal advice.
C. Meetings and Procedures of the Committee
(1) The Committee may determine its own rules of procedure, which shall be consistent with the Declaration of Trust of each Fund (or other charter document of the Fund), the Bylaws of such Fund and this Charter. The Committee shall meet at least four times annually or more frequently as circumstances require. The Chair or a majority of the members of the Committee may call a special meeting of the Committee.
(2) A majority of the members of the Committee, present in person or by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other, shall constitute a quorum. The Committee may take action by written consent if at least the number of Trustees required for approval of such action at a meeting of Trustees consent to the action in writing and the written consents are filed with the records of meetings of the Committee, unless otherwise required by applicable law.
(3) The Committee may form subcommittees for any purpose that the Committee deems appropriate and may delegate to such subcommittees such power and authority as the Committee deems appropriate. No subcommittee shall consist of fewer than two members. The Committee shall not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised by the Committee or the Independent Trustees as a whole.
(4) The Committee may request that any trustees, officers or employees of a Fund, or other persons whose advice and counsel are sought by the Committee, attend any meeting of the Committee to provide such information as the Committee requests.
(5) The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of each Fund and delivered to the Board of Trustees, including a description of all actions taken by the Committee.
D. Consultants; Investigations and Studies; Outside Advisers
The Committee shall have the authority to carry out its duties and responsibilities as set forth in this Charter. The Committee shall have authority to retain and terminate any third-party advisers, including authority to approve fees and other retention terms. Such advisers may include search firms to identify Independent Trustee candidates and board compensation consultants. The Committee may conduct or authorize investigations into or studies of matters within the Committee’s scope of responsibilities, and may retain, at the Funds’ expense, such independent counsel or other advisers as it deems necessary.
E. Particular Actions of the Committee
The Committee will:
(1) Periodically review Board and Committee procedures and Committee Charters.
(2) Periodically review Trustee compensation, and recommend any changes deemed by the Committee to be appropriate.
(3) Monitor corporate governance matters and make recommendations to the Board. Make recommendations on the frequency and structure of Board of Trustees meetings.
(4) Make recommendations concerning any other aspect of the procedures of the Board that the Committee considers warranted.
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(5) Make recommendations as to the size and members, the chair, vice chair if any, of each standing or ad hoc Board Committee. The chair and, unless such Committee is not a committee comprised of all Independent Trustees, the members of each Board Committee will be as determined by majority vote of the Independent Trustees upon the recommendation of the Committee. It is anticipated that members and chairs of any Committee will be designated annually (other than the Chairs of the Board Committees), with the chairs periodically rotated to give Independent Trustees the opportunity to broaden their experience. Rotation will be accomplished in a manner that provides reasonable continuity of membership.
(6) Review the annual calendar of Board Committee meetings and the schedule for consideration of routine or recurring matters.
(7) Make recommendations on the requirements for, and means of, Board of Trustees orientation and training.
(8) Act as administrative committee under the Funds’ fee deferral plan for Independent Trustees.
(9) Monitor the performance of legal counsel employed by the Funds and the Independent Trustees, and be responsible for the supervision of counsel for the Independent Trustees. The selection and oversight of fund counsel shall be the joint responsibility of the Committee and Fidelity. On behalf of the Independent Trustees, the Committee will make such findings and determinations as to the independence of counsel for the Independent Trustees as may be necessary or appropriate under applicable regulations or otherwise.
(10) Be responsible for oversight of Independent Trustees administrative matters, such as expense reimbursement policies and compensation for attendance at meetings, conferences and other events.
(11) Monitor compliance with, act as the administrator of, and make determinations in respect of (a) the provisions of the Code of Ethics applicable to the Independent Trustees, and (b) supplemental policies adopted by the Independent Trustees in respect of personal securities transactions of Independent Trustees.
(12) Monitor the functioning of the Board and Independent Trustees Committees and make recommendations for any changes, including the creation or elimination of such standing or ad hoc Committees.
(13) Monitor regulatory and other developments to determine whether to recommend modifications to the Committee’s responsibilities or other Trustee policies and procedures in light of rule changes, reports concerning “best practices” in corporate governance and other developments in mutual fund governance. The Committee will meet with the Independent Trustees at least once a year to discuss matters relating to Fund governance.
(14) Recommend that the Board or the Independent Trustees establish such special or ad hoc Committees as may be desirable or necessary from time to time in order to address ethical, legal or other matters that may arise. The Committee’s power to make such a recommendation under this Charter shall be without prejudice to the right of any other committee of the Board or of the Independent Trustees, or any individual trustee, to make such a recommendation at any time.
F. Self-Evaluation of the Board of Trustees
The Committee shall be responsible for overseeing the annual self-evaluation of the Board of Trustees. The Committee shall establish procedures to allow it to exercise this oversight function. The Chair shall, or shall appoint an Independent Trustee to, conduct the annual self-evaluation. In conducting this oversight, the Committee shall address all matters that the Committee considers relevant to the Board of Trustees’ performance.
The Committee shall report to the Board of Trustees on the results of its evaluation, including any recommended amendments to the principles of governance, and any recommended changes to the Funds’ or the Board of Trustees’ policies, procedures and structures. This report may be written or oral.
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G. Evaluation of the Continuing Participation of Independent Trustees
The Committee shall be responsible to assess whether any Independent Trustee, based on his or her continuing interest and commitment or level of participation, or on other specific and relevant reasons, in respect of the Funds, should not stand for election to the Board of Trustees at the next annual meeting of any Funds or, if no such annual meeting is scheduled for that year, should retire from the Board of Trustees within an appropriate time.
If the Committee determines that there is a reasonable basis, in its view, for concern about a particular Independent Trustee (an “Identified Trustee”), the Committee, under the leadership of the Chair, shall consult with each other Independent Trustee, including the Identified Trustee, as to the bases for the Committee’s concern, and the Committee thereafter shall take such action or make such suggestions as appropriate, including privately suggesting that such Independent Trustee retire, provided that no Independent Trustee shall be formally asked to retire from the Board of Trustees unless all other Independent Trustees unanimously agree.
III. Nominating Committee Function
This Section III describes the nominating committee functions of the Committee.
A. Identification of Candidates
The Committee will:
(1) Review periodically the size and composition of the Board of Trustees as a whole and recommend, if necessary, measures to be taken so that the Board of Trustees reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of Independent Trustees required by law.
(2) Periodically review the Independent Trustee’s Statement of Policy on Criteria for Selecting Independent Trustees (“Statement of Policy”), which may from time to time be revised by vote of a majority of Independent Trustees upon the recommendation of the Committee.
(3) Make nominations for the appointment or election of Independent Trustees in accordance with the Statement of Policy. The selection of Independent Trustees will be committed solely to the discretion of the Independent Trustees; persons so selected will be “disinterested” in terms of both the letter and spirit of the Investment Company Act.
(4) Make nominations for the appointment of any non-management member of any Advisory Board which the Board of Trustees shall have from time to time established. Each member of any Advisory Board shall serve at the pleasure of the Board of Trustees. Any Advisory Board shall be distinct from the Board of Trustees and shall serve such advisory functions as to investments and such other roles as may be designated by the Board of Trustees, but shall have no power to determine that any security or other investment shall be purchased or sold by any fund. In the discretion of the Board of Trustees, each Advisory Board member may be indemnified in respect of claims arising in connection with his or her services as such. Any member of an Advisory Board shall be compensated in accordance with policies in respect thereof adopted by the Board of Trustees. Service by a person on an Advisory Board shall not preclude such person’s subsequent service as a Trustee.
(5) Consider Independent Trustee candidates recommended by Fund shareholders. Any such candidates will be considered based upon the criteria applied to candidates presented to the Committee by a search firm or other sources, as set forth in the Statement of Policy. The names of such candidates should be submitted to the Chair in writing at the address maintained for communications with Independent Trustees. The submission should be accompanied by appropriate background material concerning the candidate that demonstrates his or her ability to serve as an Independent Trustee of the Funds. If the Committee retains a search firm, the Chair will generally forward such submissions to the search firm for evaluation unless the Committee concludes that the credentials of such candidate are not consistent with the criteria that are to be applied by the Committee in such search.
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B. Selection of the Chair, etc.
(1) The Committee will establish from time to time and as appropriate a procedure to choose a successor to the Chair with the objective that such successor shall be designated by a majority of the Independent Trustees as the Vice Chair of the Committee not later than one year before the expiration of the Chair’s term in order that there will be an orderly transition between them.
(2) Such Vice Chair shall serve such functions as may from time to time be designated by the Chair, and shall preside in such Chair’s absence.
(3) In the event of the death, incapacity or resignation of the Chair, the Vice Chair (if any) shall become the Chair without further action of the Committee or the Independent Trustees, and, in the absence of a Vice Chair, the remaining members of the Committee shall designate an acting Chair and initiate promptly a procedure to choose a successor Chair (who may be the acting Chair) by the vote of a majority of the Independent Trustees.
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EXHIBIT 2
Sector Portfolios
Governance and Nominating Committee Charter
A. Background
The investment companies managed by Fidelity SelectCo, LLC (collectively with its affiliates, “Fidelity”) comprising the Sector Portfolios of the Fidelity Funds are referred to as the “Funds”2; the Boards of Trustees of the Funds are referred to collectively as the “Board of Trustees” and the members are referred to as the “Trustees”; Trustees who are not “interested persons” (as such term is defined in the Investment Company Act of 1940) of the Funds are referred to as the “Independent Trustees”; and committees of the Boards of Trustees are referred to as “Board Committees”. The Board of Trustees, including at least a majority of the Independent Trustees, have adopted this Charter, which may from time to time be amended or supplemented by vote of the Board of Trustees, including at least a majority of the Independent Trustees, upon the recommendation of the Governance and Nominating Committee.
B. Organization
This Section II describes the organization and governance functions of the Governance and Nominating Committee (the “Committee”).
(1) Composition of the Committee
The Committee shall be comprised solely of Independent Trustees. The members of the Committee, other than the Chair of the Committee, will be determined annually by vote of the Independent Trustees upon the recommendation of the Committee. If a Vice Chair of the Independent Trustees has been designated, such Vice Chair will normally serve on the Committee.
(2) Chair; Functions of the Chair
The Chair of the Committee (the “Chair”) shall be an Independent Trustee and shall serve as lead Independent Trustee. The Chair shall be elected by majority vote of the Independent Trustees, and shall serve for a term of four years, subject to extension on a year- to-year basis by vote of the Independent Trustees. A majority of the members of the Committee may designate an acting lead Independent Trustee (and thus acting Chair of the Committee) in the absence of such Chair and any Vice Chair. If less than all ITs are members, following the expiration of the Chair’s term, he or she shall retire from the Committee for at least one year.
The Chair shall have the following responsibilities:
(a) The Chair shall preside at all meetings of the Committee and shall be responsible for preparing meeting agendas. The Vice Chair, if any, or in such Vice Chair’s absence, any designated acting or other lead Independent Trustee alternate will preside in the Committee Chair’s absence.
(b) The Chair shall serve as Chair of the Operations Committee.
(c) The Chair shall serve as the principal liaison between the Independent Trustees and the management of Fidelity.
(d) At meetings of the Operations Committee or the full Board of Trustees, the Chair will report on the Committee’s recommendations on applicable resolutions and on any important actions by or discussions at the Committee.
(e) The Chair may make temporary assignments of members and chairs of other Board Committees to fill vacancies or to provide for absences.
2 | The term “Funds” includes all of the Funds managed by Fidelity SelectCo, LLC. |
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(f) The Chair will coordinate with counsel for the Funds and/or counsel to the Independent Trustees on matters requiring legal advice.
(3) Meetings and Procedures of the Committee
(a) The Committee may determine its own rules of procedure, which shall be consistent with the Declaration of Trust of each Fund (or other charter document of the Fund), the Bylaws of such Fund and this Charter. The Committee shall meet at least four times annually or more frequently as circumstances require. The Chair or a majority of the members of the Committee may call a special meeting of the Committee.
(b) A majority of the members of the Committee, present in person or by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other, shall constitute a quorum. The Committee may take action by written consent if at least the number of Trustees required for approval of such action at a meeting of Trustees consent to the action in writing and the written consents are filed with the records of meetings of the Committee, unless otherwise required by applicable law.
(c) The Committee may form subcommittees for any purpose that the Committee deems appropriate and may delegate to such subcommittees such power and authority as the Committee deems appropriate. No subcommittee shall consist of fewer than two members. The Committee shall not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised by the Committee or the Independent Trustees as a whole.
(d) The Committee may request that any trustees, officers or employees of a Fund, or other persons whose advice and counsel are sought by the Committee, attend any meeting of the Committee to provide such information as the Committee requests.
(e) The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of each Fund and delivered to the Board of Trustees, including a description of all actions taken by the Committee.
(4) Consultants; Investigations and Studies; Outside Advisers
The Committee shall have the authority to carry out its duties and responsibilities as set forth in this Charter. The Committee shall have authority to retain and terminate any third-party advisers, including authority to approve fees and other retention terms. Such advisers may include search firms to identify Independent Trustee candidates and board compensation consultants. The Committee may conduct or authorize investigations into or studies of matters within the Committee’s scope of responsibilities, and may retain, at the Funds’ expense, such independent counsel or other advisers as it deems necessary.
(5) Particular Actions of the Committee
The Committee will:
(a) Periodically review Board and Committee procedures and Committee Charters.
(b) Periodically review Trustee compensation, and recommend any changes deemed by the Committee to be appropriate.
(c) Monitor corporate governance matters and make recommendations to the Board.
(d) Make recommendations on the frequency and structure of Board of Trustees meetings.
(e) Make recommendations concerning any other aspect of the procedures of the Board that the Committee considers warranted.
(f) Make recommendations as to the size and members, the chair, vice chair if any, alternate presiding members and alternate members of each standing or ad hoc Board Committee. The members and the chair of each Board Committee will be as determined by majority vote of the Independent Trustees upon the recommendation of the Committee. It is anticipated that members and chairs of any Committee will be designated annually (other than Chairs of the Operations Committee and the Governance and Nominating Committee), with membership periodically rotated to give Independent Trustees the opportunity to broaden their experience. Rotation will be accomplished in a manner that provides reasonable continuity of membership.
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(g) Review the annual calendar of Board Committee meetings and the schedule for consideration of routine or recurring matters.
(h) Make recommendations on the requirements for, and means of, Board of Trustees orientation and training.
(i) Act as administrative committee under the Funds’ fee deferral plan for Independent Trustees.
(j) Monitor the performance of legal counsel employed by the Funds and the Independent Trustees, and be responsible for the supervision of counsel for the Independent Trustees. The selection and oversight of fund counsel shall be the joint responsibility of the Committee and Fidelity. On behalf of the Independent Trustees, the Committee will make such findings and determinations as to the independence of counsel for the Independent Trustees as may be necessary or appropriate under applicable regulations or otherwise.
(k) Be responsible for oversight of Independent Trustees administrative matters, such as expense reimbursement policies and compensation for attendance at meetings, conferences and other events.
(l) Monitor compliance with, act as the administrator of, and make determinations in respect of (a) the provisions of the Code of Ethics applicable to the Independent Trustees, and (b) supplemental policies adopted by the Independent Trustees in respect of personal securities transactions of Independent Trustees.
(m) Monitor the functioning of the Board Committees and make recommendations for any changes, including the creation or elimination of standing or ad hoc Board Committees.
(n) Monitor regulatory and other developments to determine whether to recommend modifications to the Committee’s responsibilities or other Trustee policies and procedures in light of rule changes, reports concerning “best practices” in corporate governance and other developments in mutual fund governance. The Committee will report regularly to the Independent Trustees with respect to these activities.
(o) Recommend that the Board establish such special or ad hoc Board Committees as may be desirable or necessary from time to time in order to address ethical, legal or other matters that may arise. The Committee’s power to make such a recommendation under this Charter shall be without prejudice to the right of any other committee of the Board, or any individual trustee/ director, to make such a recommendation at any time.
(6) Self-Evaluation of the Board of Trustees
The Committee shall be responsible for overseeing the annual self-evaluation of the Board of Trustees. The Committee shall establish procedures to allow it to exercise this oversight function.
In conducting this oversight, the Committee shall address all matters that the Committee considers relevant to the Board of Trustees’ performance.
The Committee shall report to the Board of Trustees on the results of its evaluation, including any recommended amendments to the principles of governance, and any recommended changes to the Funds’ or the Board of Trustees’ policies, procedures and structures. This report may be written or oral.
C. Nominating Committee Function
This Section III describes the nominating committee functions of the Committee.
(1) Identification of Candidates
The Committee will:
(a) Review periodically the size and composition of the Board of Trustees as a whole and recommend, if necessary, measures to be taken so that the Board of Trustees reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of Independent Trustees required by law.
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(b) Periodically review the Independent Trustees’ Statement of Policy on Criteria for Selecting Independent Trustees (“Statement of Policy”), which may from time to time be revised by vote of a majority of Independent Trustees upon the recommendation of the Committee.
(c) Make nominations for the appointment or election of Independent Trustees in accordance with the Statement of Policy. The selection of Independent Trustees will be committed solely to the discretion of the Independent Trustees; persons so selected will be “disinterested” in terms of both the letter and spirit of the Investment Company Act.
(d) Make nominations for the appointment of any non-management member of any Advisory Board which the Board of Trustees shall have from time to time established. Each member of any Advisory Board shall serve at the pleasure of the Board of Trustees. Any Advisory Board shall be distinct from the Board of Trustees and shall serve such advisory functions as to investments and such other roles as may be designated by the Board of Trustees, but shall have no power to determine that any security or other investment shall be purchased or sold by any fund. In the discretion of the Board of Trustees, each Advisory Board member may be indemnified in respect of claims arising in connection with his or her services as such. Any member of an Advisory Board shall be compensated in accordance with policies in respect thereof adopted by the Board of Trustees. Service by a person on an Advisory Board shall not preclude such person’s subsequent service as a Trustee.
(e) Consider Independent Trustee candidates recommended by Fund shareholders. Any such candidates will be considered based upon the criteria applied to candidates presented to the Committee by a search firm or other sources, as set forth in the Statement of Policy. The names of such candidates should be submitted to the Chair in writing at the address maintained for communications with Independent Trustees. The submission should be accompanied by appropriate background material concerning the candidate that demonstrates his or her ability to serve as an Independent Trustee of the Funds. If the Committee retains a search firm, the Chair will generally forward such submissions to the search firm for evaluation unless the Committee concludes that the credentials of such candidate are not consistent with the criteria that are to be applied by the Committee in such search.
(2) Selection of the Chair, etc.
(a) The Chair (and thus the lead Independent Trustee of the Funds) will be chosen as follows: The Committee will nominate a selection committee, subject to approval by a majority vote of the Independent Trustees, which will interview individual Independent Trustees. The selection committee will select and recommend to the Independent Trustees one or more potential candidates. The Chair will be elected by a majority vote of the Independent Trustees.
(b) A Vice Chair of the Committee may be chosen in the discretion of the Independent Trustees by majority vote of the Independent Trustees. If elected, such Vice Chair shall serve such functions as may from time to time be designated by the Chair, and shall preside in such Chair’s absence.
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APPENDIX A
BOARD STRUCTURE AND OVERSIGHT FUNCTION AND
STANDING COMMITTEES OF THE FUNDS’ NEW TRUSTEES
Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the new Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds’ new Board oversees Fidelity’s sector portfolios. Other Boards oversee Fidelity’s equity and high income funds, and Fidelity’s investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The new Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds’ activities and associated risks. The new Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds’ business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds’ exposure to risks is mitigated but not eliminated by the processes overseen by the new Trustees. While each of the new Board’s committees has responsibility for overseeing different aspects of the funds’ activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds’ CCO, FMR’s internal auditor, the independent accountants, the funds’ Treasurer and portfolio management personnel, make periodic reports to the new Board’s committees, as appropriate.
The new Board has established various committees to support the Independent Trustees in acting independently in pursuing the best interests of the funds and their shareholders. Currently, the new Board has four standing committees. The members of each committee are Independent Trustees.
The Operations Committee is composed of all of the Independent Trustees, with Mr. Wiley currently serving as Chair. The committee normally meets at least four times a year, or more frequently as called by the Chair, and serves as a forum for consideration of issues of importance to, or calling for particular determinations by, the Independent Trustees. The committee considers matters involving potential conflicts of interest between the funds and FMR and its affiliates and reviews proposed contracts and the proposed continuation of contracts between the funds and FMR and its affiliates, and annually reviews and makes recommendations regarding contracts with third parties unaffiliated with FMR, including insurance coverage and custody agreements. The committee has oversight of compliance issues not specifically within the scope of any other committee. These matters include, but are not limited to, significant non-conformance with contract requirements and other significant regulatory matters and recommending to the new Board the designation of a person to serve as the funds’ CCO. The committee (i) serves as the primary point of contact for the CCO with regard to Board-related functions; (ii) oversees the annual performance review of the CCO; (iii) makes recommendations concerning the CCO’s compensation; and (iv) makes recommendations as needed in respect of the removal of the CCO. The committee is also responsible for definitive action on all compliance matters involving the potential for significant reimbursement by FMR. During the fiscal year ended February 29, 2016, the committee held nine meetings.
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The Audit Committee is composed of all of the Independent Trustees, with Mr. Rosow currently serving as Chair. All committee members must be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement. At least one committee member will be an “audit committee financial expert” as defined by the SEC. The committee normally meets four times a year, or more frequently as called by the Chair. The committee meets separately at least annually with the funds’ Treasurer, with the funds’ Chief Financial Officer, with personnel responsible for the internal audit function of FMR LLC, and with the funds’ outside auditors. The committee has direct responsibility for the appointment, compensation, and oversight of the work of the outside auditors employed by the funds. The committee assists the Trustees in overseeing and monitoring: (i) the systems of internal accounting and financial controls of the funds and the funds’ service providers (to the extent such controls impact the funds’ financial statements); (ii) the funds’ auditors and the annual audits of the funds’ financial statements; (iii) the financial reporting processes of the funds; (iv) whistleblower reports; and (v) the accounting policies and disclosures of the funds. The committee considers and acts upon (i) the provision by any outside auditor of any non-audit services for any fund, and (ii) the provision by any outside auditor of certain non-audit services to fund service providers and their affiliates to the extent that such approval (in the case of this clause (ii)) is required under applicable regulations of the SEC. In furtherance of the foregoing, the committee has adopted (and may from time to time amend or supplement) and provides oversight of policies and procedures for non-audit engagements by outside auditors of the funds. It is responsible for approving all audit engagement fees and terms for the funds and for resolving disagreements between a fund and any outside auditor regarding any fund’s financial reporting. Auditors of the funds report directly to the committee. The committee will obtain assurance of independence and objectivity from the outside auditors, including a formal written statement delineating all relationships between the auditor and the funds and any service providers consistent with the rules of the Public Company Accounting Oversight Board. The committee will receive reports of compliance with provisions of the auditor independence regulations relating to the hiring of employees or former employees of the outside auditors. It oversees and receives reports on the funds’ service providers’ internal controls and reviews the adequacy and effectiveness of the service providers’ accounting and financial controls, including: (i) any significant deficiencies or material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the funds’ ability to record, process, summarize, and report financial data; (ii) any change in the funds’ internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the funds’ internal control over financial reporting; and (iii) any fraud, whether material or not, that involves management or other employees who have a significant role in the funds’ or service providers internal controls over financial reporting. The committee will also review any correspondence with regulators or governmental agencies or published reports that raise material issues regarding the funds’ financial statements or accounting policies. These matters may also be reviewed by the Operations Committee. The committee reviews at least annually a report from each outside auditor describing any material issues raised by the most recent internal quality control, peer review, or Public Company Accounting Oversight Board examination of the auditing firm and any material issues raised by any inquiry or investigation by governmental or professional authorities of the auditing firm and in each case any steps taken to deal with such issues. The committee will oversee and receive reports on the funds’ financial reporting process, will discuss with FMR, the funds’ Treasurer, outside auditors and, if appropriate, internal audit personnel of FMR LLC their qualitative judgments about the appropriateness and acceptability of accounting principles and financial disclosure practices used or proposed for adoption by the funds. The committee will review with FMR, the funds’ outside auditor, internal audit personnel of FMR LLC and, as appropriate, legal counsel the results of audits of the funds’ financial statements. The committee will review periodically the funds’ major internal controls exposures and the steps that have been taken to monitor and control such exposures. During the fiscal year ended February 29, 2016, the committee held four meetings.
The Fair Valuation Committee is composed of all of the Independent Trustees, with Mr. Wiley currently serving as Chair. The Committee normally meets quarterly, or more frequently as called by the Chair. The Fair Valuation Committee reviews and approves annually Fair Value Committee Policies recommended by the FMR Fair Value Committee and oversees particular valuations or fair valuation methodologies employed by the FMR Fair Value Committee as circumstances may require. The Committee also reviews actions taken by the FMR Fair Value Committee. The Committee does not oversee the day-to-day operational aspects of the valuation and calculation of the net asset value of the funds, which have been delegated to the FMR Fair Value Committee and Fidelity Service Company, Inc. (FSC). During the fiscal year ended February 29, 2016, the committee held four meetings.
The Governance and Nominating Committee is composed of all of the Independent Trustees, with Mr. Wiley currently serving as Chair. The committee meets as called by the Chair. With respect to fund governance and board administration matters, the committee periodically reviews procedures of the new Board and its committees (including committee charters) and periodically reviews compensation of Independent Trustees. The committee monitors corporate governance matters and makes recommendations to the Board on the frequency and structure of Board meetings and on any other aspect of Board procedures. It acts as the administrative committee under the fee deferral plan for Independent Trustees. It reviews the performance of legal counsel employed by the funds and the Independent Trustees. On behalf of
38
the Independent Trustees, the committee will make such findings and determinations as to the independence of counsel for the Independent Trustees as may be necessary or appropriate under applicable regulations or otherwise. The committee is also responsible for Board administrative matters applicable to Independent Trustees, such as expense reimbursement policies and compensation for attendance at meetings, conferences and other events. The committee monitors compliance with, acts as the administrator of, and makes determinations in respect of, the provisions of the code of ethics and any supplemental policies regarding personal securities transactions applicable to the Independent Trustees. The committee monitors the functioning of each Board committee and makes recommendations for any changes, including the creation or elimination of standing or ad hoc Board committees. The committee monitors regulatory and other developments to determine whether to recommend modifications to the committee’s responsibilities or other Trustee policies and procedures in light of rule changes, reports concerning “best practices” in corporate governance and other developments in mutual fund governance. The committee meets with Independent Trustees at least once a year to discuss matters relating to fund governance. The committee recommends that the Board establish such special or ad hoc Board committees as may be desirable or necessary from time to time in order to address ethical, legal, or other matters that may arise. The committee also oversees the annual self-evaluation of the new Board and establishes procedures to allow it to exercise this oversight function. In conducting this oversight, the committee shall address all matters that it considers relevant to the performance of the Board and shall report the results of its evaluation to the Board, including any recommended amendments to the principles of governance, and any recommended changes to the funds’ or the Board’s policies, procedures, and structures. The committee reviews periodically the size and composition of the new Board as a whole and recommends, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise, and diversity required for the Board as a whole and contains at least the minimum number of Independent Trustees required by law. The committee makes nominations for the election or appointment of Independent Trustees and non-management Members of any Advisory Board, and for membership on committees. The committee has the authority to retain and terminate any third-party advisers, including authority to approve fees and other retention terms. Such advisers may include search firms to identify Independent Trustee candidates and board compensation consultants. The committee may conduct or authorize investigations into or studies of matters within the committee’s scope of responsibilities, and may retain, at the funds’ expense, such independent counsel or other advisers as it deems necessary. The committee will consider nominees to the new Board recommended by shareholders based upon the criteria applied to candidates presented to the committee by a search firm or other source. Recommendations, along with appropriate background material concerning the candidate that demonstrates his or her ability to serve as an Independent Trustee of the funds, should be submitted to the Chair of the committee at the address maintained for communications with Independent Trustees. If the committee retains a search firm, the Chair will generally forward all such submissions to the search firm for evaluation. With respect to the criteria for selecting Independent Trustees, it is expected that all candidates will possess the following minimum qualifications: (i) unquestioned personal integrity; (ii) not an interested person of the funds within the meaning of the 1940 Act; (iii) does not have a material relationship (e.g., commercial, banking, consulting, legal, or accounting) with the adviser, any sub-adviser or their affiliates that could create an appearance of lack of independence in respect of the funds; (iv) has the disposition to act independently in respect of FMR and its affiliates and others in order to protect the interests of the funds and all shareholders; (v) ability to attend regularly scheduled Board meetings during the year; (vi) demonstrates sound business judgment gained through broad experience in significant positions where the candidate has dealt with management, technical, financial, or regulatory issues; (vii) sufficient financial or accounting knowledge to add value in the complex financial environment of the funds; (viii) experience on corporate or other institutional oversight bodies having similar responsibilities, but which board memberships or other relationships could not result in business or regulatory conflicts with the funds; and (ix) capacity for the hard work and attention to detail that is required to be an effective Independent Trustee in light of the funds’ complex regulatory, operational, and marketing setting. The Governance and Nominating Committee may determine that a candidate who does not have the type of previous experience or knowledge referred to above should nevertheless be considered as a nominee if the Governance and Nominating Committee finds that the candidate has additional qualifications such that his or her qualifications, taken as a whole, demonstrate the same level of fitness to serve as an Independent Trustee. A current copy of the new Board’s Governance and Nominating Committee Charter is available at http://www.fidelity.com and is attached to the Proxy Statement as Exhibit 2. During the fiscal year ended February 29, 2016, the committee held four meetings.
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APPENDIX B
TRUSTEE AND NOMINEE OWNERSHIP OF FUND SHARES
Information regarding nominee and Trustee ownership of fund shares as of [ ] is provided below.
Interested Trustees
DOLLAR RANGE | Abigail P. | Jennifer Toolin | ||||||||
Fidelity International Enhanced Index Fund | ||||||||||
Fidelity Large Cap Core Enhanced Index Fund | ||||||||||
Fidelity Large Cap Growth Enhanced Index Fund | ||||||||||
Fidelity Large Cap Value Enhanced Index Fund | ||||||||||
Fidelity Mid Cap Enhanced Index Fund | ||||||||||
Fidelity Small Cap Enhanced Index Fund | ||||||||||
AGGREGATE DOLLAR RANGE OF FUND SHARES IN ALL FUNDS OVERSEEN WITHIN FUND FAMILY |
Independent Trustees
DOLLAR RANGE OF FUND SHARES | Elizabeth S. Acton | John | Albert R. | Robert F. | Arthur E. | Michael E. | James | Marie L. | Mark A. | |||||||||
Fidelity International Enhanced Index Fund | ||||||||||||||||||
Fidelity Large Cap Core Enhanced Index Fund | ||||||||||||||||||
Fidelity Large Cap Growth Enhanced Index Fund | ||||||||||||||||||
Fidelity Large Cap Value Enhanced Index Fund | ||||||||||||||||||
Fidelity Mid Cap Enhanced Index Fund | ||||||||||||||||||
Fidelity Small Cap Enhanced Index Fund | ||||||||||||||||||
AGGREGATE DOLLAR RANGE OF FUND SHARES IN ALL FUNDS OVERSEEN WITHIN FUND FAMILY |
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Interested Nominee
DOLLAR RANGE OF FUND SHARES | Brian B. | |||||||||||
Fidelity International Enhanced Index Fund | ||||||||||||
Fidelity Large Cap Core Enhanced Index Fund | ||||||||||||
Fidelity Large Cap Growth Enhanced Index Fund | ||||||||||||
Fidelity Large Cap Value Enhanced Index Fund | ||||||||||||
Fidelity Mid Cap Enhanced Index Fund | ||||||||||||
Fidelity Small Cap Enhanced Index Fund | ||||||||||||
AGGREGATE DOLLAR RANGE OF FUND SHARES IN ALL FUNDS OVERSEEN WITHIN FUND FAMILY |
Independent Nominees
DOLLAR RANGE OF FUND SHARES | Donald F. | David A. | Garnett A. | Carol B. Tomé(1) | Michael E. | |||||
Fidelity International Enhanced Index Fund | ||||||||||
Fidelity Large Cap Core Enhanced Index Fund | ||||||||||
Fidelity Large Cap Growth Enhanced Index Fund | ||||||||||
Fidelity Large Cap Value Enhanced Index Fund | ||||||||||
Fidelity Mid Cap Enhanced Index Fund | ||||||||||
Fidelity Small Cap Enhanced Index Fund | ||||||||||
AGGREGATE DOLLAR RANGE OF FUND SHARES IN ALL FUNDS OVERSEEN WITHIN FUND FAMILY |
(1) | Member of the Advisory Board of the Fidelity Sector Portfolios effective January 1, 2017. |
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APPENDIX C
TRUSTEE AND NOMINEE COMPENSATION
The following table sets forth information describing the compensation of each Trustee and nominee for his or her services, for the fiscal year ended February 29, 2016 or calendar year ended December 31, 2015, as applicable. Brian B. Hogan, Abigail P. Johnson, and Jennifer Toolin McAuliffe are interested persons and are compensated by Fidelity. Carol B. Tomé is a member of the Advisory Board of the Fidelity Sector Portfolios effective January 1, 2017 and as such received no compensation from the funds or fund complex for the periods shown.
Current Trustee Compensation Table
AGGREGATE COMPENSATION FROM A FUND | Elizabeth S. Acton | John Engler | Albert R. Gamper, Jr | Robert F. Gartland | ||||||||||||
Fidelity International Enhanced Index Fund | $ | 65 | $ | 62 | $ | 68 | $ | 62 | ||||||||
Fidelity Large Cap Core Enhanced Index Fund | $ | 185 | $ | 176 | $ | 195 | $ | 177 | ||||||||
Fidelity Large Cap Growth Enhanced Index Fund | $ | 200 | $ | 191 | $ | 211 | $ | 192 | ||||||||
Fidelity Large Cap Value Enhanced Index Fund | $ | 615 | $ | 586 | $ | 643 | $ | 589 | ||||||||
Fidelity Mid Cap Enhanced Index Fund | $ | 356 | $ | 338 | $ | 372 | $ | 340 | ||||||||
Fidelity Small Cap Enhanced Index Fund | $ | 251 | $ | 240 | $ | 265 | $ | 241 | ||||||||
TOTAL COMPENSATION FROM THE FUND COMPLEX2 | $ | 421,167 | $ | 406,167 | $ | 467,000 | $ | 408,667 |
AGGREGATE COMPENSATION FROM A FUND | Arthur E. Johnson | Michael E. Kenneally | James H. Keyes | Marie L. Knowles | Mark A. Murray1 | |||||||||||||||
Fidelity International Enhanced Index Fund | $ | 67 | $ | 62 | $ | 67 | $ | 75 | $ | 0 | ||||||||||
Fidelity Large Cap Core Enhanced Index Fund | $ | 190 | $ | 177 | $ | 189 | $ | 211 | $ | 0 | ||||||||||
Fidelity Large Cap Growth Enhanced Index Fund | $ | 206 | $ | 192 | $ | 205 | $ | 228 | $ | 0 | ||||||||||
Fidelity Large Cap Value Enhanced Index Fund | $ | 633 | $ | 589 | $ | 628 | $ | 702 | $ | 0 | ||||||||||
Fidelity Mid Cap Enhanced Index Fund | $ | 366 | $ | 340 | $ | 363 | $ | 406 | $ | 0 | ||||||||||
Fidelity Small Cap Enhanced Index Fund | $ | 258 | $ | 241 | $ | 257 | $ | 287 | $ | 0 | ||||||||||
TOTAL COMPENSATION FROM THE FUND COMPLEX2 | $ | 429,500 | $ | 408,667 | $ | 436,167 | $ | 478,000 | $ | 0 |
1 | Effective July 1, 2016, Mr. Murray serves as a Member of the Board of Trustees. |
2 | Reflects compensation received for the calendar year ended December 31, 2015 for 234 funds of 32 trusts (including Fidelity Central Investment Portfolios II LLC). Compensation figures include cash and may include amounts elected to be deferred. Certain individuals elected voluntarily to defer a portion of their compensation as follows: John M. Engler, $139,343; Robert F. Gartland, $180,000; and Michael E. Kenneally, $120,000. |
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Nominee Compensation Table
AGGREGATE COMPENSATION FROM A FUND | Donald F. Donahue1 | David A. Rosow | Garnett A. Smith | Michael E. Wiley | ||||||||||||
Fidelity International Enhanced Index Fund | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Fidelity Large Cap Core Enhanced Index Fund | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Fidelity Large Cap Growth Enhanced Index Fund | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Fidelity Large Cap Value Enhanced Index Fund | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Fidelity Mid Cap Enhanced Index Fund | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Fidelity Small Cap Enhanced Index Fund | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
TOTAL COMPENSATION FROM THE FUND COMPLEX2 | $ | 99,000 | $ | 392,000 | $ | 378,500 | $ | 428,500 |
1 | Effective October 1, 2015, Mr. Donahue serves as a Member of the Advisory Board. |
2 | Reflects compensation received for the calendar year ended December 31, 2015 for 75 funds of 4 trusts. Compensation figures include cash and may include amounts elected to be deferred. Certain individuals elected voluntarily to defer a portion of their compensation as follows: Donald F. Donahue, $40,192; Garnett A. Smith, $248,091; and Michael E. Wiley, $240,000. |
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APPENDIX D
MANAGEMENT FEES
The table below shows the aggregate amount paid by each fund under the fund’s Current Advisory Contract for the fiscal year ended February 29, 2016, the amount each fund would have paid for the period if the fund’s New Advisory Contract had been in effect, and the difference between the two, expressed as a percentage of the aggregate amount paid under the Current Advisory Contract.
Funds | Aggregate Amount Paid Under Current Advisory Contract | Aggregate Amount Paid Under New Advisory Contract | % Difference | |||||||||
Fidelity International Enhanced Index Fund | $ | 670,648 | $ | 841,390 | 25 | % | ||||||
Fidelity Large Cap Core Enhanced Index Fund | $ | 1,190,063 | $ | 1,548,867 | 30 | % | ||||||
Fidelity Large Cap Growth Enhanced Index Fund | $ | 1,289,353 | $ | 1,677,791 | 30 | % | ||||||
Fidelity Large Cap Value Enhanced Index Fund | $ | 4,025,394 | $ | 5,231,117 | 30 | % | ||||||
Fidelity Mid Cap Enhanced Index Fund | $ | 3,474,998 | $ | 4,557,716 | 31 | % | ||||||
Fidelity Small Cap Enhanced Index Fund | $ | 2,801,067 | $ | 3,452,268 | 23 | % |
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APPENDIX E
FUND EXPENSES
The following tables describe the fees and expenses that may be incurred when you buy and hold shares of each of the funds. Each table of annual operating expenses provided below compares the expenses paid by each of the funds during the fiscal year ended February 29, 2016, to the expenses that would have been paid during the same period if the New Advisory Contract had been in effect.
Fund | Current Expenses | Proposed Expenses | ||
Fidelity International Enhanced Index Fund | ||||
Management Fee | 0.47% | 0.59% | ||
Distribution and/or Service (12b-1) fees | None | None | ||
Other Expenses | 0.16% | 0.00% | ||
Total annual operating expenses | 0.63% | 0.59% | ||
Fidelity Large Cap Core Enhanced Index Fund | ||||
Management Fee | 0.30% | 0.39% | ||
Distribution and/or Service (12b-1) fees | None | None | ||
Other Expenses | 0.15% | 0.00% | ||
Total annual operating expenses | 0.45% | 0.39% | ||
Fidelity Large Cap Growth Enhanced Index Fund | ||||
Management Fee | 0.30% | 0.39% | ||
Distribution and/or Service (12b-1) fees | None | None | ||
Other Expenses | 0.15% | 0.00% | ||
Total annual operating expenses | 0.45% | 0.39% | ||
Fidelity Large Cap Value Enhanced Index Fund | ||||
Management Fee | 0.30% | 0.39% | ||
Distribution and/or Service (12b-1) fees | None | None | ||
Other Expenses | 0.15% | 0.00% | ||
Total annual operating expenses | 0.45% | 0.39% | ||
Fidelity Mid Cap Enhanced Index Fund | ||||
Management Fee | 0.45% | 0.59% | ||
Distribution and/or Service (12b-1) fees | None | None | ||
Other Expenses | 0.15% | 0.00% | ||
Total annual operating expenses | 0.60% | 0.59% |
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Fund | Current Expenses | Proposed Expenses | ||
Fidelity Small Cap Enhanced Index Fund | ||||
Management Fee | 0.52% | 0.64% | ||
Distribution and/or Service (12b-1) fees | None | None | ||
Other Expenses | 0.16% | 0.00% | ||
Total annual operating expenses | 0.68% | 0.64% |
The following table illustrates the expenses on a $10,000 investment under the fees and expenses stated above, assuming (1) 5% annual return and (2) if you sell all of your shares at the end of the time period indicated.
Fund | Current | Proposed | ||||||
Fidelity International Enhanced Index Fund |
| |||||||
1 year | $ | 64 | $ | 60 | ||||
3 years | $ | 202 | $ | 189 | ||||
5 years | $ | 351 | $ | 329 | ||||
10 years | $ | 786 | $ | 738 | ||||
Fidelity Large Cap Core Enhanced Index Fund | ||||||||
1 year | $ | 46 | $ | 40 | ||||
3 years | $ | 144 | $ | 125 | ||||
5 years | $ | 252 | $ | 219 | ||||
10 years | $ | 567 | $ | 493 | ||||
Fidelity Large Cap Growth Enhanced Index Fund |
| |||||||
1 year | $ | 46 | $ | 40 | ||||
3 years | $ | 144 | $ | 125 | ||||
5 years | $ | 252 | $ | 219 | ||||
10 years | $ | 567 | $ | 493 | ||||
Fidelity Large Cap Value Enhanced Index Fund |
| |||||||
1 year | $ | 46 | $ | 40 | ||||
3 years | $ | 144 | $ | 125 | ||||
5 years | $ | 252 | $ | 219 | ||||
10 years | $ | 567 | $ | 493 | ||||
Fidelity Mid Cap Enhanced Index Fund |
| |||||||
1 year | $ | 61 | $ | 60 | ||||
3 years | $ | 192 | $ | 189 | ||||
5 years | $ | 335 | $ | 329 | ||||
10 years | $ | 750 | $ | 738 | ||||
Fidelity Small Cap Enhanced Index Fund |
| |||||||
1 year | $ | 69 | $ | 65 | ||||
3 years | $ | 218 | $ | 205 | ||||
5 years | $ | 379 | $ | 357 | ||||
10 years | $ | 847 | $ | 798 |
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APPENDIX F
AMENDED AND RESTATED
MANAGEMENT CONTRACT
between
FIDELITY COMMONWEALTH TRUST II
[Fund Name]
and
FMR CO., INC.
AGREEMENT AMENDED and RESTATED as of this [date] day of [month], 2017, by and between Fidelity Commonwealth Trust II, a Delaware statutory trust which may issue one or more series of shares of beneficial interest (hereinafter called the “Trust”), on behalf of [Fund Name] (hereinafter called the “Fund”), and FMR Co., Inc., a Massachusetts corporation (hereinafter called the “Adviser”) as set forth in its entirety below.
1. (a) Investment Advisory Services. The Adviser undertakes to act as investment adviser of the Fund and shall, subject to the supervision of the Trust’s Board of Trustees, direct the investments of the Fund in accordance with the investment objective, policies and limitations as provided in the Fund’s Prospectus or other governing instruments, as amended from time to time, the Investment Company Act of 1940 and rules thereunder, as amended from time to time (the “1940 Act”), and such other limitations as the Fund may impose by notice in writing to the Adviser. The Adviser shall also furnish for the use of the Fund office space and all necessary office facilities, equipment and personnel for servicing the investments of the Fund; and shall pay the salaries and fees of all officers of the Trust, of all Trustees of the Trust who are “interested persons” of the Trust or of the Adviser and of all personnel of the Trust or the Adviser performing services relating to research, statistical and investment activities. The Adviser is authorized, in its discretion and without prior consultation with the Fund, to buy, sell, lend and otherwise trade in any stocks, bonds and other securities and investment instruments on behalf of the Fund. The investment policies and all other actions of the Fund are and shall at all times be subject to the control and direction of the Trust’s Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the performance by its affiliates of) the management and administrative services necessary for the operation of the Trust. The Adviser shall, subject to the supervision of the Board of Trustees, perform various services for the Fund, including but not limited to: (i) providing the Fund with office space, equipment and facilities (which may be its own) for maintaining its organization; (ii) on behalf of the Fund, supervising relations with, and monitoring the performance of, any sub-advisers, custodians, depositories, transfer and pricing agents, accountants, attorneys, underwriters, brokers and dealers, insurers and other persons in any capacity deemed to be necessary or desirable; (iii) preparing all general shareholder communications, including shareholder reports; (iv) conducting shareholder relations; (v) maintaining the Trust’s existence and its records; (vi) during such times as shares are publicly offered, maintaining the registration and qualification of the Fund’s shares under federal and state law; and (vii) investigating the development of and developing and implementing, if appropriate, management and shareholder services designed to enhance the value or convenience of the Fund as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or analyses to the Trust as the Trust’s Board of Trustees may request from time to time or as the Adviser may deem to be desirable. The Adviser shall make recommendations to the Trust’s Board of Trustees with respect to Trust policies, and shall carry out such policies as are adopted by the Trustees. The Adviser shall, subject to review by the Board of Trustees, furnish such other services as the Adviser shall from time to time determine to be necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of portfolio securities for the Fund’s account with brokers or dealers selected by the Adviser, which may include brokers or dealers affiliated with the Adviser. The Adviser shall use its best efforts to seek to execute portfolio transactions at prices which are advantageous to the Fund 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 Fund and/or the other accounts over which the Adviser or its affiliates exercise investment discretion. The Adviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Adviser and its affiliates have with respect to accounts over which they exercise investment discretion. The Trustees of the Trust shall periodically review the commissions paid by the Fund to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Fund.
47
The Adviser shall, in acting hereunder, be an independent contractor. The Adviser shall not be an agent of the Fund.
2. It is understood that the Trustees, officers and shareholders of the Trust are or may be or become interested in the Adviser as directors, officers or otherwise and that directors, officers and stockholders of the Adviser are or may be or become similarly interested in the Trust, and that the Adviser may be or become interested in the Trust as a shareholder or otherwise.
3. For the services and facilities to be furnished hereunder, the Adviser shall receive a monthly management fee at the annual rate of [Fee] %of the average daily net assets of the Fund (computed in the manner set forth in the Trust Instrument) throughout the month; provided that the amount payable to the Adviser shall be reduced by the compensation, including reimbursement of expenses, paid by the Fund to those Trustees who are not “interested persons” of the Trust or the Adviser; and further provided that in the case of initiation or termination of this contract during any month, the fee for that month shall be reduced proportionately on the basis of the number of business days during which it is in effect and the fee computed upon the average net assets for the business days it is so in effect for that month.
4. The Adviser undertakes to pay, either itself or through an affiliated company, all expenses involved in the operation of the Fund, except the following, which shall be paid by the Fund: (i) Rule 12b-1 fees, if any; (ii) taxes; (iii) the fees and expenses of all Trustees of the Trust who are not “interested persons” of the Trust or of the Adviser; (iv) brokerage fees and commissions; (v) interest expenses with respect to borrowings by the Fund; (vi) expenses of printing and mailing proxy materials to shareholders of the Fund; (vii) all other expenses incidental to holding meetings of the Fund’s shareholders, including proxy solicitations therefor; and (viii) such non–recurring and/or extraordinary expenses as may arise, including actions, suits or proceedings to which the Fund is or is threatened to be a party and the legal obligation that the Fund may have to indemnify the Trust’s Trustees and officers with respect thereto. It is understood that service charges billed directly to shareholders of the Fund, including charges for exchanges, redemptions, or other services, shall not be payable by the Adviser, but may be received and retained by the Adviser or its affiliates. It is also understood that the Adviser and/or the Fund may, from time to time, allocate or reallocate expenses between the Fund and any class of the Fund.
5. The services of the Adviser to the Fund are not to be deemed exclusive, the Adviser being free to render services to others and engage in other activities, provided, however, that such other services and activities do not, during the term of this Contract, interfere, in a material manner, with the Adviser’s ability to meet all of its obligations with respect to rendering services to the Fund hereunder. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Adviser, the Adviser shall not be subject to liability to the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security or other investment instrument.
6. Subject to the prior written approval of the Trustees of the Trust, satisfaction of all applicable requirements under the 1940 Act, and such other terms and conditions as the Trustees may impose, the Adviser may appoint (and may from time to time remove) one or more unaffiliated persons as agent to perform any or all of the services specified hereunder and to carry out such provisions of this Agreement as the Adviser may from time to time direct and may delegate to such unaffiliated persons the authority vested in the Adviser pursuant to this Agreement to the extent necessary to enable such persons to perform the services requested of such person by the Adviser, provided however, that the appointment of any such agent shall not relieve the Adviser of any of its liabilities hereunder.
7. (a) Subject to prior termination as provided in sub-paragraph (d) of this paragraph 7, this Contract shall continue in force until [date], 20 and indefinitely thereafter, but only so long as the continuance after such date shall be specifically approved at least annually by vote of the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund.
(b) This Contract may be modified by mutual consent subject to the provisions of Section 15 of the 1940 Act, as modified by or interpreted by any applicable order or orders of the Securities and Exchange Commission (the “Commission”) or any rules or regulations adopted by, or interpretative releases or no-action letters of, the Commission or its staff.
48
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this paragraph 7, the terms of any continuance or modification of this Contract must have been approved by the vote of a majority of those Trustees of the Trust who are not parties to the Contract or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days’ prior written notice to the other, terminate this Contract, without payment of any penalty, by action of its Trustees or Board of Directors, as the case may be, or with respect to the Fund by vote of a majority of the outstanding voting securities of the Fund. This Contract shall terminate automatically in the event of its assignment.
8. The Adviser is hereby expressly put on notice of the limitation of shareholder liability as set forth in the Trust’s Trust Instrument agrees that the obligations assumed by the Trust pursuant to this Contract shall be limited in all cases to the Fund and its assets, and the Adviser shall not seek satisfaction of any such obligation from the shareholders or any shareholder of the Fund or any other Funds of the Trust. In addition, the Adviser shall not seek satisfaction of any such obligations from the Trustees or any individual Trustee. The Adviser understands that the rights and obligations of any Fund under the Trust Instrument are separate and distinct from those of any and all other Funds.
9. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts, without giving effect to the choice of laws provisions thereof.
The terms “vote of a majority of the outstanding voting securities,” “assignment,” and “interested persons,” when used herein, shall have the respective meanings specified in the 1940 Act, as now in effect or as hereafter amended, and subject to such orders or no-action letters as may be granted by the Commission or its staff.
[SIGNATURE LINES OMITTED]
49
APPENDIX G
FUNDS ADVISED BY FMRC – TABLE OF AVERAGE NET ASSETS AND ADVISORY FEES
The following table shows the average net assets and advisory fees for funds with similar investment objectives to each fund and advised by FMRC as of the period indicated below. 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 the fiscal period.
Fund Name | As of | Average Net Assets (millions) | Ratio of Net Advisory Fees to Average Net Assets Paid to FMRC | |||||||
Fidelity International Enhanced Index Fund | 2/29/16 | 142.6 | 0.47 | % | ||||||
Fidelity Large Cap Core Enhanced Index Fund | 2/29/16 | 397.1 | 0.30 | % | ||||||
Fidelity Large Cap Growth Enhanced Index Fund | 2/29/16 | 430.2 | 0.30 | % | ||||||
Fidelity Large Cap Value Enhanced Index Fund | 2/29/16 | 1,341.3 | 0.30 | % | ||||||
Fidelity Mid Cap Enhanced Index Fund | 2/29/16 | 772.5 | 0.45 | % | ||||||
Fidelity Small Cap Enhanced Index Fund | 2/29/16 | 539.4 | 0.52 | % |
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Fidelity is a registered service mark of FMR LLC. © 2016 FMR LLC. All rights reserved.
Any third-party marks that may appear above are the marks of their respective owners.
1.9880117.100
Form of Proxy Card
Fidelity Investments® (logo) | Vote this proxy card TODAY! | |||||
PO Box 673023 | Your prompt response will save the expense
of additional mailings. | |||||
Dallas, TX 75267-3023 | ||||||
Vote by Internet, Touch-Tone Telephone, or Mail! |
LOG-ON: | Vote on the Internet atwww.proxyvote.com/proxyand follow the on-screen instructions. | |||||
CALL: | To vote by phone call toll-free1-877-296-4941 and follow the recorded instructions. | |||||
(right pointing arrow prints here) | [Control Number prints here in a box] | MAIL: | Return the signed proxy card in the enclosed envelope. |
[TRUST NAME: FUND NAME Prints Here] [Client Code prints here]
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Abigail P. Johnson, Jason P. Pogorelec, and Robert F. Gartland, or any one or more of them, attorneys, with full power of substitution, to vote all shares of the fund as indicated on this proxy card which the undersigned is entitled to vote at the Special Meeting of Shareholders of the fund to be held at an office of the trust at 245 Summer Street, Boston, MA 02210, on March 8, 2017 at 8:30 a.m. Eastern Time 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.
[Shareholder’s name and address prints here] | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | |||
[Card Code prints here] |
Please refer to the Proxy Statement discussion of each of these matters.
IF THE PROXY IS SIGNED, SUBMITTED, AND NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTEDFOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTEFOR EACH OF THE FOLLOWING: | () | () | () | |||||||||||||||
1. | To elect a Board of Trustees. | | FOR ALL | | | WITHHOLD ALL | | | FOR ALL EXCEPT | | | To withhold authority to vote for any individual nominee(s) mark “For All Except” and write the name(s) of the nominee(s) on the line above. | | |||||
(01) Donald F. Donahue
(02) Brian B. Hogan
(03) David A. Rosow
(04) Garnett A. Smith
(05) Carol B. Tomé
(06) Michael E. Wiley | ||||||||||||||||||
FOR | AGAINST | ABSTAIN | ||||||||||||||||
2A. | To approve an amended and restated management contract between the fund and FMR Co., Inc. (FMRC). | () | () | () | ||||||||||||||
FOR | AGAINST | ABSTAIN | ||||||||||||||||
2B. | To terminate the expense contract between the fund and FMRC. | () | () | () |
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN ENCLOSED ENVELOPE IF YOU ARE NOT VOTING BY PHONE OR INTERNET.
Signature(s) (Title(s), if applicable) (Sign in the Box)
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 or partnership proxies should be signed by an authorized person indicating the person’s title.
Signature (PLEASE SIGN WITHIN BOX) | Date | [Card Code prints here] | Signature (Joint Owners) | Date |