SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) FIDELITY CONTRAFUND
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE
REGISTRANT) ARTHUR S. LORING, SECRETARY
Payment of Filing Fee (Check the appropriate box):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11:
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(5) TOTAL FEE PAID:
[ ] 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:
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
(3) FILING PARTY:
(4) DATE FILED:
FIDELITY CONTRAFUND
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of FIDELITY CONTRAFUND:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Contrafund (the fund), a series of Fidelity
Contrafund, a single series trust (the trust), will be held at the
office of the trust, 82 Devonshire Street, Boston, Massachusetts 02109
on January 14, 1998, at 9:00 a.m. The purpose of the Meeting is to
consider and act upon the following proposals, and to transact such
other business as may properly come before the Meeting or any
adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants of the trust.
3. To amend the Declaration of Trust to provide dollar-based voting
rights for
shareholders of the trust.
4. To amend the Declaration of Trust regarding shareholder
notification of
appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund with the
ability to invest all of its assets in another open-end investment
company.
6. To adopt a new fundamental investment policy for the fund
permitting the fund to invest all of its assets in another open-end
investment company with
substantially the same investment objective and policies.
7. To approve an amended management contract for the fund.
8. To approve a new sub-advisory agreement with FMR U.K. for the
fund.
9. To approve a new sub-advisory agreement with FMR Far East for the
fund.
10. To amend the fund's fundamental investment objective and replace
certain
fundamental investment policies with non-fundamental policies.
11. To amend the fund's fundamental investment limitation concerning
diversification
to exclude investments in other investment companies from the
limitation.
12. To ratify the fund's fundamental investment limitation concerning
the
concentration of its investments in a single industry.
13. To ratify the fund's fundamental investment limitation concerning
commodities.
By order of the Board of Trustees,
ARTHUR S. LORING, Secretary
November 17, 1997
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC CORP. JOHN SMITH, TREASURER
2) ABC CORP. JOHN SMITH, TREASURER
C/O JOHN SMITH, TREASURER
B. 1) ABC CORP. PROFIT SHARING PLAN ANN B. COLLINS,
TRUSTEE
2) ABC TRUST ANN B. COLLINS,
TRUSTEE
3) ANN B. COLLINS, TRUSTEE ANN B. COLLINS,
TRUSTEE
U/T/D 12/28/78
C. 1) ANTHONY B. CRAFT, CUST. ANTHONY B. CRAFT
F/B/O ANTHONY B. CRAFT, JR.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY CONTRAFUND
TO BE HELD ON JANUARY 14, 1998
This Proxy Statement is furnished in connection with a solicitation
of proxies made by, and on behalf of, the Board of Trustees of
Fidelity Contrafund (the trust) to be used at the Special Meeting of
Shareholders of Fidelity Contrafund (the fund) and at any adjournments
thereof (the Meeting), to be held on January 14, 1998 at 9:00 a.m. at
82 Devonshire Street, Boston, Massachusetts 02109, the principal
executive office of the trust and Fidelity Management & Research
Company (FMR), the fund's investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about November 17,
1997. Supplementary solicitations may be made by mail, telephone,
telegraph, facsimile, electronic means or by personal interview by
representatives of the trust. In addition, Management Information
Services Corp. (MIS) and D.F. King & Co., Inc. may be paid on a
per-call basis to solicit shareholders on behalf of the fund at an
anticipated cost of approximately $18,000 . The expenses in
connection with preparing this Proxy Statement and its enclosures and
of all solicitations will be paid by the fund. The fund will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares. The
principal business address of Fidelity Distributors Corporation (FDC),
the fund's principal underwriter and distribution agent, and Fidelity
Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity Management &
Research (Far East) Inc. (FMR Far East), sub - advisers to the
fund, is 82 Devonshire Street, Boston, Massachusetts 02109.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written
notification received by the trust, by the execution of a later-dated
proxy card, or by attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and which
are not revoked, will be voted at the Meeting. Shares represented by
such proxies will be voted in accordance with the instructions
thereon. If no specification is made on a proxy card, it will be voted
FOR the matters specified on the proxy card. Only proxies that are
voted will be counted towards establishing a quorum. Broker non-votes
are not considered voted for this purpose. Shareholders should note
that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the Meeting will occur
only if a sufficient number of votes are cast FOR the proposal.
Accordingly, votes to ABSTAIN and votes AGAINST will have the same
effect in determining whether the proposal is approved.
The fund may also arrange to have votes recorded by telephone. D.F.
King & Co., Inc. may be paid on a per-call basis for vote-by-phone
solicitations on behalf of the fund at an anticipated cost of
approximately $16,000 . The expenses in connection with
telephone voting will be paid by the fund. If the fund records votes
by telephone, it will use procedures designed to authenticate
shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to
confirm that their instructions have been properly recorded. Proxies
voted by telephone may be revoked at any time before they are voted in
the same manner that proxies voted by mail may be revoked.
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting, but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
AGAINST the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate.
On September 30, 1997 there were 601,407,519 shares of the fund
issued and outstanding. As of September 30, 1997, the nominees and
officers of the Trust owned, in the aggregate, less than 1% of the
fund's outstanding shares. To the knowledge of the Trust, no
shareholder owned of record or beneficially more than 5% of the
outstanding shares of the fund on that date. Shareholders of
record at the close of business on November 17, 1997 will be entitled
to vote at the Meeting. Each such shareholder will be entitled to one
vote for each share held on that date.
FOR A FREE COPY OF THE FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 AND THE SEMIANNUAL REPORT FOR THE FISCAL PERIOD
ENDED JUNE 30, 1997 CALL 1-800-544-8888 OR WRITE TO FIDELITY
DISTRIBUTORS CORPORATION AT 82 DEVONSHIRE STREET, BOSTON,
MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS
SUFFICIENT TO APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE
FUND CAST AT THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL 2. APPROVAL
OF PROPOSALS 3 THROUGH 13 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" OF THE FUND. UNDER THE
INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), THE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF
THE LESSER OF (A) 67% OR MORE OF THE VOTING SECURITIES PRESENT AT THE
MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR
(B) MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES. BROKER
NON-VOTES ARE NOT CONSIDERED "PRESENT" FOR THIS PURPOSE.
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the
Trust. Pursuant to the provisions of the Declaration of Trust of
Fidelity Contrafund, the Trustees have determined that the number of
Trustees shall be fixed at twelve. It is intended that the enclosed
proxy card will be voted for the election as Trustees of the twelve
nominees listed below, unless such authority has been withheld in the
proxy card.
Except for Robert C. Pozen, all nominees named below are currently
Trustees of Fidelity Contrafund and have served in that capacity
continuously since originally elected or appointed. Phyllis Burke
Davis, Marvin L. Mann, William O. McCoy, and Robert M. Gates were
selected by the trust's Nominating and Administration Committee (see
page ) and were appointed to the Board in December 1992, October 1993,
January 1997, and March 1997, respectively. None of the nominees are
related to one another. Those nominees indicated by an asterisk (*)
are "interested persons" of the trust by virtue of, among other
things, their affiliation with either the trust, the funds' investment
adviser (FMR, or the Adviser), or the funds' distribution agent, FDC.
The business address of each nominee who is an "interested person" is
82 Devonshire Street, Boston, Massachusetts 02109, and the business
address of all other nominees is Fidelity Investments, P.O. Box 9235,
Boston, Massachusetts 02205-9235. Except for Robert M. Gates, William
O. McCoy, and Robert C. Pozen, each of the nominees is currently a
Trustee or General Partner, as the case may be, of 62 registered
investment companies (trusts or partnerships) advised by FMR. Mr.
Gates and Mr. McCoy are currently a Trustee or General Partner, as the
case may be, of 55 registered investment companies (trusts or
partnerships) advised by FMR. Mr. Pozen is currently a Trustee or
General Partner, as the case may be, of 52 registered investment
companies (trusts or partnerships) advised by FMR.
In the election of Trustees, those twelve nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is
present, shall be elected.
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
RALPH F. COX PRESIDENT OF RABAR ENTERPRISES 1991
(65) (MANAGEMENT CONSULTING-ENGINEERING
INDUSTRY, 1994). PRIOR TO FEBRUARY
1994, HE WAS PRESIDENT OF GREENHILL
PETROLEUM CORPORATION (PETROLEUM
EXPLORATION AND PRODUCTION). UNTIL
MARCH 1990, MR. COX WAS PRESIDENT
AND CHIEF OPERATING OFFICER OF UNION
PACIFIC RESOURCES COMPANY
(EXPLORATION AND PRODUCTION). HE IS A
DIRECTOR OF USA WASTE SERVICES, INC.
(NON-HAZARDOUS WASTE, 1993), CH2M
HILL COMPANIES (ENGINEERING), RIO
GRANDE, INC. (OIL AND GAS PRODUCTION),
AND DANIEL INDUSTRIES (PETROLEUM
MEASUREMENT EQUIPMENT
MANUFACTURER). IN ADDITION, HE IS A
MEMBER OF ADVISORY BOARDS OF TEXAS
A&M UNIVERSITY AND THE UNIVERSITY OF
TEXAS AT AUSTIN.
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
PHYLLIS BURKE DAVIS PRIOR TO HER RETIREMENT IN 1992
(66) SEPTEMBER 1991, MRS. DAVIS WAS
THE SENIOR VICE PRESIDENT OF
CORPORATE AFFAIRS OF AVON PRODUCTS,
INC. SHE IS CURRENTLY A DIRECTOR OF
BELLSOUTH CORPORATION
(TELECOMMUNICATIONS), EATON
CORPORATION (MANUFACTURING, 1991),
AND THE TJX COMPANIES, INC. (RETAIL
STORES), AND PREVIOUSLY SERVED AS A
DIRECTOR OF HALLMARK CARDS, INC.
(1985-1991) AND NABISCO BRANDS,
INC. IN ADDITION, SHE IS A MEMBER OF
THE PRESIDENT'S ADVISORY COUNCIL OF
THE UNIVERSITY OF VERMONT SCHOOL
OF BUSINESS ADMINISTRATION.
ROBERT M. GATES CONSULTANT, AUTHOR, AND LECTURER 1997
(54) (1993). MR. GATES WAS DIRECTOR OF
THE CENTRAL INTELLIGENCE AGENCY
(CIA) FROM 1991-1993. FROM 1989
TO 1991, MR. GATES SERVED AS
ASSISTANT TO THE PRESIDENT OF THE
UNITED STATES AND DEPUTY NATIONAL
SECURITY ADVISOR. MR. GATES IS
CURRENTLY A TRUSTEE FOR THE FORUM
FOR INTERNATIONAL POLICY, A BOARD
MEMBER FOR THE VIRGINIA
NEUROLOGICAL INSTITUTE, AND A SENIOR
ADVISOR OF THE HARVARD JOURNAL OF
WORLD AFFAIRS. IN ADDITION, MR. GATES
ALSO SERVES AS A MEMBER OF THE
CORPORATE BOARD FOR LUCASVARITY
PLC (AUTOMOTIVE COMPONENTS AND
DIESEL ENGINES), CHARLES STARK
DRAPER LABORATORY (NON-PROFIT),
NACCO INDUSTRIES, INC. (MINING AND
MANUFACTURING), AND TRW INC.
(ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS).
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
*EDWARD C. JOHNSON 3D PRESIDENT, IS CHAIRMAN, CHIEF 1968
(67) EXECUTIVE OFFICER AND A DIRECTOR OF
FMR CORP.; A DIRECTOR AND
CHAIRMAN OF THE BOARD AND OF THE
EXECUTIVE COMMITTEE OF FMR;
CHAIRMAN AND A DIRECTOR OF FMR
TEXAS INC., FIDELITY MANAGEMENT &
RESEARCH (U.K.) INC., AND FIDELITY
MANAGEMENT & RESEARCH (FAR EAST)
INC.
E. BRADLEY JONES PRIOR TO HIS RETIREMENT IN 1984, MR. 1990
(70) JONES WAS CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF LTV STEEL
COMPANY. HE IS A DIRECTOR OF TRW
INC. (ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS),
CONSOLIDATED RAIL CORPORATION,
BIRMINGHAM STEEL CORPORATION, AND
RPM, INC. (MANUFACTURER OF
CHEMICAL PRODUCTS), AND HE
PREVIOUSLY SERVED AS A DIRECTOR OF
NACCO INDUSTRIES, INC. (MINING AND
MANUFACTURING, 1985-1995),
HYSTER-YALE MATERIALS HANDLING, INC.
(1985-1995), AND CLEVELAND-CLIFFS
INC. (MINING), AND AS A TRUSTEE OF
FIRST UNION REAL ESTATE INVESTMENTS.
IN ADDITION, HE SERVES AS A TRUSTEE
OF THE CLEVELAND CLINIC FOUNDATION,
WHERE HE HAS ALSO BEEN A MEMBER
OF THE EXECUTIVE COMMITTEE AS WELL
AS CHAIRMAN OF THE BOARD AND
PRESIDENT, A TRUSTEE AND MEMBER OF
THE EXECUTIVE COMMITTEE OF
UNIVERSITY SCHOOL (CLEVELAND), AND A
TRUSTEE OF CLEVELAND CLINIC FLORIDA.
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
DONALD J. KIRK EXECUTIVE-IN-RESIDENCE (1995) AT 1987
(65) COLUMBIA UNIVERSITY GRADUATE
SCHOOL OF BUSINESS AND A FINANCIAL
CONSULTANT. FROM 1987 TO JANUARY
1995, MR. KIRK WAS A PROFESSOR AT
COLUMBIA UNIVERSITY GRADUATE
SCHOOL OF BUSINESS. PRIOR TO 1987,
HE WAS CHAIRMAN OF THE FINANCIAL
ACCOUNTING STANDARDS BOARD. MR.
KIRK IS A DIRECTOR OF GENERAL RE
CORPORATION (REINSURANCE), AND HE
PREVIOUSLY SERVED AS A DIRECTOR OF
VALUATION RESEARCH CORP. (APPRAISALS
AND VALUATIONS, 1993-1995). IN
ADDITION, HE SERVES AS CHAIRMAN OF
THE BOARD OF DIRECTORS OF THE
NATIONAL ARTS STABILIZATION FUND,
CHAIRMAN OF THE BOARD OF TRUSTEES
OF THE GREENWICH HOSPITAL
ASSOCIATION, A MEMBER OF THE PUBLIC
OVERSIGHT BOARD OF THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS' SEC PRACTICE SECTION
(1995), AND AS A PUBLIC GOVERNOR OF
THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. (1996).
*PETER S. LYNCH VICE CHAIRMAN AND DIRECTOR OF FMR 1990
(54) (1992). PRIOR TO MAY 31, 1990, HE
WAS A DIRECTOR OF FMR AND
EXECUTIVE VICE PRESIDENT OF FMR (A
POSITION HE HELD UNTIL MARCH 31,
1991); VICE PRESIDENT OF FIDELITY
MAGELLAN FUND AND FMR GROWTH
GROUP LEADER; AND MANAGING
DIRECTOR OF FMR CORP. MR. LYNCH
WAS ALSO VICE PRESIDENT OF FIDELITY
INVESTMENTS CORPORATE SERVICES
(1991-1992). IN ADDITION, HE SERVES
AS A TRUSTEE OF BOSTON COLLEGE,
MASSACHUSETTS EYE & EAR INFIRMARY,
HISTORIC DEERFIELD (1989) AND
SOCIETY FOR THE PRESERVATION OF NEW
ENGLAND ANTIQUITIES, AND AS AN
OVERSEER OF THE MUSEUM OF FINE
ARTS OF BOSTON.
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
WILLIAM O. MCCOY VICE PRESIDENT OF FINANCE FOR THE 1997
(64) UNIVERSITY OF NORTH CAROLINA
(16-SCHOOL SYSTEM, 1995). PRIOR TO
HIS RETIREMENT IN DECEMBER 1994,
MR. MCCOY WAS VICE CHAIRMAN OF THE
BOARD OF BELLSOUTH CORPORATION
(TELECOMMUNICATIONS, 1984) AND
PRESIDENT OF BELLSOUTH ENTERPRISES
(1986). HE IS CURRENTLY A DIRECTOR OF
LIBERTY CORPORATION (HOLDING
COMPANY, 1984), WEEKS CORPORATION
OF ATLANTA (REAL ESTATE, 1994),
CAROLINA POWER AND LIGHT COMPANY
(ELECTRIC UTILITY, 1996) AND THE KENAN
TRANSPORT CO. (1996). PREVIOUSLY, HE
WAS A DIRECTOR OF FIRST AMERICAN
CORPORATION (BANK HOLDING COMPANY,
1979-1996). IN ADDITION, MR. MCCOY
SERVES AS A MEMBER OF THE BOARD OF
VISITORS FOR THE UNIVERSITY OF NORTH
CAROLINA AT CHAPEL HILL (1994) AND FOR
THE KENAN-FLAGER BUSINESS SCHOOL
(UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL, 1988).
GERALD C. MCDONOUGH CHAIRMAN OF G.M. MANAGEMENT 1989
(69) GROUP (STRATEGIC ADVISORY SERVICES).
MR. MCDONOUGH IS A DIRECTOR OF YORK
INTERNATIONAL CORP. (AIR CONDITIONING
AND REFRIGERATION), COMMERCIAL
INTERTECH CORP. (HYDRAULIC SYSTEMS,
BUILDING SYSTEMS, AND METAL
PRODUCTS, 1992), CUNO, INC. (LIQUID
AND GAS FILTRATION PRODUCTS, 1996),
AND ASSOCIATED ESTATES REALTY
CORPORATION (A REAL ESTATE INVESTMENT
TRUST, 1993). MR. MCDONOUGH SERVED
AS A DIRECTOR OF ACME-CLEVELAND
CORP. (METAL WORKING,
TELECOMMUNICATIONS, AND ELECTRONIC
PRODUCTS) FROM 1987-1996 AND
BRUSH-WELLMAN INC. (METAL REFINING)
FROM 1983-1997.
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
MARVIN L. MANN CHAIRMAN OF THE BOARD, PRESIDENT, 1993
(64) AND CHIEF EXECUTIVE OFFICER OF
LEXMARK INTERNATIONAL, INC. (OFFICE
MACHINES, 1991). PRIOR TO 1991, HE
HELD THE POSITIONS OF VICE PRESIDENT
OF INTERNATIONAL BUSINESS MACHINES
CORPORATION ("IBM") AND PRESIDENT
AND GENERAL MANAGER OF VARIOUS IBM
DIVISIONS AND SUBSIDIARIES. MR. MANN
IS A DIRECTOR OF M.A. HANNA
COMPANY (CHEMICALS, 1993), IMATION
CORP. (IMAGING AND INFORMATION
STORAGE, 1997), AND INFOMART
(MARKETING SERVICES, 1991), A
TRAMMELL CROW CO. IN ADDITION, HE
SERVES AS THE CAMPAIGN VICE
CHAIRMAN OF THE TRI-STATE UNITED WAY
(1993) AND IS A MEMBER OF THE
UNIVERSITY OF ALABAMA PRESIDENT'S
CABINET.
*ROBERT C. POZEN SENIOR VICE PRESIDENT, IS PRESIDENT --
(51) AND A DIRECTOR OF FMR (1997); AND
PRESIDENT AND A DIRECTOR OF FMR
TEXAS INC. (1997), FIDELITY
MANAGEMENT & RESEARCH (U.K.) INC.
(1997), AND FIDELITY MANAGEMENT &
RESEARCH (FAR EAST) INC. (1997).
PREVIOUSLY, MR. POZEN SERVED AS
GENERAL COUNSEL, MANAGING DIRECTOR,
AND SENIOR VICE PRESIDENT OF FMR
CORP.
THOMAS R. WILLIAMS PRESIDENT OF THE WALES GROUP, INC. 1989
(69) (MANAGEMENT AND FINANCIAL ADVISORY
SERVICES). PRIOR TO RETIRING IN 1987,
MR. WILLIAMS SERVED AS CHAIRMAN OF
THE BOARD OF FIRST WACHOVIA
CORPORATION (BANK HOLDING COMPANY),
AND CHAIRMAN AND CHIEF EXECUTIVE
OFFICER OF THE FIRST NATIONAL BANK OF
ATLANTA AND FIRST ATLANTA CORPORATION
(BANK HOLDING COMPANY). HE IS
CURRENTLY A DIRECTOR OF CONAGRA, INC.
(AGRICULTURAL PRODUCTS), GEORGIA
POWER COMPANY (ELECTRIC UTILITY),
NATIONAL LIFE INSURANCE COMPANY OF
VERMONT, AMERICAN SOFTWARE, INC.,
AND APPLESOUTH, INC. (RESTAURANTS,
1992).
** Except as otherwise indicated, each individual has held the office
shown or other offices in the same company for the last five years.
As of September 30, 1997, the nominees, Trustees and officers of the
Trust and the fund owned, in the aggregate, less than 1 % of the
fund's outstanding shares.
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) a Trustee may be removed at any Special Meeting of
shareholders by a two-thirds vote of the outstanding voting securities
of the trust. 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.
The trust's Board, which is currently composed of two interested and
nine non-interested Trustees, met eleven times during the twelve
months ended December 31, 1996. It is expected that the Trustees will
meet at least ten times a year at regularly scheduled meetings.
The trust's Audit Committee is composed entirely of Trustees who are
not interested persons of the trust, FMR or its affiliates and
normally meets four times a year, or as required, prior to meetings of
the Board of Trustees. Currently, Messrs. Kirk (Chairman), Gates, and
McCoy, and Mrs. Davis are members of the Committee. The committee
oversees and monitors the trust's internal control structure, its
auditing function and its financial reporting process, including the
resolution of material reporting issues. The committee recommends to
the Board of Trustees the appointment of auditors for the trust. It
reviews audit plans, fees and other material arrangements in respect
of the engagement of auditors, including non-audit services to be
performed. It reviews the qualifications of key personnel involved in
the foregoing activities. The committee plays an oversight role in
respect of the trust's investment compliance procedures and the code
of ethics. During the twelve months ended December 31, 1996, the
committee held four meetings.
The trust's Nominating and Administration Committee is currently
composed of Messrs. McDonough (Chairman), Jones, and Williams. The
committee members confer periodically and hold meetings as required.
The committee makes nominations for independent trustees, and for
membership on committees. The committee periodically reviews
procedures and policies of the Board of Trustees and committees. It
acts as the administrative committee under the Retirement Plan for
non-interested trustees who retired prior to December 30, 1996. It
monitors the performance of legal counsel employed by the trust and
the independent trustees. The committee in the first instance monitors
compliance with, and acts as the administrator of the provisions of
the code of ethics applicable to the independent trustees. During the
twelve months ended December 31, 1996, the committee held four
meetings. The Nominating and Administration Committee will consider
nominees recommended by shareholders. Recommendations should be
submitted to the committee in care of the Secretary of the Trust. The
trust does not have a compensation committee; such matters are
considered by the Nominating and Administration Committee.
The following table sets forth information describing the
compensation of each Trustee and Member of the Advisory Board of the
fund for his or her services for the fiscal year ended December 31,
1997.
COMPENSATION TABLE
TRUSTEES AND MEMBERS OF THE AGGREGATE TOTAL
ADVISORY BOARD COMPENSATION COMPENSATION
FROM FROM THE
CONTRAFUND B,C,D+ FUND COMPLEX*,A
J. GARY BURKHEAD **,(DAGGER) $ 0 $ 0
RALPH F. COX $ 11,347 137,700
PHYLLIS BURKE DAVIS $ 11,051 134,700
RICHARD J. FLYNN*** $ 0 168,000
ROBERT M. GATES **** $ 9,6 82 0
EDWARD C. JOHNSON 3D ** $ 0 0
E. BRADLEY JONES $ 11,131 134,700
DONALD J. KIRK $ 11,131 136,200
PETER S. LYNCH ** $ 0 0
WILLIAM O. MCCOY***** $ 11,7 53 85,333
GERALD C. MCDONOUGH $ 13,859 136,200
EDWARD H. MALONE*** $ 0 136,200
MARVIN L. MANN $ 11,347 134,700
ROBERT C. POZEN** $ 0 0
THOMAS R. WILLIAMS $ 11,347 136,200
* Information is for the calendar year ended December 31, 1996 for 235
funds in the complex.
** Interested Trustees of the fund and Mr. Burkhead are
compensated by FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 1996.
**** Mr. Gates was appointed to the Board of Trustees effective March
1, 1997.
***** During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a Member of the Advisory Board of the
trust. Mr. McCoy was appointed to the Board of Trustees effective
January 1, 1997.
(dagger) J. Gary Burkhead served on the Board of Trustees through
July 3 1, 1997. Effective August 1, 1997, Mr. Burkhead serves as
a Member of the Advisory Board of the trust.
+ Estimated
A Compensation figures include cash, a pro rata portion of benefits
accrued under the retirement program for the period ended December 30,
1996 and required to be deferred, and may include amounts deferred at
the election of Trustees.
B Compensation figures include cash, and may include amounts required
to be deferred, a pro rata portion of benefits accrued under the
retirement program for the period ended December 30, 1996 and required
to be deferred, and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $5330, Phyllis Burke Davis, $5330, Richard J. Flynn, $0, Robert
M. Gates, $4 ,567 , E. Bradley Jones, $5330, Donald J. Kirk,
$5330, William O. McCoy, $5 ,490 , Gerald C. McDonough, $6218,
Edward H. Malone, $0, Marvin L. Mann, $5330, and Thomas R. Williams,
$5330.
D For the fiscal year ended December 31, 1997, certain of the
non-interested Trustees' aggregate compensation from the fund includes
accrued voluntary deferred compensation as follows: Ralph F. Cox,
$4417, Marvin L. Mann, $4417, and Thomas R. Williams, $4417.
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee fees
and length of service. The obligation of a fund to make such payments
is neither secured nor funded. A Trustee became eligible to
participate in the program at the end of the calendar year in which he
or she reached age 72, provided that, at the time of retirement, he or
she had served as a Fidelity fund Trustee for at least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
ACCOUNTANTS OF THE TRUST.
By a vote of the non-interested Trustees, the firm of Coopers &
Lybrand L.L.P. has been selected as independent accountants for the
fund to sign or certify any financial statements of the fund required
by any law or regulation to be certified by an independent accountant
and filed with the Securities and Exchange Commission (SEC) or any
state. Pursuant to the 1940 Act, such selection requires the
ratification of shareholders. In addition, as required by the 1940
Act, the vote of the Trustees is subject to the right of the fund, by
vote of a majority of its outstanding voting securities at any meeting
called for the purpose of voting on such action, to terminate such
employment without penalty. Coopers & Lybrand L.L.P. has advised the
fund that it has no direct or material indirect ownership interest in
the fund.
The independent accountants examine annual financial statements for
the fund and provide other audit and tax-related services. In
recommending the selection of the trust's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such
services would affect the accountants' independence. Representatives
of Coopers & Lybrand L.L.P. 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. On September 18, 1997 Coopers & Lybrand L.L.P. and
Price Waterhouse LLP announced plans to merge their practices
world - wide. Coopers & Lybrand L.L.P. and Price Waterhouse LLP
expect the merger, which is subject to approval by the partners of
both organizations and by the regulators, to become effective in early
1998.
3. TO AMEND THE DECLARATION OF TRUST TO PROVIDE DOLLAR-BASED VOTING
RIGHTS FOR SHAREHOLDERS OF THE TRUST.
The Board of Trustees has approved, and recommends that shareholders
of the trust approve a proposal to amend Article VIII, Section 1 of
the Declaration of Trust. The amendment would provide voting rights
based on a shareholder's total dollar interest in a fund (dollar-based
voting), rather than on the number of shares owned, for all
shareholder votes for a fund. As a result, voting power would be
allocated in proportion to the value of each shareholder's investment.
BACKGROUND. Fidelity Contrafund is a fund of Fidelity Contrafund, an
open-end management investment company organized as a Massachusetts
business trust. Currently, it is the only fund in the trust. If there
were additional funds in the trust, shareholders of each fund would
vote separately on matters concerning only that fund and would vote on
a trust-wide basis on matters that affect the trust as a whole, such
as electing trustees or amending the Declaration of Trust. Currently,
under the Declaration of Trust, each share is entitled to one vote,
regardless of the relative value of the shares of each fund in the
trust.
The original intent of the one-share, one-vote provision was to
provide equitable voting rights to all shareholders as required by the
1940 Act. In the case where a trust has several series or funds,
voting rights may become disproportionate since the net asset value
per share (NAV) of the separate funds generally diverge over time. The
Staff of the Securities and Exchange Commission (SEC) has issued a
"no-action" letter permitting a trust to seek shareholder approval of
a dollar-based voting system. The proposed amendment will comply with
the conditions stated in the no-action letter.
REASON FOR PROPOSAL. If approved, the amendment would provide a more
equitable distribution of voting rights for certain votes than the
one-share, one-vote system currently in effect. The voting power of
each shareholder would be commensurate with the value of the
shareholder's dollar investment rather than with the number of shares
held.
Under the current voting provisions, an investment in a fund with a
lower NAV may have significantly greater voting power than the same
dollar amount invested in a fund with a higher NAV. The table below
shows a hypothetical example of this.
FUND NET ASSET VALUE $1,000 INVESTMENT IN TERMS OF
NUMBER OF SHARES
A $ 10.00 100.000
B $ 7.57 132.100
C $ 10.93 91,491
D $ 1.00 1,000.000
For example, Fund D shareholders would have ten times the voting
power of Fund A shareholders, because a $1,000 investment in Fund D
would buy ten times as many shares as a $1,000 investment in Fund A.
Accordingly, a one-share, one-vote system may provide certain
shareholders with a disproportionate ability to affect the vote
relative to shareholders of other funds in the trust. If dollar-based
voting had been in effect, each shareholder would have had 1,000
voting shares. Their voting power would be proportionate to their
economic interest, which FMR believes is a more equitable result, and
which is the result with respect to a typical corporation where each
voting share generally has an equal market price.
As long as there is only one fund in the trust, as in the case of
Fidelity Contrafund, the proposal will not affect the voting rights of
fund shareholders. However, if additional funds are added to the trust
in the future, voting rights would be changed under the proposal. On
matters requiring trust-wide votes where all funds are required to
vote, shareholders who own shares with a lower NAV than other funds in
the trust would be giving other shareholders in the trust more voting
"power" than they currently have. On matters affecting only one fund,
only shareholders of that fund vote on the issue. In this instance,
under both the current Declaration of Trust and an amended Declaration
of Trust, all shareholders of the fund would have the same voting
rights, since the NAV is the same for all shares in a single fund.
AMENDMENT TO THE DECLARATION OF TRUST. Article VIII, Section 1 sets
forth the method of calculating voting rights for all shareholder
votes for the trust. If approved, Article VIII, Section 1 will be
amended as follows (material to be added is ((underlined)) and
material to be deleted is [bracketed]):
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote... On any matter
submitted to a vote of the Shareholders, all Shares shall be voted by
individual Series, except (i) when required by the 1940 Act, Shares
shall be voted in the aggregate and not by individual Series; and (ii)
when the Trustees have determined that the matter affects only the
interests of one or more Series, then only the Shareholders of such
Series shall be entitled to vote thereon. [Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote,
and each fractional Share shall be entitled to a proportionate
fractional vote.] ((A Shareholder of each Series shall be entitled to
one vote for each dollar of net asset value (number of Shares owned
times net asset value per share) of such Series, on any matter on
which such Shareholder is entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote.)) There
shall be no cumulative voting in the election of Trustees. Shares may
be voted in person or by proxy. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action
required or permitted by law, this Declaration of Trust or any Bylaws
of the Trust to be taken by Shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the trust and its shareholders. The Trustees recommend
voting FOR the proposal. The amended Declaration of Trust will become
effective upon shareholder approval. If the proposal is not approved
by shareholders of the trust, Article VIII, Section 1 of the
Declaration of Trust will remain unchanged.
4. TO AMEND THE DECLARATION OF TRUST REGARDING SHAREHOLDER
NOTIFICATION OF APPOINTMENT OF TRUSTEES.
The trust's Declaration of Trust provides that in the case of a
vacancy on the Board of Trustees, the remaining Trustees shall fill
the vacancy by appointing a person they, in their discretion, see fit,
consistent with the limitations of the 1940 Act. Section 16 of the
1940 Act states that a vacancy may be filled by the Trustees, if after
filling the vacancy, at least two-thirds of the Trustees then holding
office were elected by the holders of the outstanding voting
securities of the trust. It also states that if at any time less than
50% of the Trustees were elected by shareholders, a shareholder
meeting must be called within 60 days for the purposes of electing
Trustees to fill the existing vacancies.
The Declaration of Trust currently requires that within three months
of a Trustee appointment, notification of such be mailed to each
shareholder of the trust. Trustees may appoint a Trustee in
anticipation of a current Trustee's retirement or resignation, or in
the event of an increase in the number of Trustees. The current
Declaration of Trust also requires shareholder notification within
three months of such an appointment.
The Trustees recommend that shareholders of the trust vote to
eliminate the notification requirement from the trust's Declaration of
Trust. The language to be deleted from the Declaration of Trust is
[bracketed].
ARTICLE IV
THE TRUSTEES
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation,
retirement, removal, incapacity, or inability of any of the Trustees,
in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their discretion
shall see fit consistent with the limitations under the Investment
Company Act of 1940. Such appointment shall be evidenced by a written
instrument signed by a majority of the Trustees in office or by
recording in the records of the Trust, whereupon the appointment shall
take effect. [Within three months of such appointment the Trustees
shall cause notice of such appointment to be mailed to each
Shareholder at his address as recorded on the books of the Trust.] An
appointment of a Trustee may be made by the Trustees then in office
[and notice thereof mailed to Shareholders as aforesaid] in
anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or
after the effective date of said retirement, resignation or increase
in number of Trustees. As soon as any Trustee so appointed shall have
accepted this trust, the trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further
act or conveyance, and he shall be deemed a Trustee hereunder. The
power of appointment is subject to the provisions of Section 16(a) of
the 1940 Act.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification
to all shareholders of a trust would be costly to the funds of the
trust. If the proposal is approved, shareholders will be notified of
Trustee appointments in the next financial report for the fund. Other
than eliminating the notification requirement, this proposal does not
amend any other aspect of Trustee resignation or appointment.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the trust and its shareholders. The Trustees recommend
voting FOR the proposal. The amended Declaration of Trust will become
effective upon shareholder approval. If the proposal is not approved
by shareholders of the trust, Article IV, Section 4 of the Declaration
of Trust will remain unchanged.
5. TO AMEND THE DECLARATION OF TRUST TO PROVIDE THE FUND WITH THE
ABILITY TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT
COMPANY.
The Board of Trustees has approved, and recommends that shareholders
of the trust approve, a proposal to amend Article V, Section 1 of the
Declaration of Trust to clarify that the Trustees may authorize the
investment of all of the fund's assets in another open-end investment
company ("Master Feeder Fund Structure"). The purpose of a
Master Feeder Fund Structure is to achieve operational efficiencies by
consolidating portfolio management while maintaining different
distribution and servicing structures. In order to implement a Master
Feeder Fund Structure, both the Declaration of Trust and the fund's
policies must permit the structure. Currently, the fund's policies do
not allow for such investments. Proposal 6 on page seeks the approval
of the fund's shareholders to adopt a fundamental investment policy to
permit investment in another open-end investment company with
substantially the same investment objective and policies . This
proposal, which amends the Declaration of Trust, clarifies the Board's
ability to implement the Master Feeder Fund Structure if the fund's
policies permit it.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds
invest all of their assets in a single pooled investment, or "master"
fund. For example, an institutional equity fund with a high initial
minimum investment amount for large investors might pool its
investments with an equity fund with low minimums designed for retail
investors. This structure allows several Feeder Funds with
substantially the same objective but different distribution and
servicing features to combine their investments and manage them as one
Master Fund instead of managing them separately. The Feeder Funds
combine their investments by investing all of their assets in one
Master Fund. (Each Feeder Fund invested in a single Master Fund
retains its own characteristics, but is able to achieve operational
efficiencies by investing together with the other Feeder Funds in the
Master Feeder Fund Structure.) The current Declaration of Trust does
not specifically provide the Trustees the ability to authorize the
Master Feeder Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually
review methods of structuring mutual funds to take maximum advantage
of potential efficiencies. While neither FMR nor the Trustees has
determined that the fund should invest in a Master Fund, the Trustees
believe it could be in the best interest of the fund to adopt such a
structure at a future date. If this proposal is approved, the
Declaration of Trust amendment would provide the Trustees with the
power to authorize the fund to invest all of its assets in a single
open-end investment company. The Trustees will authorize such a
transaction only if a Master Feeder Fund Structure is permitted under
the fund's investment policies (see Proposal 6), if they determine
that a Master Feeder Fund Structure is in the best interest of the
fund, and if, upon advice of counsel, they determine that the
investment will not have material adverse tax consequences to the fund
or its shareholders. The Trustees will specifically consider the
impact, if any, on fees paid by the fund as a result of adopting a
Master Feeder Fund Structure. Although the current Declaration of
Trust does not contain any explicit prohibition against implementing a
Master Feeder Fund Structure, the specific authority is being sought
in the event the Trustees deem it appropriate to adopt a Master Feeder
Fund Structure in the future.
AMENDMENT TO THE DECLARATION OF TRUST. If the proposal is approved,
Article V, Section 1 of the Declaration of Trust will be amended as
follows: (material to be added is ((underlined))):
"Subject to any applicable limitation in the Declaration of Trust or
the Bylaws of the Trust, the Trustees shall have power and authority:
(((t) Notwithstanding any other provision hereof, to invest all of
the assets of any series in a single open-end investment company,
including investment by means of transfer of such assets in exchange
for an interest or interests in such investment company;))"
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the trust and its shareholders. The Trustees recommend
voting FOR the proposal. The amended Declaration of Trust will become
effective upon shareholder approval. If the proposal is not approved
by shareholders of the trust, Article V, Section 1 of the Declaration
of Trust will remain unchanged.
6. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR THE FUND
PERMITTING THE FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END
INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE
AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders
of the fund approve, the adoption of a new fundamental investment
policy that would permit the fund to invest all of its assets in
another open-end investment company with substantially the same
investment objective and policies ("Master Feeder Fund Structure").
The purpose of the Master Feeder Fund Structure would be to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds
invest all of their assets in a single "master" fund. In order to
implement a Master Feeder Fund Structure, an amendment to the
Declaration of Trust is proposed, as is the adoption of a new
fundamental investment policy. Proposal 5 proposes to amend the
Declaration of Trust to allow the Trustees to authorize the conversion
to a Master Feeder Fund Structure when permitted by the fund's
policies. This proposal would add a fundamental policy for the fund
that permits a Master Feeder Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually
review methods of structuring mutual funds to take advantage of
potential efficiencies. While neither the Board nor FMR has determined
that the fund should invest in a Master Fund, the Trustees believe it
could be in the best interests of the fund to adopt such a structure
at a future date.
At present, certain of the fund's fundamental investment policies and
limitations would prevent the fund from investing all of its assets in
another investment company, and would require a vote of shareholders
before such a structure could be adopted. To avoid the costs
associated with a subsequent shareholder meeting, the Trustees
recommend that shareholders vote to permit the fund's assets to be
invested in a single Master Fund, without a further vote of
shareholders. The Trustees will authorize such an investment only if
they determine that action to be in the best interests of the fund and
its shareholders and if, upon advice of counsel, they determine that
the investment will not have material adverse tax consequences to the
fund. Approval of Proposal 5 provides the Trustees with explicit
authority to approve a Master Feeder Fund Structure. If shareholders
approve this proposal, certain fundamental and non-fundamental
policies and limitations of the fund that currently prohibit
investment in shares of one investment company would not apply to
permit the investment in a Master Fund managed by FMR or its
affiliates or successor. These policies include the fund's limitations
on concentration, diversification and underwriting.
DISCUSSION. FMR may manage a number of mutual funds with similar
investment objectives, policies, and limitations but with different
features and services (Comparable Funds). Were these Comparable Funds
to pool their assets, operational efficiencies could be achieved,
offering the opportunity to reduce costs. Similarly, FMR anticipates
that a Master Feeder Fund Structure would facilitate the introduction
of new Fidelity mutual funds, increasing the investment options
available to shareholders.
The fund's method of operation and shareholder services would not be
materially affected by its investment in a Master Fund, except that
the assets of the fund would be managed as part of a larger pool. Were
the fund to invest all of its assets in a Master Fund, it would hold
only a single investment security, and the Master Fund would directly
invest in individual securities pursuant to its investment objective.
The Master Fund would be managed by FMR or an affiliate, such as FMR
Texas, Inc. in the case of a money market fund. The Trustees would
retain the right to withdraw the fund's investments from a Master Fund
at any time and would do so if the Master Fund's investment objective
and policies were no longer appropriate for the fund. The fund would
then resume investing directly in individual securities as it does
currently. Whenever a Feeder Fund is asked to vote at a shareholder
meeting of the Master Fund, the Feeder Fund will hold a meeting of its
shareholders if required by applicable law or the Feeder Fund's
policies to vote on the matters to be considered at the Master Fund
shareholder meeting. The fund will cast its votes at the Master Fund
meeting in the same proportion as the fund's shareholders voted at
their meeting.
At present, the Trustees have not considered any specific proposal to
authorize pooling of assets. The Trustees will authorize investing the
fund's assets in a Master Fund only if they determine that pooling is
in the best interests of the fund and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to the fund or its shareholders. In determining whether
to invest in a Master Fund, the Trustees will consider, among other
things, the opportunity to reduce costs and to achieve operational
efficiencies. The Trustees will not authorize investment in a Master
Fund if doing so would materially increase costs (including fees) to
shareholders.
FMR may benefit from the use of a Master Feeder Fund Structure if
overall assets under management are increased (since FMR's fees are
based on assets). Also, FMR's expenses of providing investment and
other services to the fund may be reduced. If the fund's investment in
a Master Fund were to reduce FMR's expenses materially, the Trustees
would consider whether a reduction in FMR's management fee would be
appropriate if and when a Master Feeder Fund Structure is implemented.
PROPOSED FUNDAMENTAL POLICY. To allow the fund to invest in a Master
Fund at a future date, the Trustees recommend that the fund adopt the
following fundamental policy:
"The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
If the proposal is adopted, the Trustees intend to adopt a
non-fundamental investment limitation for the fund which states:
"The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund."
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the fundamental
limitation will become effective when disclosure is revised to reflect
the changes. If the proposal is not approved by the shareholders of
the fund, the fund's current fundamental investment policies will
remain unchanged with respect to potential investment in Master Funds.
7. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR THE FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies several aspects of the
management fee that FMR receives from the fund for managing its
investments and business affairs.
CURRENT MANAGEMENT FEE. The management fee is calculated and paid
monthly, and is normally expressed as an annual percentage of the
fund's average net assets. The fee has two components: a Basic Fee and
a Performance Adjustment. The Basic Fee is an annual percentage of the
fund's average net assets for the current month. The Basic Fee rate is
the sum of a Group Fee rate, which declines as FMR's fund assets under
management increase, and a fixed individual fund fee rate of 0.30%.
The Basic Fee rate for the fund's fiscal year ended December 31, 1996
(not including the fee amendments discussed below) was 0.6132%.
The Performance Adjustment is a positive or negative dollar amount
based on the fund's performance and assets for the most recent 36
months. If the fund outperforms the S&P 500 (the Index) over 36
months, FMR receives a positive Performance Adjustment, and if the
fund underperforms the Index, the management fee is reduced by a
negative Performance Adjustment. The Performance Adjustment is an
annual percentage of the fund's average net assets over the 36-month
performance period. The Performance Adjustment rate is 0.02% for each
percentage point of outperformance or underperformance, subject to a
maximum of 0.20% if the fund outperforms or underperforms the Index by
more than ten percentage points. Performance of the fund and the Index
are rounded to the nearest whole percentage point for purposes of the
calculation.
PROPOSED MANAGEMENT FEE AMENDMENTS. The Amended Contract would (1)
reduce the Group Fee rate further if FMR's assets under management
remain over $210 billion, and (2) modify the Performance Adjustment
calculation to round the performance of the fund and the Index to the
nearest 0.01%, rather than the nearest 1.00%.
IMPACT OF GROUP FEE RATE REDUCTION. At FMR's current level of assets
under management ($531 billion as of August 31, 1997), the changes to
the Group Fee rate reduce the management fee. FMR has voluntarily
implemented the Group Fee reductions pending shareholder approval, and
the Fund has paid lower management fees as a result. For the fund's
fiscal year ended December 31, 1996, the management fee using the
proposed Group Fee reductions (including the Performance Adjustment)
was 0.5727% of the Fund's average net assets. The Group Fee reductions
lowered the management fee rate by 0.0084% compared to the rate FMR
was entitled to receive under the Present Contract (0.5811%).
IMPACT OF PERFORMANCE ADJUSTMENT CHANGES. The more precise rounding
method for the Performance Adjustment would have increased the
management fee rate for the fiscal year ended December 31, 1996 by
0.0007% of the Fund's average net assets for the year.
COMBINED EFFECT OF FEE CHANGES. In the fiscal year ended December 31,
1996, the Group Fee reductions and the changes to the Performance
Adjustment would have resulted in a 0.0077% reduction in the total
management fee. The future impact will depend on many different
factors, and may represent an increase or decrease from the management
fee under the Present Contract. The Group Fee rate reductions will
either reduce the management fee or leave it unchanged, depending on
the level of FMR's assets under management. Calculating performance to
the nearest 0.01% may increase or decrease the Performance Adjustment,
depending on whether performance would have been rounded up or down.
FMR is the fund's investment adviser pursuant to a management
contract dated January 1, 1993, which was approved by shareholders on
December 16, 1992. (For information on FMR, see the section entitled
"Activities and Management of FMR," on page .) A copy of the Amended
Contract, marked to indicate the proposed amendments, is supplied as
Exhibit 1 on page . Except for the modifications discussed above, the
Amended Contract is substantially identical to the fund's Present
Contract with FMR. (For a detailed discussion of the fund's Present
Contract, refer to the section entitled "Present Management Contract,"
on page .) If approved by shareholders, the Amended Contract will take
effect on the first day of the first month following approval and will
remain in effect through July 31, 1998, and thereafter, but only as
long as its continuance is approved at least annually by (i) the vote,
cast in person at a meeting called for the purpose, of a majority of
the Independent Trustees and (ii) the vote of either a majority of the
Trustees or a majority of the outstanding shares of the fund. If the
Amended Contract is not approved, the Present Contract will continue
in effect through July 31, 1998, and thereafter only as long as its
continuance is approved at least annually as described above.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on
the aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets
increase, the Group Fee rate declines. The Amended Contract would not
change the Group Fee rate if group assets are $210 billion or less.
Above $210 billion in group assets, the Group Fee rate declines under
both contracts, but under the Amended Contract, it declines faster.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets.
The rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets
increase. The Amended Contract would add 10 new, lower breakpoints
applicable when group assets are above $210 billion as illustrated in
the following table. (For an explanation of how the Group Fee rate is
used to calculate the management fee see the section entitled "Present
Management Contract" on page .)
GROUP FEE RATE BREAKPOINTS
AVERAGE GROUP PRESENT GROUP AMENDED
ASSETS CONTRACT ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
OVER 174 .3000% 174-210 .3000%
210-246 .2950%
246-282 .2900%
282-318 .2850%
318-354 .2800%
354-390 .2750%
390-426 .2700%
426-462 .2650%
462-498 .2600%
498-534 .2550%
OVER 534 .2500%
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are
combined to arrive at the Group Fee rate, see "Present Management
Contract" on page .)
EFFECTIVE GROUP FEE RATES
Group Present Amended
Assets Contract Contract
($ billions)
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
FMR voluntarily adopted various additional Group Fee breakpoints for
group assets over $174 billion in 1993, 1994 and 1996. Although the
new fee breakpoints have not been added to the management contract
pending shareholder approval, FMR has voluntarily based its management
fee on the Group Fee schedule contained in the Amended Contract since
January 1, 1996. Group assets for August 31, 1997 were approximately
$531 billion.
MODIFICATIONS TO PERFORMANCE ADJUSTMENT - ROUNDING METHOD. The
annual Performance Adjustment rate equals 0.02% for each percentage
point by which the fund outperforms or underperforms the Index over a
36-month performance period. Under the Present Contract, the
investment performance of both the fund and the Index are rounded to
the nearest full percentage point (for example, 15.5123% is rounded to
16%.) Rounding to full percentage points results in the Performance
Adjustment rate being applied in 0.02% increments. In comparison,
under the Amended Contract, the investment performance of both the
fund and Index are rounded to the nearest 0.01% (using the prior
example, 15.5123% is rounded to 15.51%) prior to calculating the
difference in investment performance. The more precise rounding method
results in a more accurate measure of the difference in investment
performance and allows for the Performance Adjustment to be applied in
0.0002% increments. This reduces the chance of minor changes in
performance resulting in significant changes to the Performance
Adjustment, and ultimately the fund's management fee.
During fiscal 1996, using the more precise rounding methodology, the
impact on the annual performance fee rate would have been between
0.0107% and (0.0107)% as a percentage of the fund's average net assets
for the year. The aggregate impact during fiscal 1996 was a 0.0007%
increase in the management fee.
COMPARISON OF MANAGEMENT FEES. The following table compares the
fund's management fee as calculated under the terms of the Present
Contract (not including FMR's voluntary implementation of the Group
Fee reductions) for fiscal 1996 to the management fee the fund would
have incurred if the Amended Contract had been in effect. Management
fees are expressed in dollars and as percentages of the fund's average
net assets for the year.
Present Contract Amended Contract Difference
$ % $ % $ %
Basic Fee 119,191,542 0.6132 117,562,925 0.6048 (1,628,617) (0.0084)
Performance (6,238,556) (0.0321) (6,096,988) (0.0314) 141,568 0.0007
Adjustment
Total 112,952,986 0.5811 111,465,937 0.5734 (1,487,049) (0.0077)
Managemen
t Fee
The following table provides data concerning the fund's management
fees and expenses as a percentage of average net assets for the fiscal
year ended December 31, 1996 under the Present Contract (not including
FMR's voluntary implementation of the Group Fee reductions) and if the
Amended Contract had been in effect during the same period.
The following figures are based on historical expenses adjusted to
reflect current fees of the fund and are calculated as a percentage of
average net assets.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Present Contract Amended
Contract
Management Fee 0.58% 0.57%
Other Expenses 0.25% 0.25%
Total Fund Operating Expenses 0.83% 0.82%
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. The fund has entered into arrangements
with its custodian and transfer agent whereby interest earned on
uninvested cash balances is used to offset a portion of the fund's
expenses. Including these reductions, the total operating expenses
presented in the table would have been 0.79% under the Present
Contract and 0.78% under the Amended Contract.
EXAMPLE: The following illustrates the expenses on a $1,000
investment under the fees and expenses stated above, assuming (1) 5%
annual return and (2) redemption at the end of each time period and
(3) payment of the fund's 3.00% sales charge:
1 Year 3 Years 5 Years 10 Years
Present Contract $ 38 $ 56 $ 75 $ 129
Amended Contract $ 38 $ 55 $ 74 $ 128
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of
the fund. The example above should not be considered a representation
of past or future expenses of the fund. Actual expenses may vary from
year to year and may be higher or lower than those shown above.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees on June 19, 1997. The Board of Trustees
considered and approved the modifications to the Group Fee Rate
schedule during the two month periods from November to December 1995,
June to July 1994, and September to October 1993, and the
modifications to the Performance Adjustment calculation during the
period from June to July 1995. The Board of Trustees received
materials relating to the Amended Contract in advance of the meeting
at which the Amended Contract was considered, and had the opportunity
to ask questions and request further information in connection with
such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their monthly meetings Trustees receive materials specifically
relating to the Amended Contract. These materials include: (i)
information on the investment performance of the fund, a peer group of
funds and an appropriate index or combination of indices, (ii) sales
and redemption data in respect of the fund, (iii) the economic outlook
and the general investment outlook in the markets in which the fund
invests, and (iv) notable changes in the fund's investments. The Board
of Trustees and the Independent Trustees also consider periodically
other material facts such as (1) FMR's results and financial
condition, (2) arrangements in respect of the distribution of the
fund's shares, (3) the procedures employed to determine the value of
the fund's assets, (4) the allocation of the fund's brokerage, if any,
including allocations to brokers affiliated with FMR and the use of
"soft" commission dollars to pay fund expenses and to pay for research
and other similar services, (5) FMR's management of the relationships
with the fund's custodian and subcustodians, (6) the resources devoted
to and the record of compliance with the fund's investment policies
and restrictions and with policies on personal securities transactions
and (7) the nature, cost, and audit of non-investment management
services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all of the matters considered. Matters considered by the Board
of Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees annually review a report detailing the background
of the fund's portfolio manager, and the fund's investment objective
and discipline. The Independent Trustees have also had discussions
with senior management of FMR responsible for investment operations,
and the senior management of Fidelity's equity group. Among other
things they considered the size, education and experience of FMR's
investment staff, its use of technology, and FMR's approach to
recruiting, training and retaining portfolio managers and other
research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Amended Contract and under
separate agreements covering transfer agency functions and pricing,
bookkeeping and securities lending services, if any. The Board of
Trustees and the Independent Trustees have also considered the nature
and extent of FMR's supervision of third party service providers,
principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, credit card, insurance,
publishing, real estate, international research and investment funds,
and others. The Board of Trustees and the Independent Trustees
considered the intangible benefits that accrue to FMR and its
affiliates by virtue of their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services.
CONCLUSION. In considering the Amended Contract, the Board of
Trustees and the Independent Trustees did not identify any single
factor as all-important or controlling, and the foregoing summary does
not detail all of the matters considered. Based on their evaluation of
all material factors and assisted by the advice of independent
counsel, the Trustees concluded (i) that the existing management fee
structure is fair and reasonable and (ii) that the proposed
modifications to the management fee rates, that is the reduction of
the Group Fee Rate schedule and the modifications to the performance
adjustment calculation, are in the best interest of the fund's
shareholders. The Board of Trustees, including the Independent
Trustees, voted to approve the submission of the Amended Contract to
shareholders of the fund and recommends that shareholders of the fund
vote FOR the Amended Contract.
8. TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH FMR U.K. FOR THE FUND.
In conjunction with its portfolio management responsibilities on
behalf of the fund, FMR has entered into sub-advisory agreements with
affiliates whose offices are geographically dispersed around the
world. To strengthen these relationships, the Board of Trustees
proposes that shareholders of the fund approve a new sub-advisory
agreement (the Proposed Agreement) between FMR U.K. and FMR on behalf
of the fund to replace FMR's existing agreement with FMR U.K. The
Proposed Agreement would allow FMR not only to receive investment
advice and research services from FMR U.K., but also would permit FMR
to grant FMR U.K. investment management authority if FMR believes it
would be beneficial to the fund and its shareholders. Because FMR pays
all of FMR U.K.'s fees, the Proposed Agreement would not affect the
fees paid by the fund to FMR.
On June 19, 1997, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of the fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not
"interested persons" of the trust or FMR. FMR provided substantial
information to the Trustees to assist them in their deliberations. The
Trustees determined that allowing FMR to grant investment management
authority to FMR U.K. would provide FMR increased flexibility in the
assignment of portfolio managers and give the fund access to managers
located abroad who may have more specialized expertise with respect to
local companies and markets. Additionally, the Trustees believe that
the fund and its shareholders may benefit from giving FMR, through FMR
U.K., the ability to execute portfolio transactions from points in
Europe that are physically closer to foreign issuers and the primary
markets in which their securities are traded. Increasing FMR's
proximity to foreign markets should enable the fund to participate
more readily in full trading sessions on foreign exchanges, and to
react more quickly to changing market conditions.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR U.K. with respect
to the fund (the Current Agreement). The Current Agreement, dated
November 1, 1989, was approved by the fund's shareholders on October
18, 1989. A copy of the Proposed Agreement is attached to this proxy
statement as Exhibit 2.
FMR U.K., with its principal office in London, England is a
wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This
research complements other research on foreign securities produced by
FMR's U.S.-based research analysts and portfolio managers, or obtained
from broker-dealers or other sources.
FMR U.K. may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FMR U.K.'s only
client other than FMR is Fidelity International Limited (FIL), an
affiliate of FMR organized under the laws of Bermuda. FIL provides
investment advisory services to non-U.S. investment companies and
institutional investors investing in securities of issuers throughout
the world. Edward C. Johnson 3d, President and a Trustee of the trust,
is Chairman and a Director of FMR U.K., Chairman, and a Director of
FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR U.K., see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page .
Under the Current Agreement, FMR U.K. acts as an investment
consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests
on behalf of the fund. FMR U.K. provides investment advice and
research services with respect to issuers located outside of the
United States, focusing primarily on companies based in Europe. Under
the Current Agreement with FMR U.K., FMR, NOT THE FUND, pays FMR
U.K.'s fee equal to 110% of its costs incurred in connection with the
agreement.
For the fiscal year ended December 31, 1996, FMR paid FMR U.K.
$1,434,000 on behalf of the fund. Fees paid to the sub-adviser are not
reduced to reflect expense reimbursements or fee waivers by FMR, if
any, in effect from time to time.
Although FMR employees are expected to consult regularly with FMR
U.K., under the Current Agreement, FMR U.K. has no authority to make
investment decisions on behalf of the fund. Under the Proposed
Agreement, FMR would continue to receive investment advice from FMR
U.K., but it could also grant investment management authority to FMR
U.K. with respect to all or a portion of the fund's assets. If FMR
U.K. were to exercise investment management authority on behalf of the
fund, it would be required, subject to the supervision of FMR, to
direct the investments of the fund in accordance with the fund's
investment objective, policies, and limitations as provided in the
fund's Prospectus or other governing instruments and such other
limitations as the fund may impose by notice in writing to FMR or FMR
U.K. If FMR grants investment management authority to FMR U.K. with
respect to all or a portion of the fund's assets, FMR U.K. would be
authorized to buy or sell stocks, bonds, and other securities for the
fund subject to the overall supervision of FMR and the Board of
Trustees. In addition, the Proposed Agreement would authorize FMR to
delegate other investment management services to FMR U.K., including,
but not limited to, currency management services (including buying and
selling currency options and entering into currency forward and
futures contracts on behalf of the fund), other transactions in
futures contracts and options, and borrowing or lending portfolio
securities. If any of these investment management services were
delegated, FMR U.K. would continue to be subject to the control and
direction of FMR and the Board of Trustees and to be bound by the
investment objective, policies, and limitations of the fund.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY THE
FUND. The fees paid by FMR to FMR U.K. for investment advice as
described above would remain unchanged. However, to the extent that
FMR granted investment management authority to FMR U.K., FMR would pay
FMR U.K. 50% of its monthly management fee with respect to the average
net assets managed on a discretionary basis by FMR U.K. for investment
management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on February 1, 1998 (or, if later, the first day of the first month
following approval) and would continue in force until July 31, 1998
and from year to year thereafter, but only as long as its continuance
was approved at least annually by (i) the vote, cast in person at a
meeting called for the purpose, of a majority of those Trustees who
are not "interested persons" of the trust or FMR and (ii) the vote of
either a majority of the Trustees or by the vote of a majority of the
outstanding shares of the fund.
The Proposed Agreement could be transferred to a successor of FMR
U.K. without resulting in its termination and without shareholder
approval, as long as the transfer did not constitute an assignment
under applicable securities regulations. The Proposed Agreement would
be terminable on 60 days' written notice by either party to the
agreement and the Proposed Agreement would terminate automatically in
the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. If the Proposed Agreement is not approved,
FMR's Current Agreement on behalf of the fund will continue in effect.
9. TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH FMR FAR EAST FOR THE
FUND.
In conjunction with its portfolio management responsibilities on
behalf of the fund, FMR has entered into sub-advisory agreements with
affiliates whose offices are geographically dispersed around the
world. To strengthen these relationships, the Board of Trustees
proposes that shareholders of the fund approve a new sub-advisory
agreement (the Proposed Agreement) between FMR Far East and FMR on
behalf of the fund to replace FMR's existing agreement with FMR Far
East. The Proposed Agreement would allow FMR not only to receive
investment advice and research services from FMR Far East, but also
would permit FMR to grant FMR Far East investment management authority
if FMR believes it would be beneficial to the fund and its
shareholders. Because FMR pays all of FMR Far East's fees, the
Proposed Agreement would not affect the fees paid by the fund to FMR.
On June 19, 1997, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of the fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not
"interested persons" of the trust or FMR. FMR provided substantial
information to the Trustees to assist them in their deliberations. The
Trustees determined that allowing FMR to grant investment management
authority to FMR Far East would provide FMR increased flexibility in
the assignment of portfolio managers and give the fund access to
managers located abroad who may have more specialized expertise with
respect to local companies and markets. Additionally, the Trustees
believe that the fund and its shareholders may benefit from giving
FMR, through FMR Far East, the ability to execute portfolio
transactions from points in the Far East that are physically closer to
foreign issuers and the primary markets in which their securities are
traded. Increasing FMR's proximity to foreign markets should enable
the fund to participate more readily in full trading sessions on
foreign exchanges, and to react more quickly to changing market
conditions.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR Far East with
respect to the fund (the Current Agreement). The Current Agreement,
dated November 1, 1989, was approved by the fund's shareholders on
October 18, 1989. A copy of the Proposed Agreement is attached to this
proxy statement as Exhibit 3.
FMR Far East, with its principal office in Tokyo, Japan is a
wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This
research complements other research on foreign securities produced by
FMR's U.S.-based research analysts and portfolio managers, or obtained
from broker-dealers or other sources.
FMR Far East may also provide investment advisory services to FMR
with respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FMR Far East's
only client other than FMR is Fidelity International Limited (FIL), an
affiliate of FMR organized under the laws of Bermuda. FIL provides
investment advisory services to non-U.S. investment companies and
institutional investors investing in securities of issuers throughout
the world. Edward C. Johnson 3d, President and a Trustee of the trust,
is Chairman and a Director of FMR Far East, Chairman, and a Director
of FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR Far East, see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page .
Under the Current Agreement, FMR Far East acts as an investment
consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests
on behalf of the fund. FMR Far East provides investment advice and
research services with respect to issuers located outside of the
United States, focusing primarily on companies based in the Far East.
Under the Current Agreement with FMR Far East, FMR, NOT THE FUND, pays
FMR Far East's fee equal to 105% of its costs incurred in connection
with the agreement.
For the fiscal year ended December 31, 1996, FMR paid FMR Far East
$1,402,000 on behalf of the fund. Fees paid to the sub-adviser are not
reduced to reflect expense reimbursements or fee waivers by FMR, if
any, in effect from time to time.
Although FMR employees are expected to consult regularly with FMR Far
East, under the Current Agreement, FMR Far East has no authority to
make investment decisions on behalf of the fund. Under the Proposed
Agreement, FMR would continue to receive investment advice from FMR
Far East, but it could also grant investment management authority to
FMR Far East with respect to all or a portion of the fund's assets. If
FMR Far East were to exercise investment management authority on
behalf of the fund, it would be required, subject to the supervision
of FMR, to direct the investments of the fund in accordance with the
fund's investment objective, policies, and limitations as provided in
the fund's Prospectus or other governing instruments and such other
limitations as the fund may impose by notice in writing to FMR or FMR
Far East. If FMR grants investment management authority to FMR Far
East with respect to all or a portion of the fund's assets, FMR Far
East would be authorized to buy or sell stocks, bonds, and other
securities for the fund subject to the overall supervision of FMR and
the Board of Trustees. In addition, the Proposed Agreement would
authorize FMR to delegate other investment management services to FMR
Far East, including, but not limited to, currency management services
(including buying and selling currency options and entering into
currency forward and futures contracts on behalf of the fund), other
transactions in futures contracts and options, and borrowing or
lending portfolio securities. If any of these investment management
services were delegated, FMR Far East would continue to be subject to
the control and direction of FMR and the Board of Trustees and to be
bound by the investment objective, policies, and limitations of the
fund.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY THE
FUND. The fees paid by FMR to FMR Far East for investment advice as
described above would remain unchanged. However, to the extent that
FMR granted investment management authority to FMR Far East, FMR would
pay FMR Far East 50% of its monthly management fee with respect to the
average net assets managed on a discretionary basis by FMR Far East
for investment management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on February 1, 1998 (or, if later, the first day of the first month
following approval) and would continue in force until July 31, 1998
and from year to year thereafter, but only as long as its continuance
was approved at least annually by (i) the vote, cast in person at a
meeting called for the purpose, of a majority of those Trustees who
are not "interested persons" of the trust or FMR and (ii) the vote of
either a majority of the Trustees or by the vote of a majority of the
outstanding shares of the fund.
The Proposed Agreement could be transferred to a successor of FMR Far
East without resulting in its termination and without shareholder
approval, as long as the transfer did not constitute an assignment
under applicable securities regulations. The Proposed Agreement would
be terminable on 60 days' written notice by either party to the
agreement and the Proposed Agreement would terminate automatically in
the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. If the Proposed Agreement is not approved,
FMR's Current Agreement on behalf of the fund will continue in effect.
10. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT OBJECTIVE AND REPLACE
CERTAIN FUNDAMENTAL INVESTMENT POLICIES WITH NON-FUNDAMENTAL POLICIES.
The Board of Trustees has approved, and recommends that shareholders
of the fund approve, modifications to the fund's investment objective
and policies. The proposed modifications are intended to describe the
fund's investment approach more clearly, and to reflect changes in the
fund's investments and investment strategies over the years since the
fund was introduced. The proposal also would make some of the fund's
investment policies non-fundamental (i.e., changeable without
shareholder approval, but subject to supervision of the Board of
Trustees), to provide flexibility to deal with future changes in the
marketplace.
INVESTMENT OBJECTIVE AND RELATED INVESTMENT POLICIES. Contrafund's
investment objective and policies have remained essentially unchanged
since the fund was introduced in 1967. The fund's investment
objective, and the policies describing its key investment strategies,
currently read as follows:
The fund seeks capital appreciation by investing in securities of
companies believed by FMR to be undervalued due to an overly
pessimistic appraisal by the public of their future outlook. FMR will
invest in securities of companies (1) which have been unpopular for
some time but where recent developments bring hope of improved
operating results; (2) which have enjoyed recent market popularity but
which appear to have temporarily fallen out of favor for reasons that
are considered non-recurring or short term; or (3) which are
undervalued in relation to popular securities of other companies in
the same industry.
The objective and policies above are fundamental, which means they
cannot be modified without a vote of the fund's shareholders.
The proposal would modify the fund's investment objective and
policies to reduce their emphasis on securities that are unpopular or
out of favor. Unlike some "contrarian" funds, which focus exclusively
on companies that are doing poorly or whose stock is trading at
historical lows, the fund's contrarian approach also
encompasses companies where general market opinion is neutral or even
favorable, if FMR believes that the market has overlooked or
discounted positive developments that could benefit the company's
stock. To reflect this aspect of the fund's strategy more clearly, the
proposal would modify the fund's objective and policies to read as
follows:
The fund seeks capital appreciation by investing in securities of
companies whose value FMR believes is not fully recognized by the
public. The types of companies the fund may invest in include
(1) companies experiencing positive fundamental change such as a new
management team or product launch, a significant cost-cutting
initiative, a merger or acquisition, or a reduction in industry
capacity that should lead to improved pricing; (2) companies whose
earnings potential has increased or is expected to increase more than
generally perceived; (3) companies that have enjoyed recent market
popularity but which appear to have temporarily fallen out of favor
for reasons that are considered non-recurring or short term; and (4)
companies that are undervalued in relation to securities of other
companies in the same industry.
Under the proposal, only the fund's investment objective would be
fundamental. The examples in the sentence following the objective
could be changed without further shareholder approval subject to the
supervision of the Board of Trustees.
The proposal would not change the fund's contrarian investment style
or its goal of seeking capital appreciation. The proposal would,
however, reflect changes in the fund's mix of investment strategies
over time . Companies whose stock is out of favor or viewed
pessimistically play a less significant role in the fund than they did
in the 1960s, when the fund commenced operations. In their place,
companies that are not necessarily performing poorly, but whose
potential is not fully recognized by the market, have come to
represent a more important part of the fund's portfolio.
The proposed investment objective and policies would reflect this
change in emphasis. In addition, the proposed investment policies
would provide specific examples of the factors (such as a positive
fundamental change in a company's business, or an increase in earnings
potential) that FMR uses to identify instances where the popular view
overlooks or understates a company's future prospects. Because the
proposed investment policies would be non-fundamental, they could be
modified or updated in the future without the necessity of calling a
shareholder meeting, to remain current with the strategies used by FMR
to implement the fund's objective.
OTHER INVESTMENT POLICIES. In addition to the investment policies
discussed above, the fund's current fundamental investment policies
provide that the fund: 1) will remain substantially fully invested in
equity and debt securities; 2) will usually be primarily invested in
common stocks and convertible securities; and 3) may make substantial
investments in investment-grade fixed-income obligations if FMR
believes that market conditions warrant a more conservative approach.
If the proposal is approved by shareholders, the fund's Trustees
intend to replace the above fundamental policies with the following
non-fundamental policies:
The fund normally invests primarily in common stocks and securities
convertible into common stocks. The fund also reserves the right to
invest without limitation in preferred stocks and investment-grade
debt instruments for temporary, defensive purposes.
Under both the current and proposed policies, the fund will primarily
invest in common stocks and convertible securities and will reserve
the right to invest in more conservative instruments under certain
circumstances. Although the fund will no longer be required to remain
substantially fully invested in equity and debt securities, it is not
currently anticipated that the changes will have any material impact
on the investments of the fund or the way it is managed. However,
approval of the proposal will permit the fund to react to changing
market and regulatory conditions, subject to the supervision of the
Trustees, without seeking additional approval from shareholders.
The proposal will broaden the fund's ability to invest in more
conservative investments in two ways. First, the proposed policy
clarifies that more conservative investments can be made for
temporary, defensive purposes rather than just when market conditions
warrant a more conservative approach. Second, the fund would be able
to invest in preferred stocks as well as investment grade debt
securities for temporary, defensive purposes. Preferred stocks are
generally considered more risky than investment-grade debt securities,
but more conservative than common stocks. The proposed "temporary
defensive" policy is the standard policy for Fidelity equity funds.
The Trustees believe that efforts to standardize the fund's temporary
defensive policy will promote operational efficiencies and facilitate
compliance monitoring.
The SEC has proposed amendments to its requirements for mutual fund
prospectuses that would require a fund to disclose in its prospectus
its ability to invest for temporary defensive purposes and the
percentage of assets that may be committed to temporary defensive
positions. Replacing the fund's current fundamental temporary
defensive policy with a non-fundamental policy would permit the fund
to conform to any future regulatory changes without the possible need
for an additional shareholder meeting.
See Exhibit 4 for a complete listing of the current and proposed
investment objective and policies discussed in this proposal.
CONCLUSION. The Board of Trustees believes that the proposed
modifications to the fund's investment objective and policies are in
the best interests of the fund and its shareholders, and recommends
that shareholders vote FOR the proposal. If approved, the proposed
objective and policies will take effect when the disclosure is revised
to reflect the changes. If the proposal is not approved, the fund's
current fundamental objective and policies will remain unchanged.
11. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION.
The fund's current fundamental investment limitation concerning
diversification is as follows:
"The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer."
The Trustees recommend that shareholders of the fund vote to replace
the fund's current fundamental investment limitation with the
following amended fundamental investment limitation governing
diversification:
"The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, ((or securities of other investment companies)))
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer."
The percentage limits in the proposed fundamental limitation
concerning diversification are the percentage limitations imposed by
the 1940 Act for diversified investment companies. The amended
fundamental diversification limitation makes one change from the
current limitation; it would permit the fund to invest without limit
in the securities of other investment companies. Pursuant to an order
of exemption granted by the SEC, the fund may invest up to 25% of
total assets in non-publicly offered money market or short-term bond
funds (the Central Funds) managed by FMR or an affiliate of FMR. The
Central Funds do not currently pay investment advisory, management, or
transfer agent fees, but do pay minimal fees for services, such as
custodian, auditor, and Independent Trustees fees. FMR anticipates
that the Central Funds will benefit the fund by enhancing the
efficiency of cash management for the Fidelity funds and by providing
increased short-term investment opportunities. If the proposal is
approved, the Central Funds are expected to serve as a principal
option for cash investment for the fund.
If this proposal is approved, the amended fundamental diversification
limitation cannot be changed without the approval of the shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund and its shareholders. The Trustees
recommend voting FOR the proposal. The amended fundamental
diversification limitation, upon shareholder approval, will become
effective when the disclosure is revised to reflect the changes. If
the proposal is not approved by the shareholders of the fund, the
fund's current fundamental diversification limitation will remain
unchanged.
12. TO RATIFY THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
THE CONCENTRATION OF ITS INVESTMENTS IN A SINGLE INDUSTRY.
Pursuant to Section 8(b) of the 1940 Act, a mutual fund must state
its policy relating to, among other things, the concentration of its
investments in a single industry. The fund has been operating under
the following fundamental investment limitation concerning
concentration:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry."
The Trustees recommend that shareholders of the fund vote to ratify
the fund's fundamental investment limitation concerning concentration
with the following change:
"The fund may not purchase the securities of any issuer (other than
((securities)) issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities) if, as a result, more than 25% of
the fund's total assets would be invested in the securities of
companies whose principal business activities are in the same
industry."
The primary purpose of the proposal is to ratify the fund's current
fundamental concentration limitation while also conforming it to a
limitation which is expected to become standard for all funds managed
by FMR. If the proposal is approved, the new fundamental concentration
limitation cannot be changed without the approval of shareholders.
Ratification of the proposed amended limitation on concentration is
not expected to affect the way the fund is managed, the investment
performance of the fund, or the securities or instruments in which the
fund invests.
The proposed amended limitation is not substantially different from
the current policy and is not likely to have any impact on the
investment techniques employed by the fund.
CONCLUSION. The Board of Trustees has concluded that the proposal
benefits the fund and its shareholders. The Trustees recommend voting
FOR the proposal. Upon shareholder approval, the amended fundamental
limitation will become effective when the disclosure is revised to
reflect the change. If the proposal is not approved by the
shareholders of the fund, the fund's current limitation will remain
unchanged.
13. TO RATIFY THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
COMMODITIES.
Pursuant to Section 8(b) of the 1940 Act, a mutual fund must state
its policy relating to, among other things, the purchase and sale of
commodities. The fund has been operating under a fundamental
investment limitation concerning commodities. In general, the fund
does not anticipate any future investment activity with respect to
physical commodities, but pursuant to securities regulation, must have
a stated policy.
The Trustees recommend that shareholders vote to ratify the following
fundamental investment limitation concerning the purchase or sale of
commodities currently being followed by the fund:
"The fund may not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other instruments
(but this shall not prevent the fund from purchasing or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities)."
The fundamental policy conforms to a limitation that is expected to
become standard for all funds managed by FMR. The limitation does not
permit the fund to acquire physical commodities directly, but permits
the fund to invest in securities and other instruments backed by
commodities and to sell commodities acquired as a result of ownership
of other investments. In addition, the limitation does not apply to
options and futures contracts. If the proposal is approved, the
fundamental limitation concerning commodities cannot be changed
without the approval of shareholders.
Ratification of the proposed limitation on commodities is not
expected to affect the way the fund is managed, the investment
performance of the fund, or the securities or instruments in which the
fund invests.
CONCLUSION. The Board of Trustees has concluded that the proposal
benefits the fund and its shareholders. The Trustees recommend voting
FOR the proposal. Upon shareholder approval, the fundamental
limitation will become effective immediately. If the proposal is not
approved by the shareholders of the fund, the fund will continue to
follow its current limitation.
OTHER BUSINESS
The Board knows of no other business to be brought before the
Meeting. However, if any other matters properly come before the
Meeting, it is the intention that proxies that do not contain specific
instructions to the contrary will be voted on such matters in
accordance with the judgment of the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to
a number of investment companies. Information concerning the advisory
fees, net assets, and total expenses of funds with investment
objectives similar to Fidelity Contrafund and advised by FMR is
contained in the Table of Average Net Assets and Expense Ratios in
Exhibit 5 beginning on page .
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions that have occurred to date have included mortgages
and personal and general business loans. In the judgment of FMR, the
terms and conditions of those transactions were not influenced by
existing or potential custodial or other fund relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter
S. Lynch, Vice Chairman. With the exception of Robert C. Pozen, who is
proposed for election as a Trustee, each of the Directors is also a
Trustee of the trust. Messrs. Johnson 3d, Pozen, J. Gary Burkhead,
John H. Costello, Arthur S. Loring, Robert H. Morrison, Richard A.
Silver, Leonard M. Rush, William J. Hayes, Ms. Abigail Johnson, and
Mr. William Danoff are currently officers of the trust and officers or
employees of FMR or FMR Corp. With the exception of Mr. Costello
and Mr. Silver , all of these persons hold or have
options to acquire stock of FMR Corp. The principal business address
of each of the Directors of FMR is 82 Devonshire Street, Boston,
Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore,
under the 1940 Act may be deemed to form a controlling group with
respect to FMR Corp.
During the period January 1, 1996 through September 30, 1997, 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 Corp.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed
in 1986 to provide research and investment advice with respect to
companies based outside the United States for certain funds for which
FMR acts as investment adviser. FMR may also grant the sub-advisers
investment management authority as well as authority to buy and sell
securities for certain of the funds for which it acts as investment
adviser, if FMR believes it would be beneficial to a fund.
Funds with investment objectives similar to Fidelity Contrafund
managed by FMR with respect to which FMR currently has sub-advisory
agreements with either FMR U.K. or FMR Far East, and the net assets of
each of these funds, are indicated in the Table of Average Net Assets
and Expense Ratios in Exhibit 5 beginning on page .
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is
President and a Trustee of the trust and other funds advised by FMR;
Chairman and a Director of FMR Texas Inc. (FMR Texas); Chairman, Chief
Executive Officer, President, and a Director of FMR Corp., Chairman of
the Board and of the Executive Committee of FMR, and a Director of
FMR. In addition, Mr. Pozen is Senior Vice President of the trust and
Senior Vice President and a Trustee of other funds advised by FMR; a
Director of FMR Corp.; Director of FMR; and President and Director of
FMR Texas. Each of the Directors is a stock holder of FMR Corp. The
principal business address of the Directors is 82 Devonshire Street,
Boston, Massachusetts 02109.
PRESENT MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other
services. Under its management contract with the fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of the fund in accordance with its
investment objective, policies, and limitations. FMR also provides the
fund with all necessary office facilities and personnel for servicing
the fund's investments, compensates all officers of the fund and all
Trustees who are "interested persons" of the trust or of FMR, and all
personnel of the fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include
providing facilities for maintaining the fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with the fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal and state laws;
developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees. Services provided by affiliates of FMR will continue
under the proposed management contract described in Proposal 7 .
In addition to the management fee payable to FMR, the fund pays
transfer agent and pricing and bookkeeping fees to Fidelity Service
Company, Inc. (FSC), an affiliate of FMR, its transfer, dividend
disbursing, and shareholder servicing agent. Although the fund's
current management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders, the
trust, on behalf of the fund has entered into a revised transfer agent
agreement with FSC, pursuant to which FSC bears the costs of providing
these services to existing shareholders. Other expenses paid by the
fund include interest, taxes, brokerage commissions, and the fund's
proportionate share of insurance premiums and Investment Company
Institute dues. The fund is also liable for such non-recurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including
reimbursement for out-of-pocket expenses, paid to FSC by the fund for
fiscal 1996 amounted to $4 3,399,000 and $849,000, respectively.
FSC also received fees for administering the fund's securities lending
program. Securities lending fees are based on the number and duration
of individual securities loans. Securities lending fees for fiscal
1996 were $105,000.
The fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. The
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered. Promotional and
administrative expenses in connection with the offer and sale of
shares are paid by FMR. Sales charge revenue paid to, and retained by,
FDC for fiscal 1996 amounted to $16,029,000.
FMR is the fund's manager pursuant to a management contract dated
January 1, 1993, which was approved by shareholders on December 16,
1992. Shareholder approval had been requested for changes affecting
the basic fee portion of the total management fee that FMR receives
from the fund. The approved contract modified the group fee by
providing for lower fee rates if FMR's assets under management remain
above $138 billion, and also raised the individual fund fee rate from
0.09% to 0.30%.
For the services of FMR under the contract, the fund pays FMR a
monthly management fee composed of the sum of two elements: a basic
fee and a performance adjustment based on a comparison of the fund's
performance to that of the Standard & Poor's 500 Index (S&P
500(registered trademark)).
COMPUTING THE BASIC FEE. The fund's basic fee rate is composed of two
elements: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown below on the left. The schedule
below on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $453 billion of group net assets - the approximate
level for December 1996 - was 0.3021%, which is the weighted
average of the respective fee rates for each level of group net assets
up to $453 billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
Under the fund's current management contract with FMR, the group fee
rate is based on a schedule with breakpoints ending at .3000% for
average group assets in excess of $174 billion. Prior to January 1,
1993, the group fee rate breakpoints shown above for average group
assets in excess of $138 billion and under $228 billion were
voluntarily adopted by FMR on January 1, 1992. The additional
breakpoints shown above for average group assets in excess of $228
billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to
the group fee rate schedule, and added new breakpoints for average
group assets in excess of $210 billion and under $390 billion as shown
in the schedule below, pending shareholder approval of a new
management contract reflecting the revised schedule. The revised group
fee rate schedule provides for lower management fee rates as FMR's
assets under management increase. The revised group fee rate schedule
was identical to the above schedule for average group assets under
$210 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $390 billion,
pending shareholder approval of a new management contract reflecting
the revised schedule and additional breakpoints. The revised group fee
rate schedule and its extensions provide for lower management fee
rates as FMR's assets under management increase. For average group
assets in excess of $210 billion, the revised group fee rate schedule
with additional breakpoints voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
174 - $210 billion .3000% $ 150 billion .3371%
210 - 246 .2950 175 .3325
246 - 282 .2900 200 .3284
282 - 318 .2850 225 .3249
318 - 354 .2800 250 .3219
354 - 390 .2750 275 .3190
390 - 426 .2700 300 .3163
426 - 462 .2650 325 .3137
462 - 498 .2600 350 .3113
498 - 534 .2550 375 .3090
Over 534 .2500 400 .3067
425 .3046
450 .3024
475 .3003
500 .2982
525 .2962
550 .2942
The individual fund fee rate is 0.30%. Based on the average group net
assets of the funds advised by FMR for December 1996, the annual basic
fee rate would be calculated as follows:
Group Fee Rate Individual Fund Basic Fee Rate
Fee Rate
0.3021% + 0.30% = 0.6021%
One-twelfth of this annual basic fee rate is applied to the fund's
net assets averaged for the month, giving a dollar amount, which is
the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee is subject to
upward or downward adjustment, depending upon whether, and to what
extent, the fund's investment performance for the performance period
exceeds, or is exceeded by, the record of the S&P 500 (the Index) over
the same period. The performance period consists of the current month
plus the previous 35 months. Each percentage point of difference,
calculated to the nearest 1.0% (up to a maximum difference of +/-10.00
) is multiplied by a performance adjustment rate of .02%. Thus, the
maximum annualized adjustment rate is +/-.20%. This performance
comparison is made at the end of each month. One twelfth (1/12) of
this rate is then applied to the fund's average net assets for the
entire performance period, giving a dollar amount which will be added
to (or subtracted from) the basic fee.
The fund's performance is calculated based on change in net asset
value. For purposes of calculating the performance adjustment, any
dividends or capital gain distributions paid by the fund are treated
as if reinvested in fund shares at the net asset value as of the
record date for payment. The record of the Index is based on change in
value and is adjusted for any cash distributions from the companies
whose securities compose the Index.
Because the adjustment to the basic fee is based on the fund's
performance compared to the investment record of the Index, the
controlling factor is not whether the fund's performance is up or down
per se, but whether it is up or down more or less than the record of
the Index. Moreover, the comparative investment performance of the
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
During fiscal 1996, FMR received $111,424,000 for its services as
investment adviser to the fund. This fee, which includes both the
basic fee and the performance adjustment, was equivalent to 0.57% of
the average net assets of the fund. For 1996, the downward performance
adjustment amounted to $6,130,000 for the fund.
FMR may, from time to time, voluntarily reimburse all or a portion of
the fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year. Expense
reimbursements by FMR will increase the fund's total returns and
repayment of the reimbursement by the fund will lower its total
returns.
SUB-ADVISORY AGREEMENTS
On behalf of Fidelity Contrafund FMR has entered into sub-advisory
agreements with FMR U.K. and FMR Far East. Pursuant to the
sub-advisory agreements, FMR may receive investment advice and
research services outside the United States from the sub-advisers. The
sub-advisory agreements, dated November 1, 1989, were approved by
shareholders on October 18, 1989. These were the first sub-advisory
agreements adopted for the fund.
Currently, FMR U.K. and FMR Far East each focus on issuers in
countries other than the United States such as those in Europe, Asia,
and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. Under the sub-advisory agreements FMR pays
the fees of FMR U.K. and FMR Far East. For providing non-discretionary
investment advice and research services, FMR pays FMR U.K. and FMR Far
East fees equal to 110% and 105%, respectively, of FMR U.K.'s and FMR
Far East's costs incurred in connection with providing investment
advice and research services.
For providing investment advice and research services, the fees paid
to the sub-advisers for the fiscal year ended 1996 were as follows:
FMR U.K. FMR Far East
$ 1,434,000 $ 1,402,000
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by FMR pursuant to authority contained
in the fund's management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (FBS), indirect
subsidiaries of FMR Corp., if the commissions are fair, reasonable,
and comparable to commissions charged by non-affiliated, qualified
brokerage firms for similar services.
During fiscal 1996 the fund paid brokerage commissions of
$ 10,652,000 to NFSC and $ 116,000 to FBS. During fiscal
1996, this amounted to approximately 23 % and 0.25 %,
respectively, of the aggregate brokerage commissions paid by the fund.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to
the Secretary of the Trust, 82 Devonshire Street, Boston,
Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Service Company,
Inc., P.O. Box 789, Boston, Massachusetts 02102, whether other
persons are beneficial owners of shares for which proxies are being
solicited and, if so, the number of copies of the Proxy Statement and
Annual Reports you wish to receive in order to supply copies to the
beneficial owners of the respective shares.
EXHIBIT 1
FORM OF MANAGEMENT CONTRACT
The language to be added to the current contract is ((underlined))
and material to be deleted is set forth in [brackets].
MANAGEMENT CONTRACT
BETWEEN
FIDELITY CONTRAFUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION made] ((AGREEMENT AMENDED and RESTATED as of)) this
[1st] ____ day of [January 1993] ((February 1998)), by and between
Fidelity Contrafund, a Massachusetts business trust which may issue
one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of its single existing series of shares
of beneficial interest (hereinafter called the "Portfolio"), and
Fidelity Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser")(( as set forth in its entirety
below)).
Required authorization and approval by shareholders and Trustees
having been obtained, [Fidelity Contrafund,] the Fund, on behalf of
the Portfolio, and [Fidelity Management & Research Company] ((the
Adviser)) hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [November 1, 1989] ((January 1, 1993)), to a
modification of said Contract in the manner set forth below. The
[Modified] ((Amended)) Management Contract shall, when executed by
duly authorized officers of the Fund and [the] Adviser, take effect on
[the later of January 1, 1993] ((February __, 1998)) or the first day
of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser[, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a
[b]((B))asic [f]((F))ee and a [p]((P))erformance [a]((A))djustment.
[to the basic fee based upon the investment performance of the
Portfolio in relation to] ((The Performance Adjustment is added to or
subtracted from the Basic Fee depending on whether the Portfolio
experienced better or worse performance than)) the Standard & Poor's
500 [Composite Stock Price] Index (the "Index"). ((The Performance
Adjustment is not cumulative. An increased fee will result even though
the performance of the Portfolio over some period of time shorter than
the performance period has been behind that of the Index, and,
conversely, a reduction in the fee will be made for a month even
though the performance of the Portfolio over some period of time
shorter than the performance period has been ahead of that of the
Index.)) The [b]((B))asic [f]((F))ee and the [p]((P))erformance
[a]((A))djustment will be computed as follows:
(a) Basic Fee Rate: The annual [b]((B))asic [f]((F))ee [r]((R))ate
shall be the sum of the [g]((G))roup [f]((F))ee [r]((R))ate and the
[i]((I))ndividual [f]((F))und [f]((F))ee [r]((R))ate calculated to the
nearest millionth decimal place as follows:
(i) Group Fee Rate. The [g]((G))roup [f]((F))ee [r]((R))ate shall
be based upon the monthly average of the net assets of the registered
investment companies having Advisory and Service or Management
Contracts with the Adviser (computed in the manner set forth in the
[charter] ((Fund's Declaration of Trust or other organizational
document)) [of each investment company]) determined as of the close of
business on each business day throughout the month. The [g]((G))roup
[f]((F))ee [r]((R))ate shall be determined on a cumulative basis
pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .520((0))%
3 - 6 .490((0))
6 - 9 .460((0))
9 - 12 .430((0))
12 - 15 .400((0))
15 - 18 .385((0))
18 - 21 .370((0))
21 - 24 .360((0))
24 - 30 .350((0))
30 - 36 .345((0))
36 - 42 .340((0))
42 - 48 .335((0))
48 - 66 .325((0))
66 - 84 .320((0))
84 - 102 .315((0))
102 - 138 .310((0))
138 - 174 .305((0))
[Over 174] [.300]
((174)) - ((210)) ((.3000))
((210)) - ((246)) ((.2950))
((246)) - ((282)) ((.2900))
((282)) - ((318)) ((.2850))
((318)) - ((354)) ((.2800))
((354)) - ((390)) ((.2750))
((390)) - ((426)) ((.2700))
((426)) - ((462)) ((.2650))
((462)) - ((498)) ((.2600))
((498)) - ((534)) ((.2550))
((Over)) ((534)) ((.2500))
(ii) Individual Fund Fee Rate. The [i]((I))ndividual [f]((F((und
[f]((F((ee [r]((R))ate shall be ((0)).30%.
(b) ((Basic Fee.)) One-twelfth of the [annual] [b]((B))asic
[f]((F))ee [r]((R))ate shall be applied to the average of the net
assets of the Portfolio (computed in the manner set forth in the
Fund's Declaration of Trust ((or other organizational document)))
determined as of the close of business on each business day throughout
the month. The resulting dollar amount comprises the [b]((B))asic
[f]((F))ee. [This basic fee will be subject to upward or downward
adjustment on the basis of the Portfolio's investment performance as
follows:]
(c) [The] Performance Adjustment ((Rate)): [An adjustment to the
monthly basic fee will be made by applying a performance adjustment
rate to the average net assets of the Portfolio over the performance
period. The resulting dollar figure will be added to or subtracted
from the basic fee depending on whether the Portfolio experienced
better or worse performance than the Index.] ((The Performance
Adjustment Rate is 0.02% for each percentage point (the performance of
the Portfolio and the Index each being calculated to the nearest
0.01%) that the Portfolio's investment performance for the performance
period was better or worse than the record of the Index as then
constituted. The maximum performance adjustment rate is 0.20%.))
[The performance adjustment rate is 0.02% for each percentage point
rounded to the nearer point (the higher point if exactly one-half
point) that the Portfolio's investment performance for the performance
period was better or worse than the record of the Index as then
constituted. The maximum performance adjustment rate is 0.20%.]
The performance period will commence on December 1, 1984. [(the date
of the predecessor corporation's contract) and d]((D))uring the first
eleven months [after such date (including December, 1984)] ((of the
performance period for the Portfolio,)) there will be no performance
adjustment. Starting with the twelfth month [(December, 1985)] ((of
the performance period,)) the performance adjustment will take effect.
((Following the twelfth month a new month will be added to the
performance period until the performance period equals 36 months.
Thereafter the performance period will consist of the current month
plus the previous 35 months.))
[Following the twelfth month a new month will be added to the
performance period until the performance period equals 36 months.
Thereafter the performance period will consist of the current month
plus the previous 35 months.]
The Portfolio's investment performance will be measured by comparing
(i) the opening net asset value of one share of the Portfolio on the
first business day of the performance period with (ii) the closing net
asset value of one share of the Portfolio as of the last business day
of such period. In computing the investment performance of the
Portfolio and the investment record of the Index, distributions of
realized capital gains, the value of capital gains taxes per share
paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of
investment income on the part of the Portfolio, and all cash
distributions of the [companies whose stocks comprise] ((securities
included in)) the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment
Advisers Act of 1940, as the same from time to time may be amended.
[The computation of the performance adjustment will not be
cumulative. A positive fee rate will apply even though the performance
of the Portfolio over some period of time shorter than the performance
period has been behind that of the Index, and, conversely, a negative
fee rate will apply for a month even though the performance of the
Portfolio over some period of time shorter than the performance period
has been ahead of that of the Index.]
(d) ((Performance Adjustment.)) One-twelfth of the annual
[p]((P))erformance [a]((A))djustment [r]((R))ate [shall] ((will)) be
applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the ((Fund's)) Declaration of Trust ((or other
organizational document)) [of the Fund adjusted as provided in
sub-paragraph (e) of this paragraph 3 below, if applicable)]
determined as of the close of business on each business day throughout
the month and the performance period. [The resulting dollar amount is
added to or deducted from the basic fee.]
[(e) In the event of a merger or other business combination
involving another entity for which the Adviser is the investment
adviser, and where such other entity utilizes a performance adjustment
in determining its investment advisory fee, then:
(A) For purpose of determining the amount of the performance
adjustment, the net assets of the acquired entity averaged over the
period from the first day of the performance period through the date
of the transaction shall be considered to have been included in the
net assets of the Portfolio for the period from the first day of the
performance period through the date of the transaction.
(B) For purposes of determining the performance adjustment, the
opening net asset value of one share of the Portfolio on the first
business day of the performance period shall be adjusted on a
dollar-weighed basis by (i) multiplying the percentage change (to the
nearest one-hundredth of one percent) between the actual net asset
value of one share of the Portfolio and of the other entity on the
first day of the Portfolio's performance period and such respective
net asset values per share on the date of the transaction ( as
computed in paragraph 3 (c)) by the respective average net assets of
the Portfolio and such other entity; (measured from the first day of
the Portfolio's performance period through the date of the
transaction); (ii) combining the products determined in (i); (iii)
dividing by the sum of the average net assets of the Portfolio and
such other entity; and (iv) if a positive percentage, dividing 1 plus
the percentage determined in (iii) (expressed as a decimal to the
nearest one-hundredth of a percent) into the net asset value of one
share of the Portfolio on the date of the transaction (as computed in
paragraph 3 (c); or (v) if a negative percentage, deducting the
percentage determined in (iii) (expressed as a decimal to the nearest
one-hundredth of a percent) from 1 and dividing the result into the
net asset value of one share of the Portfolio on the date of the
transaction ( as computed in paragraph 3 (c). The resulting adjusted
net asset value of one share of the Portfolio on the first business
day of the Portfolio's performance period shall be utilized in
calculating the annual rate of performance adjustment under paragraph
3 (c) for the 36 monthly fee calculations following the date of the
transaction. One-twelfth of the annual performance adjustment rate
shall be applied to the average of the net assets of the Portfolio
determined as provided in paragraph 3 (e) (A). The performance
adjustment so computed shall be added to or deducted from the amount
of the basic fee (as computed in paragraph 3 (b)) depending upon
whether the performance of the Portfolio exceeded or was exceeded by
the record of the Index.]
([f]((e))) In [the] case of 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 for
that month. The [b]((B))asic [f]((F))ee [r]((R))ate will be computed
on the basis of and applied to net assets averaged over that month
ending on the last business day on which this Contract is in effect.
The amount of this [p]((P))erformance [a]((A))djustment to the
[b]((B))asic [f]((F))ee will be computed on the basis of and applied
to net assets averaged over the 36-month period ending on the last
business day on which this Contract is in effect provided that if this
Contract has been in effect less than 36 months, the computation will
be made on the basis of the period of time during which it has been in
effect.
4. It is understood that the Portfolio will pay all its expenses
[other than those expressly stated to be payable by the Adviser
hereunder], which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities
laws; (vii) expenses of printing and mailing reports and notices and
proxy material to shareholders of the Portfolio; (viii) all other
expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums
for fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument.))
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until July
31, [1993] ((1998)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
((or other organizational document)) and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or [the] ((any)) other Portfolios of the
Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust ((or other organizational document)) are separate
and distinct from those of any and all other Portfolios.
((8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.))
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, ((and their respective seals to be hereunto affixed,)) all
as of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 2
FORM OF SUB-ADVISORY AGREEMENT
The language to be added to the current contract is ((underlined))
and material to be deleted is set forth in [brackets].
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
((AND FIDELITY CONTRAFUND ON BEHALF OF FIDELITY CONTRAFUND))
AGREEMENT made this [1st day of November, 1989] ((_____ day of
February, 1998,)) by and between Fidelity Management & Research
[(U.K.) Inc.] ((Company,)) a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter
called the "[Sub-]Adviser") and Fidelity Management & Research
(((U.K.) Inc.)) [Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts] (hereinafter
called the "((Sub-))Adviser")((; and Fidelity Contrafund, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Trust") on
behalf of Fidelity Contrafund (hereinafter called the "Portfolio"))).
WHEREAS ((the Trust and)) the Adviser [has] ((have)) entered into a
Management Contract [with Fidelity Contrafund, a Massachusetts
business trust which may issue one or more series of shares of
beneficial interest (hereinafter called the "Fund"),] on behalf of
[its single existing series of shares of beneficial interest, Fidelity
Contrafund (hereinafter called the "Portfolio")] ((the Portfolio)),
pursuant to which the Adviser is to act as investment [adviser to the
Fund] ((manager of the Portfolio)), and
WHEREAS the Sub-Adviser ((and its subsidiaries and other affiliated
persons have)) [has] personnel in [Western Europe] ((various locations
throughout the world)) and [was] ((have been)) formed ((in part)) for
the purpose of researching and compiling information and
recommendations with respect to the economies of various countries,
and ((securities of)) issuers located [outside of North America,
principally in Western Europe.] ((in such countries, and providing
investment advisory services in connection therewith;))
NOW THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Adviser and the Sub-Adviser agree
as follows:
((1. Duties: The Adviser may, in its discretion, appoint the
Sub-Adviser to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Adviser shall be as agreed upon from
time to time by the Adviser and the Sub-Adviser. The Sub-Adviser shall
pay the salaries and fees of all personnel of the Sub-Adviser
performing services for the Portfolio relating to research,
statistical and investment activities.))
[1.] (((a) INVESTMENT ADVICE: If and to the extent requested by the
Adviser,)) [T]((t))he Sub-Adviser shall [act as an investment
consultant] ((provide investment advice to the Portfolio and)) [to]
the Adviser ((with respect to all or a portion of the investments of
the Portfolio, and in connection with such advice)) [and] shall
furnish ((the Portfolio and)) the Adviser factual information,
research reports and investment recommendations [relating to non-U.S.
issuers of securities located in, and the economies of, various
countries outside the U.S., all] as the Adviser may reasonably
require. Such information [shall] ((may)) include written and oral
reports and analyses.
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Adviser, the Sub-Adviser shall, subject to the supervision of the
Adviser, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Adviser may impose with respect
to the Portfolio by notice to the Sub-Adviser. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Adviser is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Adviser may
select. The Sub-Adviser may also be authorized, but only to the extent
such duties are delegated in writing by the Adviser, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Adviser shall at all times be subject to the control and direction
of the Adviser and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Adviser may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Adviser shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Adviser: The
Sub-Adviser shall furnish such reports, evaluations, information or
analyses to the Trust and the Adviser as the Trust's Board of Trustees
or the Adviser may reasonably request from time to time, or as the
Sub-Adviser may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Adviser
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Adviser, which may include brokers or dealers
affiliated with the Adviser or Sub-Adviser. The Sub-Adviser shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Adviser or Adviser exercise investment
discretion. The Sub-Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-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
Sub-Adviser has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.))
[2]((4)). ((Compensation:)) The [Sub-Adviser will be compensated by
the] Adviser ((shall compensate the Sub-Adviser)) on the following
basis for the services to be furnished hereunder. [: the Adviser
agrees to pay the Sub-Adviser a monthly fee equal to 110% of the
Sub-Adviser's costs incurred in connection with the Agreement, said
costs to be determined in relation to the assets of the Portfolio that
benefit from the services of the Sub-Adviser.]
(((a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Adviser agrees
to pay the Sub-Adviser a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 110% of the Sub-Adviser's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Adviser, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Adviser agrees
to pay the Sub-Adviser a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Adviser under its Management
Contract with the Adviser, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Adviser shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Adviser waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Adviser will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Adviser reduces its fees to reflect such waivers or reimbursements
and the Adviser subsequently recovers all or any portion of such
waivers or reimbursements, then the Sub-Adviser shall be entitled to
receive from the Adviser a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Adviser required by such limitations are in excess of the Adviser's
management fee, the Investment Management Fee paid to the Sub-Adviser
will be reduced to zero for that month, but in no event shall the
Sub-Adviser be required to reimburse the Adviser for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Adviser shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1)
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Adviser with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Adviser hereunder or by the Adviser under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Adviser or the Adviser; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Adviser,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.))
[3]((6)). ((Interested Persons:)) It is understood that Trustees,
officers and shareholders of the [Fund] ((Trust)) are or may be or
become interested in the Adviser [and] ((or)) the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser [and] ((or)) the Sub-Adviser are or may be
or become similarly interested in the [Fund] ((Trust)), and that the
Adviser or the Sub-Adviser may be or become interested in the [Fund]
((Trust)) as a shareholder or otherwise.
[4]((7)). ((Services to Other Companies or Accounts: The services of
the Sub-Adviser to the Adviser are not to be deemed to be exclusive,
the Sub-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 Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations hereunder.)) The Sub-Adviser shall for all purposes be an
independent contractor and not an agent or employee of the Adviser or
the [Fund] ((Trust)). [The Sub-Adviser shall have no authority to act
for, represent, bind or obligate the Adviser or the Fund, and shall in
no event have discretion to invest or reinvest assets held by the
Portfolio.]
[5]((8)). ((Standard of Care:)) [The Services of the Sub-Adviser to
the Adviser are not to be deemed to be exclusive, the Sub-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 Agreement, interfere, in a material
manner, with the Sub-Adviser's ability to meet all of its obligations
with respect to rendering investment advice hereunder.] In the absence
of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the
Sub-Adviser, the Sub-Adviser shall not be subject to liability to the
Adviser, the [Fund] ((Trust)) or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
[6.] (a) Subject to prior termination as provided in sub-paragraph
(d) of this paragraph [6]((9)), this Agreement shall continue in force
until July 31, [1990] ((1998)) and indefinitely thereafter, but only
so long as the continuance after such period shall be specifically
approved at least annually by vote of the [Fund's] ((Trust's)) Board
of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser,
the Sub-Adviser and the Portfolio, such consent on the part of the
[Fund] ((Portfolio)) to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph [6]((9)), the terms of any continuance or modification
of [the] ((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund] ((Trust)) who are not parties
to such Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or ((with respect to the
Portfolio)) by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event
of its assignment.
[7]((10)). ((Limitation of Liability:)) The Sub-Adviser is hereby
expressly put on notice of the limitation of shareholder liability as
set forth in the Declaration of Trust ((or other organizational
document)) of the [Fund] ((Trust)) and agrees that any obligations of
the [Fund] ((Trust)) or the Portfolio arising in connection with this
Agreement shall be limited in all cases to the Portfolio and its
assets, and the Sub-Adviser shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio.
Nor shall the Sub-Adviser seek satisfaction of any such obligation
from the Trustees or any individual Trustee.
((11. Governing Law: 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 "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the Investment Company Act of 1940 as now in effect or as
hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 3
FORM OF SUB-ADVISORY AGREEMENT
The language to be added to the current contract is ((underlined)) and
material to be deleted is set forth in [brackets].
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
((AND FIDELITY CONTRAFUND ON BEHALF OF FIDELITY CONTRAFUND))
AGREEMENT made this [1st day of November 1989] ((_____ day of
February 1998)), by and between Fidelity Management & Research [(Far
East) Inc.] ((Company)), a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter
called the "[Sub-]Adviser") and Fidelity Management & Research ( Far
East ) Inc. [Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts] (hereinafter
called the "((Sub-))Adviser")((; and Fidelity Contrafund, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Trust") on
behalf of Fidelity Contrafund (hereinafter called the "Portfolio"))).
WHEREAS ((the Trust and)) the Adviser [has] ((have)) entered into a
Management Contract [with Fidelity Contrafund, a Massachusetts
business trust which may issue one or more series of shares of
beneficial interest (hereinafter called the "Fund"),] on behalf of its
single existing series of shares of beneficial interest, Fidelity
Contrafund (hereinafter called the "Portfolio")] ((the Portfolio)),
pursuant to which the Adviser is to act as investment [adviser to the
Fund] ((manager of the Portfolio)), and
WHEREAS the Sub-Adviser ((and its subsidiaries and other affiliated
persons have)) [has] personnel in [Asia and the Pacific Basin]
((various locations throughout the world)) and [was] ((have been))
formed ((in part)) for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and ((securities of)) issuers located [outside of
North America, principally in Asia and the Pacific Basin.] ((in such
countries, and providing investment advisory services in connection
therewith;))
NOW THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Adviser and the Sub-Adviser agree
as follows:
((1. Duties: The Adviser may, in its discretion, appoint the
Sub-Adviser to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Adviser shall be as agreed upon from
time to time by the Adviser and the Sub-Adviser. The Sub-Adviser shall
pay the salaries and fees of all personnel of the Sub-Adviser
performing services for the Portfolio relating to research,
statistical and investment activities.))
[1.] (((a) INVESTMENT ADVICE: If and to the extent requested by the
Adviser,)) [T]((t))he Sub-Adviser shall [act as an investment
consultant] ((provide investment advice to the Portfolio and)) [to]
the Adviser ((with respect to all or a portion of the investments of
the Portfolio, and in connection with such advice)) [and] shall
furnish ((the Portfolio and)) the Adviser factual information,
research reports and investment recommendations [relating to non-U.S.
issuers of securities located in, and the economies of, various
countries outside the U.S., all] as the Adviser may reasonably
require. Such information [shall] ((may)) include written and oral
reports and analyses.
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Adviser, the Sub-Adviser shall, subject to the supervision of the
Adviser, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Adviser. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Adviser is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Adviser may
select. The Sub-Adviser may also be authorized, but only to the extent
such duties are delegated in writing by the Adviser, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Adviser shall at all times be subject to the control and direction
of the Adviser and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Adviser may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Adviser shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Adviser: The
Sub-Adviser shall furnish such reports, evaluations, information or
analyses to the Trust and the Adviser as the Trust's Board of Trustees
or the Adviser may reasonably request from time to time, or as the
Sub-Adviser may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Adviser
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Adviser, which may include brokers or dealers
affiliated with the Adviser or Sub-Adviser. The Sub-Adviser shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Adviser or Adviser exercise investment
discretion. The Sub-Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-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
Sub-Adviser has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.))
[2]((4)). ((Compensation:)) The [Sub-Adviser will be compensated by
the] Adviser ((shall compensate the Sub-Adviser)) on the following
basis for the services to be furnished hereunder. [: the Adviser
agrees to pay the Sub-Adviser a monthly fee equal to 105% of the
Sub-Adviser's costs incurred in connection with the Agreement, said
costs to be determined in relation to the assets of the Portfolio that
benefit from the services of the Sub-Adviser.]
(((a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Adviser agrees
to pay the Sub-Adviser a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 105% of the Sub-Adviser's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Adviser, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Adviser agrees
to pay the Sub-Adviser a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Adviser under its Management
Contract with the Adviser, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Adviser shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Adviser waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Adviser will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Adviser reduces its fees to reflect such waivers or reimbursements
and the Adviser subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Adviser shall be entitled to
receive from the Adviser a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Adviser required by such limitations are in excess of the Adviser's
management fee, the Investment Management Fee paid to the Sub-Adviser
will be reduced to zero for that month, but in no event shall the
Sub-Adviser be required to reimburse the Adviser for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Adviser shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Adviser with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Adviser hereunder or by the Adviser under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Adviser or the Adviser; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Adviser,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.))
[3]((6)). ((Interested Persons:)) It is understood that Trustees,
officers and shareholders of the [Fund] ((Trust)) are or may be or
become interested in the Adviser [and] ((or)) the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser [and] ((or)) the Sub-Adviser are or may be
or become similarly interested in the [Fund] ((Trust)), and that the
Adviser or the Sub-Adviser may be or become interested in the [Fund]
((Trust)) as a shareholder or otherwise.
[4]((7)). ((Services to Other Companies or Accounts: The services of
the Sub-Adviser to the Adviser are not to be deemed to be exclusive,
the Sub-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 Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations hereunder.)) The Sub-Adviser shall for all purposes be an
independent contractor and not an agent or employee of the Adviser or
the [Fund] ((Trust)). [The Sub-Adviser shall have no authority to act
for, represent, bind or obligate the Adviser or the Fund, and shall in
no event have discretion to invest or reinvest assets held by the
Portfolio.]
[5]((8)). ((Standard of Care:)) [The Services of the Sub-Adviser to
the Adviser are not to be deemed to be exclusive, the Sub-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 Agreement, interfere, in a material
manner, with the Sub-Adviser's ability to meet all of its obligations
with respect to rendering investment advice hereunder.] In the absence
of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the
Sub-Adviser, the Sub-Adviser shall not be subject to liability to the
Adviser, the [Fund] ((Trust)) or to any shareholder of the [Fund]
((Portfolio)) for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
((9. Duration and Termination of Agreement; Amendments:))
[6.] (a) Subject to prior termination as provided in sub-paragraph
(d) of this paragraph [6]((9)), this Agreement shall continue in force
until July 31, [1990] ((1998)) and indefinitely thereafter, but only
so long as the continuance after such period shall be specifically
approved at least annually by vote of the [Fund's] ((Trust's)) Board
of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser,
the Sub-Adviser and the Portfolio, such consent on the part of the
[Fund] ((Portfolio)) to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph [6]((9)), the terms of any continuance or modification
of [the] ((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund] ((Trust)) who are not parties
to such Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or ((with respect to the
Portfolio)) by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event
of its assignment.
[7]((10)). ((Limitation of Liability:)) The Sub-Adviser is hereby
expressly put on notice of the limitation of shareholder liability as
set forth in the Declaration of Trust ((or other organizational
document)) of the [Fund] ((Trust)) and agrees that any obligations of
the [Fund] ((Trust)) or the Portfolio arising in connection with this
Agreement shall be limited in all cases to the Portfolio and its
assets, and the Sub-Adviser shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio.
Nor shall the Sub-Adviser seek satisfaction of any such obligation
from the Trustees or any individual Trustee.
((11. Governing Law: 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 "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the Investment Company Act of 1940 as now in effect or as
hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 4
CURRENT FUNDAMENTAL INVESTMENT OBJECTIVE. The fund seeks capital
appreciation by investing in securities of companies believed by FMR
to be undervalued due to an overly pessimistic appraisal by the public
of their future outlook.
CURRENT FUNDAMENTAL INVESTMENT POLICIES.
FMR will invest in companies:
1) which have been unpopular for some time but where recent
developments bring hope of improved operating results;
2) which have enjoyed recent market popularity but which appear to
have temporarily fallen out of favor for reasons that are considered
non-recurring or short term; or
3) which are undervalued in relation to popular securities of other
companies in the same industry.
The fund will remain substantially fully invested in common stocks,
preferred stocks, bonds, securities with warrants attached, and other
certificates of indebtedness. The fund will usually be primarily
invested in common stocks and securities convertible into common
stocks. However, if FMR believes that market conditions warrant a more
conservative approach, the fund may make substantial investments in
investment-grade fixed-income obligations of all types and U.S.
Government obligations.
PROPOSED FUNDAMENTAL INVESTMENT OBJECTIVE. The fund seeks capital
appreciation by investing in securities of companies whose value FMR
believes is not fully recognized by the public.
PROPOSED NON-FUNDAMENTAL INVESTMENT POLICIES. The types of companies
the fund may invest in include:
1) companies experiencing positive fundamental change such as a new
management team or product launch, a significant cost-cutting
initiative, a merger or acquisition, or a reduction in industry
capacity that leads to improved pricing;
2) companies whose earnings potential has increased or is expected to
increase more than generally perceived;
3) companies that have enjoyed recent market popularity but which
appear to have temporarily fallen out of favor for reasons that are
considered non-recurring or short term; and
4) companies that are undervalued in relation to securities of other
companies in the same industry.
The fund normally invests primarily in common stocks and securities
convertible into common stocks. FMR normally invests the fund's assets
according to its investment strategy. The fund also reserves the right
to invest without limitation in preferred stocks and investment-grade
debt instruments for temporary, defensive purposes.
EXHIBIT 5
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
GROWTH
Advisor Korea Fund, Inc. (oval) 9/30/96 $ 53.7 1.00%
Destiny I ((pound)) 9/30/96 4,319.1 0.62
Destiny II ((pound)) 9/30/96 2,293.1 0.73
Advisor Emerging Asia Fund, Inc. 10/31/96 131.8 1.02
(oval)
Advisor Natural Resources: ((pound))
Class A 7/31/97** 4.5 0.60
Class T 7/31/97 634.0 0.60
Class B 7/31/97 49.0 0.60
Institutional Class 7/31/97 10.8 0.60
Advisor Growth Opportunities: ((pound))
Class A 10/31/96** 4.2 0.61
Class T 10/31/96 12,224.7 0.61
Class B ((hollow diamond)) 10/31/97** 120.0 0.61
Institutional Class 10/31/96 193.0 0.61
Advisor Overseas: ((epslon))
Class A 10/31/96** 0.3 0.68
Class T 10/31/96 913.4 0.68
Class B 10/31/96 12.0 0.68
Institutional Class 10/31/96 6.6 0.68
Canada ((epslon)) 10/31/96 145.6 0.45
Capital Appreciation ((pound)) 10/31/96 1,656.1 0.54
Disciplined Equity ((pound)) 10/31/96 2,168.3 0.54
Diversified International ((epslon)) 10/31/96 478.6 0.85
Emerging Markets ((epslon)) 10/31/96 1,329.4 0.76
Europe ((epslon)) 10/31/96 558.5 0.84
Europe Capital Appreciation ((epslon)) 10/31/96 167.9 0.80
France ((epslon)) 10/31/96** 5.5 0.75(dagger)
Germany ((epslon)) 10/31/96** 5.5 0.75(dagger)
Hong Kong and China (Rex-all) 10/31/96** 58.8 0.75(dagger)
International Value (Rex-all) 10/31/96 217.4 0.79
Japan (Rex-all) 10/31/96 374.5 0.68
Japan Small Companies (Rex-all) 10/31/96** 105.3 0.75(dagger)
Latin America ((epslon)) 10/31/96 605.9 0.76
Nordic ((epslon)) 10/31/96** 9.6 0.75(dagger)
Overseas ((epslon)) 10/31/96 2,773.5 0.76
Pacific Basin (Rex-all) 10/31/96 $ 605.8 0.75%
Southeast Asia (Rex-all) 10/31/96 848.8 0.65
Stock Selector ((pound)) 10/31/96 1,447.9 0.58
Technoquant Growth 10/31/97** 57.8 0.60(dagger)
United Kingdom ((epslon)) 10/31/96** 2.1 0.75(dagger)
Value ((pound)) 10/31/96 6,357.2 0.65
Worldwide ((epslon)) 10/31/96 762.4 0.76
Advisor Equity Growth: ((pound))
Class A 11/30/96** 2.0 0.61
Class T 11/30/96 2,784.5 0.61
Class B ((hollow diamond)) 11/30/97** 21.0 0.61
Institutional Class 11/30/96 1,022.8 0.61
Advisor Large Cap: ((pound))
Class A 11/30/96** 0.3 0.60(dagger)
Class T 11/30/96** 12.6 0.60(dagger)
Class B 11/30/96** 3.7 0.60(dagger)
Institutional Class 11/30/96** 4.9 0.60(dagger)
Advisor Mid Cap: ((pound))
Class A 11/30/96** 0.7 0.60(dagger)
Class T 11/30/96** 116.9 0.60(dagger)
Class B 11/30/96** 17.5 0.60(dagger)
Institutional Class 11/30/96** 2.5 0.60(dagger)
Advisor TechnoQuant Growth: ((pound))
Class A 11/30/97** 4.0 0.59(dagger)
Class T 11/30/97** 10.3 0.59(dagger)
Class B 11/30/97** 4.7 0.59(dagger)
Institutional Class 11/30/97** 1.2 0.59(dagger)
Emerging Growth ((pound)) 11/30/96 1,608.1 0.77
Growth Company ((pound)) 11/30/96 7,918.8 0.62
New Millennium ((pound)) 11/30/96 960.0 0.73
Retirement Growth ((pound)) 11/30/96 4,142.2 0.50
Advisor Strategic Opportunities: ((pound))
Class A 12/31/96** 0.4 0.48
Class T 12/31/96 603.6 0.48
Class B 12/31/96 99.5 0.48
Institutional Class 12/31/96 32.0 0.48
Initial Class 12/31/96 21.7 0.48
Congress Street 12/31/96 $ 86.2 0.45%
Contrafund ((pound)) 12/31/96 19,417.4 0.57
Exchange 12/31/96 246.2 0.54
Trend ((pound)) 12/31/96 1,293.3 0.42
Variable Insurance Products:
Growth ((pound)) 12/31/96 5,245.2 0.61
Overseas Portfolio ((epslon)) 12/31/96 1,544.2 0.76
Variable Insurance Products II:
Contrafund ((pound)) 12/31/96 1,576.1 0.61
Variable Insurance Products III:
Growth Opportunities ((pound)) 12/31/96 277.4 0.61
Overseas Fund ((epslon)) 12/31/96 33.3 0.70*
Select Portfolios:
Air Transportation ((pound)) 2/28/97 89.4 0.60
American Gold 2/28/97 414.0 0.60
Automotive ((pound)) 2/28/97 120.2 0.60
Biotechnology ((pound)) 2/28/97 715.3 0.60
Brokerage and Investment 2/28/97 72.5 0.62
Management ((pound))
Chemicals ((pound)) 2/28/97 123.5 0.60
Computers ((pound)) 2/28/97 546.6 0.61
Construction and Housing ((pound)) 2/28/97 68.0 0.60
Consumer Industries ((pound)) 2/28/97 25.6 0.60
Cyclical Industries ((pound)) 2/28/98** 3.3 0.59(dagger)
Defense and Aerospace ((pound)) 2/28/97 44.1 0.61
Developing Communications ((pound)) 2/28/97 307.6 0.60
Electronics ((pound)) 2/28/97 1,297.2 0.61
Energy ((pound)) 2/28/97 176.4 0.60
Energy Service ((pound)) 2/28/97 461.6 0.60
Environmental Services ((pound)) 2/28/97 41.6 0.61
Financial Services ((pound)) 2/28/97 273.8 0.61
Food and Agriculture ((pound)) 2/28/97 278.8 0.60
Health Care ((pound)) 2/28/97 1,266.7 0.60
Home Finance ((pound)) 2/28/97 691.6 0.61
Industrial Equipment ((pound)) 2/28/97 92.5 0.61
Industrial Materials ((pound)) 2/28/97 97.9 0.60
Insurance ((pound)) 2/28/97 33.8 0.61
Leisure ((pound)) 2/28/97 106.5 0.60
Select Portfolios (continued):
Medical Delivery ((pound)) 2/28/97 $ 216.3 0.60%
Multimedia ((pound)) 2/28/97 85.1 0.60
Natural Gas ((pound)) 2/28/97 113.0 0.60
Natural Resources ((pound)) 2/28/98** 4.6 0.59(dagger)
Paper and Forest Products ((pound)) 2/28/97 32.3 0.60
Precious Metals and Minerals ((pound)) 2/28/97 332.0 0.60
Regional Banks ((pound)) 2/28/97 416.8 0.61
Retailing ((pound)) 2/28/97 221.9 0.60
Software and Computer 2/28/97 421.4 0.60
Services ((pound))
Technology ((pound)) 2/28/97 463.1 0.60
Telecommunications ((pound)) 2/28/97 476.9 0.60
Transportation ((pound)) 2/28/97 12.6 0.41*
Utilities Growth ((pound)) 2/28/97 238.2 0.60
Magellan ((pound)) 3/31/97 54,132.7 0.45
Large Cap Stock ((pound)) 4/30/97 100.3 0.53
Mid Cap Stock ((pound)) 4/30/97 1,528.2 0.70
Small Cap Stock ((pound)) 4/30/97 548.6 0.55
Fidelity Fifty ((pound)) 6/30/97 152.4 0.45
Advisor Focus Funds:
Consumer: ((pound))
Class A 7/31/97** 0.7 0.60(dagger)
Class T 7/31/97** 3.9 0.60(dagger)
Class B 7/31/97** 0.3 0.60(dagger)
Institutional Class 7/31/97** 1.1 0.60(dagger)
Cyclical: ((pound))
Class A 7/31/97** 0.2 0.60(dagger)
Class T 7/31/97** 1.1 0.60(dagger)
Class B 7/31/97** 0.1 0.60(dagger)
Institutional Class 7/31/97** 4.1 0.60(dagger)
Financial Services: ((pound))
Class A 7/31/97** 2.9 0.60(dagger)
Class T 7/31/97** 22.0 0.60(dagger)
Class B 7/31/97** 3.3 0.60(dagger)
Institutional Class 7/31/97** 2.2 0.60(dagger)
Advisor Focus Funds (continued):
Health Care: ((pound))
Class A 7/31/97** $ 2.9 0.60%(dagger)
Class T 7/31/97** 22.5 0.60(dagger)
Class B 7/31/97** 2.4 0.60(dagger)
Institutional Class 7/31/97** 2.7 0.60(dagger)
Technology: ((pound))
Class A 7/31/97** 3.6 0.60(dagger)
Class T 7/31/97** 25.8 0.60(dagger)
Class B 7/31/97** 2.2 0.60(dagger)
Institutional Class 7/31/97** 1.6 0.60(dagger)
Utilities Growth: ((pound))
Class A 7/31/97** 0.4 0.60(dagger)
Class T 7/31/97** 3.8 0.60(dagger)
Class B 7/31/97** 0.8 0.60(dagger)
Institutional Class 7/31/97** 1.8 0.60(dagger)
Blue Chip Growth ((pound)) 7/31/97 10,047.1 0.51
Low-Priced Stock ((pound)) 7/31/97 6,107.7 0.76
OTC Portfolio ((pound)) 7/31/97 3,330.0 0.56
Export and Multinational Fund ((pound)) 8/31/97 415.7 0.60
(a) All fund data are as of the fiscal year end noted in the chart or
as of August 31, 1997, if fiscal year end figures are not yet
available.
(b) Average net assets are computed on the basis of average net assets
of each fund at the close of business on each business day throughout
its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*).
(dagger) Annualized
** Less than a complete fiscal year
(Rex-all) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management &
Research (Far East) Inc. (FMR Far East), Fidelity Investments Japan
Ltd. (FIJ), Fidelity International Investment Advisors (FIIA), and
Fidelity International Investment Advisors (U.K.) Limited (FIIAL
U.K.), with respect to the fund.
((epslon)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: FMR U.K., FMR
Far East, FIIA, and FIIAL U.K., with respect to the fund.
((pound)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect
to the fund.
(oval) Fidelity Management & Research Company has entered into
sub-advisory agreements with FIIA and FIJ, with respect to the fund.
((hollow diamond)) The ratio of net advisory fees to average net
assets paid to FMR represents the amount as of the prior fiscal year
end. Updated ratios will be presented for each class of shares of the
fund when the next fiscal year end figures are available.
CON-PXS-1197 CUSIP#316071109/FUND#022
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ---------------------------------------------------------------------
- -------------------------
FIDELITY CONTRAFUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Arthur S. Loring, and Gerald C. McDonough, or any one
or more of them, attorneys, with full power of substitution, to vote
all shares of Fidelity Contrafund which the undersigned is entitled to
vote at the Special Meeting of Shareholders of the fund to be held at
the office of the trust at 82 Devonshire St., Boston, MA 02109, on
January 14, 1998 at 9:00 a.m. and at any adjournments thereof. All
powers may be exercised by a majority of said proxy holders or
substitutes voting or acting or, if only one votes and acts, then by
that one. This Proxy shall be voted on the proposals described in the
Proxy Statement as specified on the reverse side. Receipt of the
Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date _____________, 1997
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316071109/fund# 022
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- ---------------------------------------------------------------------
- -------------------------
1. To elect the 12 nominees specified below as [ ] FOR all [ ] 1.
Trustees: Ralph F. Cox, Phyllis Burke Davis, nominees listed WITHHOLD
Robert M. Gates, Edward C. Johnson 3d, E. (except as marked to authority to
Bradley Jones, Donald J. Kirk, Peter S. Lynch, the contrary below). vote for all
William O. McCoy, Gerald C. McDonough, Marvin nominees.
L. Mann, Robert C. Pozen, Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
_____________________________________________________________________
________________________
2. To ratify the selection of Coopers & Lybrand L.L.P. as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the
trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting the fund to invest all of its assets in
another open-end investment company with
substantially the same investment objective and
policies.
7. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
fund.
8. To approve a new sub-advisory agreement with FMR FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
U.K. for the fund.
9. To approve a new sub-advisory agreement with FMR FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
Far East for the fund.
10. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
objective and replace certain fundamental
investment policies with other non-fundamental
investment policies to more clearly describe the
fund's investment strategy.
11. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
limitation concerning diversification to exclude
investments in other investment companies from the
limitation.
12. To ratify the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
limitation concerning the concentration of its
investments in a single industry.
13. To ratify the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
limitation concerning commodities.
CON-PXC-1197 cusip # 316071109/fund# 022
IMPORTANT
PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
FIDELITY CONTRAFUND
Dear Shareholder:
I am writing to let you know that a Special Meeting of Shareholders of
Fidelity Contrafund will be held on January 14, 1998. The purpose of
the Meeting is to vote on several important proposals that affect the
fund and your investment in it. As a shareholder, you have the
opportunity to voice your opinion on the matters that affect your
fund. This package contains information about the proposals and the
materials to use when voting by mail.
Please read the enclosed materials and cast your vote on the proxy
card. PLEASE VOTE AND RETURN YOUR CARD PROMPTLY. YOUR VOTE IS
EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE.
All of the proposals have been carefully reviewed by the Board of
Trustees. The Trustees, most of whom are not affiliated with
Fidelity, are responsible for protecting your interests as a
shareholder. The Trustees believe these proposals are in the best
interest of shareholders. They recommend that you vote "For" each
proposal.
The following Q&A is provided to assist you in understanding the
proposals. Each of these proposals is described in greater detail in
the enclosed proxy statement.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
We encourage you to exercise your right as a shareholder and to vote
promptly. To cast your vote, simply complete the proxy card enclosed
in this package. Be sure to sign the card before mailing it in the
postage-paid envelope.
If you have any questions before you vote, please call us at
1-800-544-8888. We'll be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative.
Sincerely,
Edward C. Johnson 3d
President
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND AND VOTE ON THE PROPOSALS
Please read the full text of the enclosed proxy statement. Below is a
brief overview of all of the proposals found in the proxy statement
that are to be voted on at the Special Meeting of Shareholders. If
you have any questions regarding the proposals, please call us at
1-800-544-8888. We appreciate you placing your trust in Fidelity and
look forward to helping you achieve your financial goals.
THE PROXY SAYS THAT THE BOARD OF TRUSTEES HAS APPROVED THESE CHANGES.
WHAT ROLE DOES THE BOARD PLAY? (PROPOSAL 1)
The Trustees oversee the investment policies of the fund. Members of
the Board are fiduciaries and have an obligation to serve the best
interests of shareholders, including approving policy changes such as
those proposed for your fund. In addition, the Trustees review fund
performance, oversee fund activities, and review contractual
arrangements with companies that provide services to the fund.
WHAT IS THE ROLE OF THE INDEPENDENT ACCOUNTANTS? (PROPOSAL 2)
The independent accountants examine annual financial statements for
the fund and provide other audit and tax-related services. They also
sign or certify any financial statements of the fund that are required
by law to be independently certified and filed with the Securities and
Exchange Commission.
WHAT IS THE CHANGE IN VOTING RIGHTS BEING PROPOSED? (PROPOSAL 3)
The proposed change would provide a more equitable distribution of
voting rights than the one-share, one-vote system currently in effect.
The voting power of each shareholder would be measured by the value of
the shareholder's total dollar investment rather than by the number of
shares owned.
Since Contrafund is the only fund in the trust, this proposal does not
currently affect your voting rights. However, it would affect your
voting rights if additional funds with a fluctuating net asset value
per share (NAV) were added to the trust in the future. Under the
current system, if there were fluctuating NAV funds in the trust,
there would be disproportionate voting rights since the NAV of each
fund will generally diverge over time. By basing voting rights on
total dollar investment, the proposed change would give investors in
new funds more equitable voting rights.
WHAT IS THE PROPOSED CHANGE IN NOTIFICATION OF AN APPOINTMENT OF A
TRUSTEE? (PROPOSAL 4)
The Declaration of Trust currently requires that notification of a
Trustee appointment be mailed to shareholders within three months. To
reduce the cost to the fund, the proposed change is to notify
shareholders of Trustee appointments in the next financial report for
the fund.
WHAT ARE THE BENEFITS OF PERMITTING FUNDS TO INVEST THEIR ASSETS IN
ANOTHER OPEN-END INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE AND POLICIES? (PROPOSALS 5 AND 6)
Fidelity Management & Research Company (FMR) and the Board of Trustees
continually review methods of structuring mutual funds to take maximum
advantage of potential efficiencies. A number of mutual fund
companies have developed "master-feeder" fund structures under which
several "feeder" funds invest all of their assets in a single pooled
investment, or "master" fund. The purpose of the master feeder fund
structure is to achieve operational efficiencies by consolidating
portfolio management while maintaining different distribution and
servicing structures. An example would be funds with the same
investment objective but different minimum investments due to the
servicing of individual shareholders versus institutional clients.
These proposals would enable the fund to invest all of its assets in
another open-end investment company, managed by FMR or an affiliate,
with substantially the same investment objective and policies. In
order to implement the master-feeder structure, both the Declaration
of Trust and the fund's policies must permit the structure. Proposal
5 would amend the Declaration of Trust to permit the structure and
Proposal 6 would amend the policy at the fund level.
The master-feeder fund structure could generate operational
efficiencies and the opportunity to reduce costs. However, no such
plans are being contemplated for the fund at this time and the
Trustees would only allow it in the future if they determined that it
would be in the best interests of the fund and its shareholders.
WHAT IS BEING AMENDED IN THE FUND'S MANAGEMENT CONTRACT? (PROPOSAL 7)
The proposed amendments modify the fund's management contract with
FMR. One modification would reduce the Group Fee portion of the
management fee paid by the fund when FMR's assets under management
exceed certain levels. The result of this modification would be a
Group Fee Rate that is the same as, or lower than, the fee payable
under the present management contract.
Another proposed amendment would modify the Performance Adjustment
calculation that is used to calculate the fund's investment
performance and that of its comparative Index. Specifically, the
calculation will be rounded to the nearest 0.01% rather than the
nearest 1.00%. The rounding will occur prior to calculating the
difference in investment performance. The combined effect of the
modifications to the Group Fee and rounding calculations may represent
a future increase or decrease from the management fee under the
Present Contract.
WHAT IS THE BENEFIT OF APPROVING NEW SUB-ADVISORY AGREEMENTS WITH FMR
U.K. AND FMR FAR EAST? (PROPOSALS 8 AND 9)
FMR Far East, with its principal office in Tokyo, Japan and FMR U.K.,
with its principal office in London, England, are wholly-owned
subsidiaries of FMR. Both FMR U.K. and FMR Far East provide FMR with
investment advice and research on foreign securities specific
primarily to their regions. This research complements other research
produced by FMR's U.S.-based research analysts and portfolio managers.
The proposed agreements would allow FMR Far East and FMR U.K. to
continue to provide FMR with investment advice and research services.
They would also permit FMR to grant FMR Far East and FMR U.K.
investment management authority if FMR believes it would be beneficial
to the fund and its shareholders.
The sub-advisory agreements on behalf of the fund would provide FMR
with increased flexibility to access more specialized investment
expertise in foreign markets. The proposed agreements would not
increase fees paid to FMR by the fund.
WHAT ARE THE PROPOSED CHANGES TO INVESTMENT OBJECTIVE AND POLICIES?
(PROPOSAL 10)
This proposal would modify the fund's fundamental investment objective
and policies. The proposed modifications are intended to describe the
fund's investment approach more clearly. In addition, the proposal
would modify some of the fund's investment policies.
The proposed fundamental investment objective would read, "The fund
seeks capital appreciation by investing in securities of companies
whose value FMR believes is not fully recognized by the public."
Under the proposal, this investment objective would be fundamental and
could only be changed with shareholder approval.
The proposal would not change the fund's contrarian investment style
or its goal of seeking capital appreciation. The proposal would,
however, reflect changes in the fund's mix of investment strategies
over time. The proposed investment strategy places importance on
companies that are not necessarily performing poorly, but whose
potential is not fully recognized by the market.
The proposal would also make some of the fund's investment policies
non-fundamental (i.e., changeable without shareholder approval, but
subject to supervision of the Board of Trustees). Making selected
policies non-fundamental would increase the fund's flexibility to deal
with changes in the marketplace. For more detailed information on the
proposed modifications to the investment objective and policies,
please refer to Proposal 10 in the Proxy Statement.
WHAT IS THE BENEFIT OF AMENDING THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING DIVERSIFICATION? (PROPOSAL 11)
Proposal 11 would permit the fund to invest without limit in the
securities of other investment companies. As a result of an order of
exemption granted by the SEC, the fund may currently invest up to 25%
of its total assets in non-publicly offered money market and
short-term bond funds (the Central Funds), managed by FMR or an
affiliate of FMR.
If the proposal is approved, the fund may increase its investment in
the Central Funds. FMR believes that the Central Funds will benefit
the fund through enhanced efficiency of cash management and increased
short-term investment opportunities.
WHAT IS MEANT BY RATIFICATION OF "THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS"? (PROPOSALS 12 - 13)
The primary purpose of these proposals is to approve fundamental
investment limitations currently being followed by the fund in an
effort to standardize these limitations for all funds managed by FMR.
Fidelity believes that increased standardization will help promote
operational efficiencies and facilitate monitoring of investment
compliance. RATIFICATION OF THE PROPOSALS IS NOT EXPECTED TO AFFECT
THE WAY THE FUND IS MANAGED, THE INVESTMENT PERFORMANCE OF THE FUND,
OR THE SECURITIES OR INSTRUMENTS IN WHICH THE FUND INVESTS.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each share you own
of the fund on the record date. The record date is November 17, 1997.
WHAT IF THERE ARE NOT ENOUGH VOTES TO REACH A QUORUM BY THE SCHEDULED
SHAREHOLDER MEETING DATE?
If enough people do not vote, we will need to take further action. We
or outside solicitors may contact you by mail, telephone, facsimile,
or by personal interview to encourage you to vote. All of this is
costly to the fund and is ultimately passed on to shareholders.
Therefore, we encourage shareholders to vote as soon as they review
the enclosed proxy materials to avoid additional mailings, telephone
calls or other solicitations.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage paid envelope. If you
need assistance, or have any questions regarding the proposals, please
call us at 1-800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."