Exhibit 5(a)
MANAGEMENT CONTRACT
between
Fidelity Special Situations Fund
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 29th day of November, 1990, by and between Fidelity
Special Situations Fund, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called the
"Fund"), and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Adviser").
Required authorizations and approvals by shareholders and Trustees having
been obtained, Fidelity Special Situations Fund, on behalf of its two
existing classes of shares of beneficial interest within a single portfolio
(hereinafter called the "Portfolio"), and Fidelity Management & Research
Company hereby consent, pursuant to Paragraph 6 of the existing Management
Contract dated November 1, 1987, to a modification of said Contract in the
manner set forth below. The term "Portfolio" shall be understood to apply
to Initial Class shares and Plymouth Class shares of the Fund. The
modifications shall take effect upon the execution of this modification of
the Management Contract by duly authorized officers of the Fund and the
Adviser.
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. Management Fee. 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 basic fee and a
performance adjustment to the basic fee based upon the investment
performance of the Portfolio in relation to the Standard & Poor's Daily
Stock Price Index of 500 Common Stocks (the "Index"). The basic fee and
performance adjustment will be computed as follows:
Basic Fee Rate:
The basic fee rate shall be composed of two elements.
(i) Group Fee Rate. The Group fee rate shall be based upon the
monthly average of the net assets of the registered investment companies
having Management Contracts with the Adviser (computed in the manner set
forth in the charter of each investment company, determined as of the close
of business on each business day throughout the month. The Group fee rate
shall be determined on a cumulative basis pursuant to the following
schedule:
Average Net Assets Annualized Fee Rate (for each level)
$ 0 - 3 billion .52%
3 - 6 .49
6 - 9 .46
9 - 12 .43
12 - 15 .40
15 - 18 .385
18 - 21 .37
21 - 24 .36
24 - 30 .35
30 - 36 .345
36 - 42 .34
42 - 48 .335
48 - 66 .325
66 - 84 .32
00 - 000 .000
Xxxx 000 .00
(xx) Individual Fund Fee Rate. The individual fund fee rate shall be
.30%.
The sum of the cumulative Group fee rate, calculated as described above to
the nearest millionth, and the Individual Fund fee rate shall constitute
the annual rate.
Basic Fee:
One-twelfth of the annual fee rate 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) determined as of the close of business on each
business day throughout the month.
The basic fee will be subject to upward or downward adjustment on the
basis of the Portfolio's investment performance as follows:
Performance Adjustment:
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 performance index.
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 +.20%.
The performance period will commence with the first day of the first full
month following the effective date of the Fund's registration statement.
During the first eleven months of the operation of the Contract there will
be no performance adjustment. Starting with the twelfth month of operation
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.
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 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 Portfolio's investment performance will be measured separately for
Initial Class shares and Plymouth Class shares, and the lesser of the two
results obtained will be used in calculating the performance adjustment.
In calculating the investment performance of the Plymouth Class, the
investment performance of the Initial Class shall be the investment
performance of the Plymouth Class for the period before the first Plymouth
Class share was issued.
The adjustment to the basic fee will not be 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 the same period of time
shorter than the performance period has been ahead of that of the Index.
In 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 basic fee
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.
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 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.
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, 1991 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 and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust are separate and distinct from those of any and all
other Portfolios.
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 all as
of the date written above.
FIDELITY SPECIAL SITUATIONS FUND
By /s/J. Xxxx Xxxxxxxx
J. Xxxx Xxxxxxxx
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/J. Xxxx Xxxxxxxx
J. Xxxx Xxxxxxxx
President
