EXHIBIT 5(A)
MANAGEMENT CONTRACT
BETWEEN
FIDELITY TREND FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
Modification made this 1st day of August, 1993 by and between Fidelity
Trend 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 authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
November 1, 1989, to a modification of said Contract in the manner set
forth below. The Modified Management Contract shall, when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of August 1, 1993 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 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.
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 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 500 Composite Stock Price
Index (the "Index"). The basic fee and performance adjustment will be
computed as follows:
(a) Basic Fee Rate. The annual basic fee rate shall be the sum of the
group fee rate and the individual fund fee rate calculated to the nearest
millionth decimal place as follows:
(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
Advisory and Service or 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 .520%
3 - 6 .490
6 - 9 .460
9 - 12 .430
12 - 15 .400
15 - 18 .385
18 - 21 .370
21 - 24 .360
24 - 30 .350
30 - 36 .345
36 - 42 .340
42 - 48 .335
48 - 66 .325
66 - 84 .320
84 - 102 .315
102 - 138 .310
138 - 174 .305
Over 174 .300
(ii) Individual Fund Fee Rate. The individual fund fee rate shall be
.30%.
(b) Basic fee: One-twelfth of the basic fee rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner set
forth in theFund's Declaration of Trust) determined as of the close of
business on each business day throughout the month. The resulting dollar
amount comprises the basic fee. This basic fee will be subject to upward
or downward adjustment on the basis of the Portfolio's investment
performance as follows:
(c) 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. One-twelfth of 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 rounded
to the nearer point (the higher point if exactly one-half a point) that the
Portfolio's investment performance over the month and the preceding 35
months (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 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 adjustment to the basic fee will not be cumulative. An increased fee
rate 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 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.
(d) One-twelfth of the annual performance adjustment 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 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 purposes 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-weighted 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) 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
basic fee rate 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 performance adjustment to the
basic fee 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.
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.
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, 1994 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 the 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 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.
SEAL FIDELITY TREND FUND
By /s /J. Xxxx Xxxxxxxx
Senior Vice President
SEAL FIDELITY MANAGEMENT
& RESEARCH COMPANY
By /s / J. Xxxx Xxxxxxxx
President
