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For administrative convenience, the board of trustees
considers renewal of the contracts with petitioner over a 3-month
period, by general investment category, reviewing and renewing
contracts to manage all equity funds (RIC's that invest in
stocks) in a given month; all fixed income funds (RIC's that
invest in Bonds) in another month; and all money market funds
(RIC's that invest in commercial paper and other obligations) in
another month. The common board of trustees for the RIC's in the
Fidelity family has never exercised its right of termination or
otherwise failed to renew a management contract with petitioner.
Between 1980 and 1995, FMR Co. has recommended, and the
board of trustees has approved, the merging or closing of 23
RIC's. Of the 82 RIC's which were created during the years at
issue, FMR Co. recommended, and the board of trustees approved,
the merging of 6 retail RIC's and the closing of 2 institutional
RIC's.
Prior to offering shares in a new RIC to the public, FMR Co.
must obtain three different approvals from the board of trustees.
The three board approvals involve: (1) Approval to create the
RIC; (2) approval to register the new RIC with the SEC; and (3)
approval of the initial management contract. When petitioner
determines that a new RIC concept merits consideration by the
board of trustees, petitioner prepares a memorandum to the board
of trustees. Once petitioner receives the board of trustees'
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Last modified: May 25, 2011