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Fidelity Moves Index Fund Management In-House

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Dec. 30, 2002 — Fidelity Investments is taking over management of six index mutual funds that are currently run for the company by a unit of Deutsche Bank AG.

The switch will reduce the price Northern Trust (NTRS) will pay to acquire Deutsche Bank’s index-based asset management business, but will not scuttle the planned transaction, a spokeswoman for Northern said. Northern announced in September that it agreed to acquire the business for about $260 million.

Fidelity will take over the stock index funds, which the company said have about $25.5 billion in assets, on Jan. 13. The company believes it can provide shareholders in the funds with “consistent management in a cost-effective manner” by bringing management of the offerings in-house, said Fidelity spokesman Vin Loporchio. He added that the funds’ expense ratios will not change.

Fidelity has “no particular issues” with Northern or the service it has received from Deutsche Asset Management Inc., Loporchio said. Northern’s planned acquisition led Fidelity to review its management agreement with Deutsche, he said.

Fidelity’s move will lower Northern’s purchase price, which is tied to the amount of assets Northern is buying, said Jaime Ziegler, director of marketing for Northern Trust Global Investors, Northern’s asset management arm. She declined to elaborate on the modified price.

The decision by Fidelity will not affect the planned acquisition, which “is still very attractive to us,” Ziegler said, adding that the deal is expected to close in the first quarter of 2003.

The funds to be managed by Fidelity are Fidelity Spartan 500 Index (FSMKX), Fidelity Spartan Total Market Index (FSTMX), Fidelity Spartan International Index (FSIIX), Fidelity Spartan Extended Market Index (FSEMX), Fidelity Spartan US Equity Index (FUSEX), and the Fidelity VIP 500 Index Fund, Loporchio said.

The funds will be run by a team of managers overseen by Jacques Perold, senior vice president of Fidelity’s Fidelity Management and Research Co. unit, Loporchio said.


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