SUPPLEMENT TO THE
FIDELITY STRATEGIC INCOME FUND
A FUND OF FIDELITY SCHOOL STREET TRUST
FEBRUARY 27, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)).
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION UNDER THE HEADING
"EXPOSURE TO FOREIGN MARKETS" BEGINNING ON PAGE 4.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. For example, many
foreign countries are less prepared than the United States to properly
process and calculate information related to dates from and after
January 1, 2000. As a result, some foreign markets, brokers, banks or
securities depositories could experience at least temporary
disruptions, which could result in difficulty buying and selling
securities in certain foreign markets and pricing foreign investments,
and foreign issuers could fail to pay timely dividends, interest or
principal. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions and custodial
costs, are generally higher than with U.S. investments.
THE FOLLOWING INFORMATION REPLACES AND SUPPLEMENTS INFORMATION FOUND
IN THE "TRUSTEES AND OFFICERS" SECTION ON PAGE 40.
*EDWARD C. JOHNSON 3d (68), Trustee and President, is Chairman, Chief
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 Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc. Abigail Johnson, member of the Advisory Board
of Fidelity School Street Trust, is Mr. Johnson's daughter.
ABIGAIL P. JOHNSON (37), Member of the Advisory Board of Fidelity
School Street Trust, is Vice President of certain Equity Funds (1997),
and is a Director of FMR Corp. (1994). Before assuming her current
responsibilities, Ms. Johnson managed a number of Fidelity funds.
Edward C. Johnson 3d, Trustee and President of the Funds, is Ms.
Johnson's father.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION ON PAGE 43.
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, 1998.
<TABLE>
<CAPTION>
<S> <C> <C>
COMPENSATION TABLE
Trustees and Members of the Aggregate Compensation from Total Compensation from the
Advisory Board Strategic IncomeB,+ Fund Complex*,A
Edward C. Johnson 3d** $ 0 $ 0
Abigail P. Johnson** $ 0 $ 0
J. Gary Burkhead** $ 0 $ 0
Ralph F. Cox $ 5 $ 223,500
Phyllis Burke Davis $ 5 $ 220,500
Robert M. Gates $ 5 $ 223,500
E. Bradley Jones $ 5 $ 222,000
Donald J. Kirk $ 6 $ 226,500
Peter S. Lynch** $ 0 $ 0
William O. McCoy $ 5 $ 223,500
Gerald C. McDonough $ 7 $ 273,500
Marvin L. Mann $ 5 $ 220,500
Robert C. Pozen** $ 0 $ 0
Thomas R. Williams $ 5 $ 223,500
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the fund, Ms. Johnson and Mr. Burkhead are
compensated by FMR.
+ Estimated
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433 and William McCoy, $55,039.
B Compensation figures include cash.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 46.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as
follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East a fee equal
to 50% of its monthly management fee with respect to the fund's
average net assets managed by the sub-adviser on a discretionary
basis.
(small solid bullet) FMR pays FIJ and FIIA a fee equal to 57% of
its monthly management fee with respect to the fund's average net
assets managed by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
SUPPLEMENT TO THE
FIDELITY INTERNATIONAL BOND FUND AND FIDELITY NEW MARKETS INCOME FUND
FEBRUARY 27, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION OF FIDELITY
INTERNATIONAL BOND FUND BEGINNING ON PAGE 2.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)).
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money up to 15% of
the fund's net assets to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION OF FIDELITY NEW
MARKETS INCOME FUND BEGINNING ON PAGE 2.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)).
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money up to 15% of
the fund's net assets to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
SOURCES OF LIQUIDITY OR CREDIT SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit of the
liquidity or credit enhancement provider in determining whether to
purchase a security supported by such enhancement. In evaluating the
credit of a foreign bank or other foreign entities, FMR will consider
whether adequate public information about the entity is available and
whether the entity may be subject to unfavorable political or economic
developments, currency controls, or other government restrictions that
might affect its ability to honor its commitment. Changes in the
credit quality of the entity providing the enhancement could affect
the value of the security or a fund's share price.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER
THE HEADING "EXPOSURE TO FOREIGN MARKETS" IN THE "INVESTMENT POLICIES
AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. For example, many
foreign countries are less prepared than the United States to properly
process and calculate information related to dates from and after
January 1, 2000. As a result, some foreign markets, brokers, banks or
securities depositories could experience at least temporary
disruptions, which could result in difficulty buying and selling
securities in certain foreign markets and pricing foreign investments,
and foreign issuers could fail to pay timely dividends, interest or
principal. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions and custodial
costs, are generally higher than with U.S. investments.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION ON PAGE 43.
EDWARD C. JOHNSON 3d (68), Trustee and President, is Chairman, Chief
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 Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; and a Director of FDC . Abigail
Johnson, Member of the Advisory Board of Fidelity School Street Trust
(1999), is Mr. Johnson's daughter.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION ON PAGE 43.
ABIGAIL P. JOHNSON (37), Member of the Advisory Board of Fidelity
School Street Trus t (1999) is Vice President of certain Equity
Funds (1997), and is a Director of FMR Corp. (1994). Before assuming
her current responsibilities, Ms. Johnson managed a number of Fidelity
funds. Edward C. Johnson 3d, Trustee and President of the Funds, is
Ms. Johnson's father.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND UNDER THE
HEADING "COMPENSATION TABLE" IN THE "TRUSTEES AND OFFICERS" SECTION ON
PAGE 45.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMPENSATION TABLE
Trustees and Members of the Aggregate Compensation from Aggregate Compensation from Total Compensation from the
Advisory Board International BondB New Markets IncomeB Fund Complex*,A
Edward C. Johnson 3d** $ 0 $ 0 $ 0
Abigail P. Johnson** $ 0 $ 0 $ 0
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox $ 27 $ 105 $ 223,500
Phyllis Burke Davis $ 27 $ 104 $ 220,500
Robert M. Gates $ 27 $ 105 $ 223,500
E. Bradley Jones $ 27 $ 104 $ 222,000
Donald J. Kirk $ 27 $ 106 $ 226,500
Peter S. Lynch** $ 0 $ 0 $ 0
William O. McCoy $ 27 $ 105 $ 223,500
Gerald C. McDonough $ 33 $ 129 $ 273,500
Marvin L. Mann $ 26 $ 103 $ 220,500
Robert C. Pozen** $ 0 $ 0 $ 0
Thomas R. Williams $ 27 $ 105 $ 223,500
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the funds, Ms. Johnson and Mr. Burkhead are
compensated by FMR.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
B Compensation figures include cash.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 46.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as
follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East a fee equal
to 50% of its monthly management fee with respect to the fund's
average net assets managed by the sub-adviser on a discretionary
basis.
(small solid bullet) FMR pays FIJ and FIIA a fee equal to 57% of
its monthly management fee with respect to the fund's average net
assets managed by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
For investment advice and research services, no fees were paid to
FMR U.K., FMR Far East, FIJ, and FIIA. or FIIA(U.K.)L on behalf of
International Bond and New Markets Income for the past three fiscal
years.
For discretionary investment management and execution of portfolio
transactions, no fees were paid to FMR U.K., FMR Far East, FIJ, FIIA,
and FIIA(U.K.)L on behalf of New Markets Income for the past three
fiscal years.
For discretionary investment management and execution of portfolio
transactions, fees paid to FMR U.K., FMR Far East, FIJ, FIIA, and
FIIA(U.K.)L on behalf of International Bond for the past three fiscal
years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fiscal Years Ended December 31 FMR U.K. FMR Far East FIIA* FIIA(U.K.)L FIJ
International Bond
1998 $ 0 $ 0 $ 121,889 $ 75,948 $ 0
1997 $ 0 $ 0 $ 221,132 $ 122,400 $ 0
1996 $ 0 $ 0 $ 478,336 $ 185,613 $ 0
</TABLE>
* Prior to August 1, 1999, FMR paid FIIA a fee equal to 50% of its
monthly management fee with respect to the fund's average net assets
managed by the sub-adviser on a discretionary basis.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
SECOND PARAGRAPH OF THE "TRANSFER AND SERVICE AGENT AGREEMENTS"SECTION
ON PAGE 49.
For providing transfer agency services, FSC receives an
account fee and an asset-based fee each paid monthly with respect to
each account in a fund. For retail accounts and certain institutional
accounts, these fees are based on account size and fund type. For
certain institutional retirement accounts, these fees are based on
fund type. For certain other institutional retirement accounts, these
fees are based on account type and fund type. The account fees are
subject to increase based on postage rate changes.
