SUPPLEMENT TO THE
SPARTAN(registered trademark) INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF FIDELITY SCHOOL STREET TRUST
SPARTAN MUNICIPAL INCOME FUND
A FUND OF FIDELITY COURT STREET TRUST
FEBRUARY 27, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING NON-FUNDAMENTAL LIMITATION REPLACES NON-FUNDAMENTAL
INVESTMENT LIMITATION (III) FOUND IN THE "INVESTMENT LIMITATIONS OF
SPARTAN INTERMEDIATE MUNICIPAL INCOME" SECTION ON PAGE 2.
(iii) 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 (3)).
THE FOLLOWING NON-FUNDAMENTAL LIMITATION REPLACES NON-FUNDAMENTAL
INVESTMENT LIMITATION (III) FOUND IN THE "INVESTMENT LIMITATIONS OF
SPARTAN MUNICIPAL INCOME" SECTION ON PAGE 4.
(iii) 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 (3)).
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 10.
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 FOURTH PARAGRAPH FOLLOWING THE
HEADING "PERFORMANCE COMPARISONS" IN THE "PERFORMANCE" SECTION ON PAGE
15.
Each fund may compare its performance to the Lehman Brothers Municipal
Bond Index, a market value-weighted index for investment-grade
municipal bonds with maturities of one year or more. Spartan
Intermediate Municipal Income may also compare its performance to that
of the Lehman Brothers 1-17 Year Municipal Bond Index, a market
value-weighted index for investment-grade municipal bonds with
maturities between one and 17 years. Spartan Municipal Income may also
compare its performance to that of the Lehman Brothers Municipal Bond
Index, a market value-weighted index for investment-grade municipal
bonds with maturities of one year or more. Spartan Municipal Income
may also compare its performance to that of the Lehman Brothers 3 Plus
Year Municipal Bond Index, a market value-weighted index for
investment-grade municipal bonds with maturities of three years or
more. Issues included in each index have been issued after December
31, 1990, have an outstanding par value of at least $3 million, and
have been issued as part of an offering of at least $50 million.
Subsequent to December 31, 1995, zero coupon bonds and issues subject
to the alternative minimum tax are included in each index. Beginning
January 1, 2000, issues included in each index will have an
outstanding par value of at least $5 million.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 17.
*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 and
Fidelity Court Street Trust, is Mr. Johnson's daughter.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 17.
ABIGAIL P. JOHNSON (37), Member of the Advisory Board of Fidelity
School Street Trust and Fidelity Court Street Trust (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.
NED C. LAUTENBACH (55), Trustee (2000), has been a partner of
Clayton, Dubilier & Rice, Inc. (private equity investment firm) since
September 1998. Mr. Lautenbach was Senior Vice President of IBM
Corporation from 1992 until his retirement in July 1998. From 1993 to
1995 he was Chairman of IBM World Trade Corporation. He also was a
member of IBM's Corporate Executive Committee from 1994 to July 1998.
He is a Director of PPG Industries Inc. (glass, coating and chemical
manufacturer), Dynatech Corporation (global communications equipment),
Eaton Corporation (global manufacturer of highly engineered products)
and ChoicePoint Inc. (data identification, retrieval, storage, and
analysis).
MARIA F. DWYER (41), Deputy Treasurer (2000), is Deputy Treasurer
of the Fidelity funds and is a Vice President (1999) and an employee
(1996) of FMR. Prior to joining Fidelity, Ms. Dwyer served as Director
of Compliance for MFS Investment Management.
THE FOLLOWING INFORMATION FOUND IN THE "TRUSTEES AND OFFICERS" SECTION
BEGINNING ON PAGE 17 HAS BEEN REMOVED.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984,
Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and
replacement products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
LEONARD M. RUSH (52), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THE FOLLOWING INFORMATION REPLACES THE COMPENSATION TABLE FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 17.
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended in 1998 or calendar year
ended December 31, 1998, as applicable.
<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 Spartan Intermediate Spartan Municipal IncomeB Fund Complex*,A
Municipal IncomeB
Edward C. Johnson 3d** $ 0 $ 0 $ 0
Abigail P. Johnson** $ 0 $ 0 $ 0
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox $ 393 $ 1,128 $ 223,500
Phyllis Burke Davis $ 388 $ 1,117 $ 220,500
Robert M. Gates $ 393 $ 1,134 $ 223,500
E. Bradley Jones**** $ 390 $ 1,122 $ 222,000
Donald J. Kirk $ 398 $ 1,154 $ 226,500
Ned C. Lautenbach*** $ 0 $ 0 $ 0
Peter S. Lynch** $ 0 $ 0 $ 0
William O. McCoy $ 393 $ 1,134 $ 223,500
Gerald C. McDonough $ 480 $ 1,389 $ 273,500
Marvin L. Mann $ 388 $ 1,122 $ 220,500
Robert C. Pozen** $ 0 $ 0 $ 0
Thomas R. Williams $ 393 $ 1,134 $ 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.
*** Duri ng the period from October 14, 1999 through December 31,
1999, Mr. Lautenbach served as a Member of the Advisory Board.
Effective January 1, 2000, Mr. Lautenbach serves as a Member of the
Board of Trustees.
**** Mr. Jones served on the Board of Trustees through December
31, 1999.
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 "GROUP FEE RATE" AND "EFFECTIVE
ANNUAL FEE RATE" SCHEDULES FOR THE FUNDS ON PAGE 22.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .3700% $ 1 billion .3700%
3 - 6 .3400 50 .2188
6 - 9 .3100 100 .1869
9 - 12 .2800 150 .1736
12 - 15 .2500 200 .1652
15 - 18 .2200 250 .1587
18 - 21 .2000 300 .1536
21 - 24 .1900 350 .1494
24 - 30 .1800 400 .1459
30 - 36 .1750 450 .1427
36 - 42 .1700 500 .1399
42 - 48 .1650 550 .1372
48 - 66 .1600 600 .1349
66 - 84 .1550 650 .1328
84 - 120 .1500 700 .1309
120 - 156 .1450 750 .1291
156 - 192 .1400 800 .1275
192 - 228 .1350 850 .1260
228 - 264 .1300 900 .1246
264 - 300 .1275 950 .1233
300 - 336 .1250 1,000 .1220
336 - 372 .1225 1,050 .1209
372 - 408 .1200 1,100 .1197
408 - 444 .1175 1,150 .1187
444 - 480 .1150 1,200 .1177
480 - 516 .1125 1,250 .1167
516 - 587 .1100 1,300 .1158
587 - 646 .1080 1,350 .1149
646 - 711 .1060 1,400 .1141
711 - 782 .1040
782 - 860 .1020
860 - 946 .1000
946 - 1,041 .0980
1,041 - 1,145 .0960
1,145 - 1,260 .0940
over - 1,260 .0920
</TABLE>
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH IN THE
"TRANSFER AND SERVICE AGENT AGREEMENTS" SECTION ON PAGE 24.
Each fund has entered into a transfer agent agreement with Citibank,
N.A., which is located at 111 Wall Street, New York, New York. Under
the terms of the agreements, Citibank, N.A. provides transfer agency,
dividend disbursing, and shareholder services for each fund. Citibank,
N.A. in turn has entered into sub-transfer agent agreements with FSC,
an affiliate of FMR. Under the terms of the sub-agreements, FSC
performs all processing activities associated with providing these
services for each fund and receives all related transfer agency fees
paid to Citibank, N.A.
THE FOLLOWING INFORMATION REPLACES THE FOURTH PARAGRAPH IN THE
"TRANSFER AND SERVICE AGENT AGREEMENTS" SECTION ON PAGE 24.
In addition, Citibank, N.A. receives the pro rata portion of the
transfer agency fees applicable to shareholder accounts in a qualified
state tuition program (QSTP), as defined under the Small Business Job
Protection Act of 1996, managed by FMR or an affiliate and each
Fidelity Freedom Fund, a fund of funds managed by an FMR affiliate,
according to the percentage of the QSTP's or Freedom Fund's assets
that is invested in a fund.
THE FOLLOWING INFORMATION REPLACES THE SIXTH PARAGRAPH IN THE
"TRANSFER AND SERVICE AGENT AGREEMENTS" SECTION ON PAGE 25.
Each fund has also entered into a service agent agreement with
Citibank, N.A. Under the terms of the agreements, Citibank, N.A.
provides pricing and bookkeeping services for each fund. Citibank,
N.A. in turn has entered into sub-service agent agreements with FSC.
Under the terms of the sub-agreements, FSC performs all processing
activities associated with providing these services, including
calculating the NAV and dividends for each fund and maintaining each
fund's portfolio and general accounting records, and receives all
related pricing and bookkeeping fees paid to Citibank, N.A.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"DESCRIPTION OF THE TRUSTS" SECTION ON PAGE 26.
CUSTODIAN. Citibank, N.A., 111 Wall Street, New York, New York, is
custodian of the assets of the funds. The custodian is responsible for
the safekeeping of a fund's assets and the appointment of any
subcustodian banks and clearing agencies.
SUPPLEMENT TO THE FIDELITY STRATEGIC INCOME FUND
FEBRUARY 27, 1999
PROSPECTUS
SHAREHOLDER MEETING. On or about January 19, 2000, a meeting of the
shareholders of Fidelity Strategic Income Fund will be held to approve
various proposals. Shareholders of record on November 22, 1999 are
entitled to vote at the meeting.
For more detailed information concerning the proposals under
consideration, please contact Fidelity at 1-800-544-8888 to request a
free copy of the proxy statement.
The following information replaces similar information found in the
"Fund Management" section on page 21.
(small solid bullet) Fidelity Management & Research Far East Inc.
(FMR Far East) serves as a sub-adviser for the fund. FMR Far East was
organized in 1986 to provide investment research and advice to FMR.
Currently, FMR Far East provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services for the fund.
The following information replaces similar information found in the
"Fund Management" section on page 22.
FMR pays FIMM, FMR U.K., FMR Far East and FIIA for providing
sub-advisory services, and FIIA in turn pays FIIA(U.K.)L. FMR or FMR
Far East pays FIJ for providing sub-advisory services.
The following information replaces similar information found in the
"Fund Services" section under the heading "Fund Management" on page
22.
John Carlson is Vice President and lead manager of Strategic Income,
which he has managed since inception. Other Fidelity investment
professionals assist Mr. Carlson in selecting investments for the
fund. He also manages other Fidelity funds. Prior to joining Fidelity
in 1995, Mr. Carlson was executive director of emerging markets at
Lehman Brothers International from 1992 through 1995.
The following information found in the "Fund Services" section under
the heading "Fund Management" on page 22 has been removed.
Margaret Eagle is Vice President and manager of Strategic Income. Ms.
Eagle has managed the high yield investments for Strategic Income
since inception. In addition, she is Senior Vice President of Fidelity
Trust Company. Since joining Fidelity in 1980, Ms. Eagle has worked as
an analyst and manager.
Kevin Grant is Vice President and manager of Strategic Income. Mr.
Grant has managed the domestic investment-grade and the U.S.
Government investments for Strategic Income since 1998. He also
manages several other Fidelity funds. Mr. Grant joined Fidelity in
1993 as a portfolio manager.
Ian Spreadbury is manager of Strategic Income's foreign bond
investments, which he has managed since inception. He also co-manages
another Fidelity fund. Additionally, Mr. Spreadbury is a director of
fixed income and a portfolio manager for Fidelity International
Limited (FIL). Prior to joining Fidelity in 1995, Mr. Spreadbury was a
senior manager with Legal & General, Limited, from 1981 to 1995.
The following information replaces similar information found in the
"Investment Details" section under the heading "Foreign Exposure" on
page 7.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial and other operational risks; and the
less stringent investor protection and disclosure standards of some
foreign markets. 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, which could result in
difficulty pricing foreign investments and failure by foreign issuers
to pay timely dividends, interest or principal. All of these factors
can make foreign investments, especially those in emerging markets,
more volatile and potentially less liquid than U.S. investments. In
addition, foreign markets can perform differently than the U.S.
market.
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 THE FOURTH AND FIFTH PARAGRAPHS
UNDER "PERFORMANCE COMPARISONS" IN THE "PERFORMANCE" SECTION ON PAGE
38.
Strategic Income may compare its performance to that of the Fidelity
Strategic Income Composite Index, which is a hypothetical
representation of the performance of the fund's general investment
categories according to their respective weightings in the fund's
neutral mix. The Fidelity Strategic Income Composite Index represents
Strategic Income's four general investment categories according to
their respective weighting in the fund's neutral mix (40% high yield,
30% U.S. Government and investment-grade, 15% foreign developed
markets and 15% emerging markets). The following indexes are used to
calculate the Fidelity Strategic Income Composite Index: Merrill Lynch
High Yield Master II Index for the high yield category, Lehman
Brothers Government Bond Index for the U.S. Government and investment
grade category, Salomon Brothers Non-U.S. Dollar World Government Bond
Index for the foreign developed markets category, and J.P. Morgan
Emerging Markets Bond Index Plus for the emerging markets category.
The index weightings of the Fidelity Strategic Income Composite Index
are rebalanced monthly.
MERRILL LYNCH HIGH YIELD MASTER II INDEX. A market value-weighted
index of all domestic and yankee high-yield bonds, including deferred
interest bonds and payment-in-kind securities. Issues included in the
index have maturities of one year or more and have a credit rating
lower than BBB-/Baa3, but are not in default. Issues must have an
outstanding par value of at least $50 million to be included in the
index.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND UNDER
"PERFORMANCE COMPARISONS" IN THE "PERFORMANCE" SECTION ON PAGE 38.
Strategic Income may compare its performance to that of the Merrill
Lynch High Yield Master II Index, a market value-weighted index of all
domestic and yankee high-yield bonds, including deferred interest
bonds and payment-in-kind securities. Issues included in the index
have maturities of one year or more and have a credit rating lower
than BBB-/Baa3, but are not in default. Issues must have an
outstanding par value of at least $50 million to be included in the
index.
THE FOLLOWING INFORMATION REPLACES AND SUPPLEMENTS INFORMATION FOUND
IN THE "TRUSTEES AND OFFICERS" SECTION BEGINNING 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 HAS BEEN REMOVED FROM THE "TRUSTEES AND
OFFICERS" SECTION BEGINNING ON PAGE 40.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984,
Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and
replacement products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
LEONARD M. RUSH (52), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THE FOLLOWING INFORMATION SUPPLEMENTS THE SIMILAR INFORMATION FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 40.
NED C. LAUTENBACH (55), Trustee (2000), has been a partner of
Clayton, Dubilier & Rice, Inc. (private equity investment firm) since
September 1998. Mr. Lautenbach was Senior Vice President of IBM
Corporation from 1992 until his retirement in July 1998. From 1993 to
1995 he was Chairman of IBM World Trade Corporation. He also was a
member of IBM's Corporate Executive Committee from 1994 to July 1998.
He is a Director of PPG Industries Inc. (glass, coating and chemical
manufacturer), Dynatech Corporation (global communications equipment),
Eaton Corporation (global manufacturer of highly engineered products)
and ChoicePoint Inc. (data identification, retrieval, storage, and
analysis).
THE FOLLOWING INFORMATION SUPPLEMENTS THE SIMILAR INFORMATION FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 40.
MARIA F. DWYER (41), Deputy Treasurer (2000), is Deputy Treasurer
of the Fidelity funds and is a Vice President (1999) and an employee
(1996) of FMR. Prior to joining Fidelity, Ms. Dwyer served as Director
of Compliance for MFS Investment Management.
THE FOLLOWING INFORMATION REPLACES THE COMPENSATION TABLE FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION BEGINNING 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.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
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
Ned C. Lautenbach*** $ 0 $ 0
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.
*** During the period from October 14, 1999 through December 31,
1999, Mr. Lautenbach served as a Member of the Advisory Board.
Effective January 1, 2000, Mr. Lautenbach serves as a Member of the
Board of Trustees.
**** Mr. Jones served on the Board of Trustees through December 31,
1999.
+ 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 "GROUP FEE RATE" AND "EFFECTIVE
ANNUAL FEE RATE" SCHEDULES FOUND ON PAGE 45.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .3700% $ 1 billion .3700%
3 - 6 .3400 50 .2188
6 - 9 .3100 100 .1869
9 - 12 .2800 150 .1736
12 - 15 .2500 200 .1652
15 - 18 .2200 250 .1587
18 - 21 .2000 300 .1536
21 - 24 .1900 350 .1494
24 - 30 .1800 400 .1459
30 - 36 .1750 450 .1427
36 - 42 .1700 500 .1399
42 - 48 .1650 550 .1372
48 - 66 .1600 600 .1349
66 - 84 .1550 650 .1328
84 - 120 .1500 700 .1309
120 - 156 .1450 750 .1291
156 - 192 .1400 800 .1275
192 - 228 .1350 850 .1260
228 - 264 .1300 900 .1246
264 - 300 .1275 950 .1233
300 - 336 .1250 1,000 .1220
336 - 372 .1225 1,050 .1209
372 - 408 .1200 1,100 .1197
408 - 444 .1175 1,150 .1187
444 - 480 .1150 1,200 .1177
480 - 516 .1125 1,250 .1167
516 - 587 .1100 1,300 .1158
587 - 646 .1080 1,350 .1149
646 - 711 .1060 1,400 .1141
711 - 782 .1040
782 - 860 .1020
860 - 946 .1000
946 - 1,041 .0980
1,041 - 1,145 .0960
1,145 - 1,260 .0940
over - 1,260 .0920
</TABLE>
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.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 46.
SUB-ADVISERS. On behalf of the fund, FMR has entered into
sub-advisory agreements with FMR U.K., FMR Far East, FIJ, and FIIA.
FIIA, in turn, has entered into a sub-advisory agreement with
FIIA(U.K.)L. Pursuant to the sub-advisory agreements, FMR may receive
from the sub-advisers investment research and advice on issuers
outside the United States and, FMR may grant the sub-advisers
investment management authority as well as the authority to buy and
sell securities if FMR believes it would be beneficial to the
fund.
THE FOLLOWING INFORMATION SUPPLEMENTS SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 46.
On behalf of the fund, FMR Far East has entered into a sub-advisory
agreement with FIJ pursuant to which FMR Far East may receive from FIJ
investment research and advice relating to Japanese issuers (and such
other Asian issuers as FMR Far East may designate).
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 46.
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal
to 110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of
FMR's monthly management fee with respect to the average net assets
held by the fund for which the sub-adviser has provided FMR with
investment advice and research services.
(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 investment
advice and research services.
(small solid bullet) FMR Far East pays FIJ a fee equal to 100% of
FIJ's costs incurred in connection with providing investment advice
and research services for a fund to FMR Far East.
SUPPLEMENT TO THE
FIDELITY INTERNATIONAL BOND FUND AND
FIDELITY NEW MARKETS INCOME FUND
FEBRUARY 27, 1999
PROSPECTUS
SHAREHOLDER MEETING. On or about January 19, 2000, a meeting of the
shareholders of Fidelity International Bond Fund and Fidelity New
Markets Income Fund will be held to approve various proposals.
Shareholders of record on November 22, 1999 are entitled to vote at
the meeting.
For more detailed information concerning the proposals under
consideration, please contact Fidelity at 1-800-544-8888 to request a
free copy of the proxy statement.
The following information replaces similar information found under the
heading "Foreign Exposure" in the "Investment Details" section
beginning on page 8.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
may involve additional risks and considerations. These include risks
relating to political, economic, or regulatory conditions in foreign
countries; fluctuations in foreign currencies; withholding or other
taxes; trading, settlement, custodial, and other operational risks;
and the potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. 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, which could result in
difficulty pricing foreign investments and failure by foreign issuers
to pay timely dividends, interest or principal. All of these factors
can make foreign investments, especially those in emerging markets,
more volatile.
The following information replaces similar information found in the
"Fund Management" section on page 24.
(small solid bullet) Fidelity Management & Research Far East Inc.
(FMR Far East) serves as a sub-adviser for each fund. FMR Far East was
organized in 1986 to provide investment research and advice to FMR.
Currently, FMR Far East provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services for each fund.
The following information replaces similar information found in the
"Fund Management" section on page 25.
FMR pays FMR U.K., FMR Far East and FIIA for providing sub-advisory
services, and FIIA in turn pays FIIA(U.K.)L. FMR or FMR Far East pays
FIJ for providing sub-advisory 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 SIMILAR INFORMATION FOUND UNDER THE
HEADING "INVESTMENT LIMITATIONS OF FIDELITY INTERNATIONAL BOND FUND"
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 SUPPLEMENTS INFORMATION FOUND UNDER THE
HEADING "INVESTMENT LIMITATIONS OF FIDELITY INTERNATIONAL BOND FUND"
IN THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE
2.
For purposes of normally investing at least 65% of the fund's total
assets in foreign debt securities, FMR interprets "total assets" to
exclude collateral received for securities lending transactions.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND UNDER THE
HEADING "INVESTMENT LIMITATIONS OF FIDELITY NEW MARKETS INCOME FUND"
IN THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE
3.
(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 SUPPLEMENTS INFORMATION FOUND UNDER THE
HEADING "INVESTMENT LIMITATIONS OF FIDELITY NEW MARKETS INCOME FUND"
IN THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE
3.
For purposes of normally investing at least 65% of the fund's total
assets in debt securities of issuers in emerging markets, FMR
interprets "total assets" to exclude collateral received for
securities lending transactions.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND UNDER THE
HEADING "EXPOSURE TO FOREIGN MARKETS" IN THE "INVESTMENT POLICIES AND
LIMITATIONS" SECTION ON PAGE 5.
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
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 12.
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 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 SIMILAR INFORMATION FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 43.
ABIGAIL P. JOHNSON (37), Member of the Advisory Board of Fidelity
School Street Trust (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.
NED C. LAUTENBACH (55), Trustee (2000 ), has been a partner of
Clayton, Dubilier & Rice, Inc. (private equity investment firm) since
September 1998. Mr. Lautenbach was Senior Vice President of IBM
Corporation from 1992 until his retirement in July 1998. From 1993 to
1995 he was Chairman of IBM World Trade Corporation. He also was a
member of IBM's Corporate Executive Committee from 1994 to July 1998.
He is a Director of PPG Industries Inc. (glass, coating and chemical
manufacturer), Dynatech Corporation (global communications equipment),
Eaton Corporation (global manufacturer of highly engineered products)
and ChoicePoint Inc. (data identification, retrieval, storage, and
analysis).
MARIA F. DWYER (41), Deputy Treasurer (2000), is Deputy Treasurer
of the Fidelity funds and is a Vice President (1999) and an employee
(1996) of FMR. Prior to joining Fidelity, Ms. Dwyer served as Director
of Compliance for MFS Investment Management.
THE FOLLOWING INFORMATION HAS BEEN REMOVED FROM THE "TRUSTEES AND
OFFICERS" SECTION ON PAGE 43.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984,
Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and
replacement products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
THE FOLLOWING INFORMATION HAS BEEN REMOVED FROM THE "TRUSTEES AND
OFFICERS" SECTION ON PAGE 44.
LEONARD M. RUSH (52), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THE FOLLOWING INFORMATION REPLACES THE COMPENSATION TABLE FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION ON PAGE 45.
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended December 31, 1998.
<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
Ned C. Lautenbach*** $ 0 $ 0 $ 0
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.
*** During the period from October 14, 1999 through December 31,
1999, Mr. Lautenbach served as a Member of the Advisory Board.
Effective January 1, 2000, Mr. Lautenbach serves as a Member of the
Board of Trustees.
**** Mr. Jones served on the Board of Trustees through December 31,
1999.
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 "GROUP FEE RATE" AND "EFFECTIVE
ANNUAL FEE RATE" SCHEDULES FOUND ON PAGE 47.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .3700% $ 1 billion .3700%
3 - 6 .3400 50 .2188
6 - 9 .3100 100 .1869
9 - 12 .2800 150 .1736
12 - 15 .2500 200 .1652
15 - 18 .2200 250 .1587
18 - 21 .2000 300 .1536
21 - 24 .1900 350 .1494
24 - 30 .1800 400 .1459
30 - 36 .1750 450 .1427
36 - 42 .1700 500 .1399
42 - 48 .1650 550 .1372
48 - 66 .1600 600 .1349
66 - 84 .1550 650 .1328
84 - 120 .1500 700 .1309
120 - 156 .1450 750 .1291
156 - 192 .1400 800 .1275
192 - 228 .1350 850 .1260
228 - 264 .1300 900 .1246
264 - 300 .1275 950 .1233
300 - 336 .1250 1,000 .1220
336 - 372 .1225 1,050 .1209
372 - 408 .1200 1,100 .1197
408 - 444 .1175 1,150 .1187
444 - 480 .1150 1,200 .1177
480 - 516 .1125 1,250 .1167
516 - 587 .1100 1,300 .1158
587 - 646 .1080 1,350 .1149
646 - 711 .1060 1,400 .1141
711 - 782 .1040
782 - 860 .1020
860 - 946 .1000
946 - 1,041 .0980
1,041 - 1,145 .0960
1,145 - 1,260 .0940
Over 1,260 .0920
</TABLE>
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 48.
SUB-ADVISERS. On behalf of each fund, FMR has entered into
sub-advisory agreements with FMR U.K., FMR Far East, FIJ, and FIIA.
FIIA, in turn, has entered into a sub-advisory agreement with
FIIA(U.K.)L. Pursuant to the sub-advisory agreements, FMR may receive
from the sub-advisers investment research and advice on issuers
outside the United States and FMR may grant the sub-advisers
investment management authority as well as the authority to buy and
sell securities if FMR believes it would be beneficial to the
funds.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 48.
On behalf of each fund, FMR Far East has entered into a
sub-advisory agreement with FIJ pursuant to which FMR Far East may
receive from FIJ investment research and advice relating to Japanese
issuers (and such other Asian issuers as FMR Far East may
designate).
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 48.
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal
to 110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of
FMR's monthly management fee with respect to the average net assets
held by the fund for which the sub-adviser has provided FMR with
investment advice and research services.
(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 investment
advice and research services.
(small solid bullet) FMR Far East pays FIJ a fee equal to 100% of
FIJ's costs incurred in connection with providing investment advice
and research services for a fund to FMR Far East.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 48.
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 THE SECOND PARAGRAPH IN THE
"TRANSFER AND SERVICE AGENT AGREEMENTS"SECTION ON PAGE 49.
For providing transfer agency services, Citibank, N.A. 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.
