FIDELITY SHORT-TERM WORLD BOND FUND
A FUND OF FIDELITY INVESTMENT TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity Short-Term World Bond Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Short-Term World Bond Fund (the Fund), will be held at
the office of the Fidelity Investment Trust, 82 Devonshire Street, Boston,
Massachusetts 02109 on Friday, October 11, 1996, at 9:00 a.m. Eastern time.
The purpose of the Meeting is to consider and act upon the following
proposal, and to transact such other business as may properly come before
the Meeting or any adjournments thereof.
(1) To approve an Agreement and Plan of Reorganization (the Agreement)
between the Fund and Fidelity Short-Term Bond Fund. The Agreement provides
for the transfer of all of the assets of the Fund to Fidelity Short-Term
Bond Fund in exchange solely for shares of beneficial interest of Fidelity
Short-Term Bond Fund and the assumption by Fidelity Short-Term Bond Fund of
the Fund's liabilities, followed by the distribution of Fidelity Short-Term
Bond Fund shares.
The Board of Trustees has fixed the close of business on August 14, 1996
as the record date for the determination of shareholders of the Fund
entitled to notice of, and to vote at, such Meeting and any adjournments
thereof.
By order of the Board of Trustees,
ARTHUR S. LORING, Secretary
August 14, 1996
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help you avoid the time involved in validating your vote if you
fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears
in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself or
by the individual executing the proxy card. For example:
REGISTRATION VALID
SIGNATURE
A. 1) ABC Corp. John Smith,
Treasurer
2) ABC Corp. John Smith,
Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins,
Trustee
2) ABC Trust Ann B. Collins,
Trustee
3) Ann B. Collins, Trustee Ann B. Collins,
Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
FIDELITY SHORT-TERM WORLD BOND FUND
A FUND OF FIDELITY INVESTMENT TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
PROXY STATEMENT AND PROSPECTUS
AUGUST 14, 1996
This Proxy Statement and Prospectus (Proxy Statement) is being furnished
to shareholders of Fidelity Short-Term World Bond Fund (Short-Term World or
the Fund), a fund of Fidelity Investment Trust (the trust), in connection
with the solicitation of proxies by the trust's Board of Trustees for use
at the Special Meeting of Shareholders of the Fund and at any adjournments
thereof (the Meeting). The Meeting will be held on Friday, October 11,
1996, at 9:00 a.m. Eastern time at 82 Devonshire Street, Boston,
Massachusetts 02109, the principal executive office of the trust.
As more fully described in the Proxy Statement, the purpose of the Meeting
is to vote on a proposed reorganization (the Reorganization). Pursuant to
an Agreement and Plan of Reorganization (the Agreement), Short-Term World
would transfer all of its assets to Fidelity Short-Term Bond Fund
(Short-Term Bond), a fund of Fidelity Fixed-Income Trust, in exchange
solely for shares of beneficial interest of Short-Term Bond and the
assumption by Short-Term Bond of Short-Term World's liabilities. The number
of shares to be issued in the proposed Reorganization will be based upon
the relative net asset values of the funds at the time of the exchange. As
provided in the Agreement, Short-Term World will distribute shares of
Short-Term Bond to its shareholders on the closing date (defined below) so
that each shareholder receives the number of full and fractional shares of
Short-Term Bond equal in value to the aggregate net asset value of the
shares of Short-Term World held by such shareholder on October 31, 1996, or
such other date as the parties may agree (the Closing Date). Following the
distribution, Short-Term World will have neither assets, liabilities, nor
shareholders, and it is expected that the trust's Board of Trustees will
liquidate Short-Term World as soon as practicable thereafter.
Short-Term Bond, a taxable bond fund, is a diversified fund of Fidelity
Fixed-Income Trust, an open-end management investment company organized as
a Massachusetts business trust on September 5, 1984. Short-Term Bond's
investment objective is to seek as high a level of current income as
consistent with preservation of capital. Short-Term Bond seeks to achieve
its investment objective by investing principally in investment-grade debt
securities while normally maintaining an average maturity of three years or
less.
This Proxy Statement is accompanied by the Prospectus of Short-Term Bond
(dated June 24, 1996), which is incorporated herein by reference and should
be retained for future reference. These documents set forth concisely the
information about the Reorganization, Short-Term World, and Short-Term Bond
that a shareholder should know before voting on the proposed
Reorganization. A Prospectus and Statement of Additional Information for
Short-Term World, both dated February 26, 1996, supplement s dated July
16, 1996 to Short-Term World's Prospectus and Statement of
Additional Information, and a Statement of Additional Information dated
June 24, 1996 for Short-Term Bond have been filed with the Securities and
Exchange Commission and are incorporated herein by reference. Copies of
these documents may be obtained without charge by contacting Fidelity
Distributors Corporation at 82 Devonshire Street, Boston, Massachusetts
02109 or by calling 1-800-544-8888.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT AND
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Voting Information
Synopsis
Comparison of Principal Risk Factors
The Proposed Transaction
Additional Information About Fidelity Short-Term Bond Fund
Miscellaneous
Exhibit 1 - Agreement and Plan of Reorganization
FIDELITY SHORT-TERM WORLD BOND FUND
(A FUND OF FIDELITY INVESTMENT TRUST)
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY INVESTMENT TRUST: FIDELITY SHORT-TERM WORLD BOND FUND
TO BE HELD ON OCTOBER 11, 1996
VOTING INFORMATION
This Proxy Statement and Prospectus (Proxy Statement) is furnished in
connection with a solicitation of proxies made by, and on behalf of, the
Board of Trustees of Fidelity Investment Trust (the trust) to be used at
the Special Meeting of Shareholders of Fidelity Short-Term World Bond Fund
(Short-Term World or the Fund) and at any adjournments thereof (the
Meeting), to be held on Friday, October 11, 1996 at 9:00 a.m. Eastern time
at 82 Devonshire Street, Boston, Massachusetts 02109, the principal
executive office of the trust and Fidelity Management & Research Company
(FMR), Short-Term World's investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice of
Special Meeting of Shareholders. The solicitation is made primarily by the
mailing of this Proxy Statement and the accompanying proxy card on or about
August 14, 1996. Supplementary solicitations may be made by mail,
telephone, telegraph, or by personal interview by representatives of the
trust. In addition, D.F. King may be paid on a per-call basis to solicit
shareholders on behalf of Short-Term World at an anticipated cost of
approximately $1,950. The expenses in connection with preparing this Proxy
Statement and its enclosures and of all solicitations will be borne by the
Fund. The Fund will reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the beneficial
owners of shares.
If a quorum is not present at the Meeting, or if a quorum is present but
sufficient votes to approve the proposal are not received, or if other
matters arise requiring shareholder attention, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as proxies
will vote FOR the proposed adjournment all shares that they are entitled to
vote, unless directed to vote AGAINST the item, in which case such shares
will be voted against the proposed adjournment with respect to that item. A
shareholder vote may be taken on items in this Proxy Statement or on any
other business properly presented at the Meeting prior to such adjournment
if sufficient votes have been received and it is otherwise appropriate.
If the enclosed proxy card is executed and returned, it nevertheless may
be revoked at any time prior to its use by written notification received by
the trust, by the execution of a later-dated proxy card, or by attending
the Meeting and voting in person. All proxy cards solicited by the Board of
Trustees that are properly executed and received by the Secretary prior to
the Meeting, and which are not revoked, will be voted at the Meeting.
Shares represented by such proxies will be voted in accordance with the
instructions thereon. If no specification is made on a proxy card, it will
be voted FOR the matters specified on the proxy card. Only proxies voted
will be counted towards establishing a quorum. Broker non-votes are not
considered voted for this purpose. Shareholders should note that while
votes to ABSTAIN will count toward establishing a quorum, passage of any
proposal being considered at the Meeting will occur only if a sufficient
number of votes are cast FOR the proposal. Accordingly, votes to ABSTAIN
and votes AGAINST will have the same effect in determining whether the
proposal is approved.
Short-Term World may also choose to have votes recorded by telephone. D.F.
King may be paid on a per-call basis for vote-by-phone solicitations on
behalf of Short-Term World at an anticipated cost of approximately $360. If
the Fund records votes by telephone, it will use procedures designed to
authenticate shareholders' identities, to allow shareholders to authorize
the voting of their shares in accordance with their instructions, and to
confirm that their instructions have been properly recorded. Proxies given
by telephone may be revoked at any time before they are voted in the same
manner that proxies voted by mail may be revoked.
On June 30 , 1996 there were 118,208,248 shares of Fidelity
Short-Term Bond Fund (Short-Term Bond) issued and outstanding.
On June 30, 1996 there were 11,044,424 shares of Short-Term World
issued and outstanding. Shareholders of record of Short-Term World at the
close of business on August 14, 1996 will be entitled to vote at the
Meeting. Each such shareholder will be entitled to one vote for each share
held on that date.
As of July 22 , 1996, approximately 4.92 % of Short-Term
Bond's total outstanding shares was held by FMR affiliates. FMR Corp. is
the ultimate parent company of these FMR affiliates. Mr. Edward C. Johnson
3d, President and Trustee of the Fund, is a member of a family group which,
by virtue of owning approximately 49% of the voting securities of FMR
Corp., may be deemed under the Investment Company Act of 1940 (the 1940
Act) to form a controlling group with respect to FMR Corp. Based on his
membership in this family group, Mr. Edward C. Johnson 3d may be deemed to
be a beneficial owner of these shares. As of the above date, with the
exception of Mr. Johnson 3d's ownership of Short-Term Bond's shares, the
Trustees and officers of the Funds owned, in the aggregate, less than 1% of
each Fund's total outstanding shares.
VOTE REQUIRED: APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION (THE
AGREEMENT) REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING
VOTING SECURITIES" OF SHORT-TERM WORLD. UNDER THE 1940 ACT, A "MAJORITY
VOTE OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF
THE LESSER OF (A) 67% OR MORE OF THE VOTING SECURITIES PRESENT AT THE
MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES ARE PRESENT OR REPRESENTED BY PROXY, OR (B)
MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES. BROKER NON-VOTES ARE
NOT CONSIDERED "PRESENT" FOR THIS PURPOSE.
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this Proxy Statement, in the Agreement, and in the Prospectuses of
Short-Term World and Short-Term Bond, which are incorporated herein by this
reference. Shareholders should read the entire Proxy Statement and the
Prospectus of Short-Term Bond carefully for more complete information.
The proposed Reorganization would merge Short-Term World into Short-Term
Bond, a larger bond fund also managed by FMR. If the Reorganization is
approved, Short-Term World will cease to exist and current shareholders
will become shareholders of Short-Term Bond instead.
Short-Term World and Short-Term Bond have similar investment objectives
and offer identical shareholder services. Short-Term Bond, however, is a
much larger fund than Short-Term World, and has lower management fees and
other operating expenses. Short-Term Bond has also performed better than
Short-Term World over Short-Term World's lifetime, with a lower level of
volatility. As discussed more fully below, the Board of Trustees of the
trust believes that the Reorganization will be in the best interests of
Short-Term World shareholders.
The primary focus of both Short-Term World and Short-Term Bond is to seek
as high a level of current income as is consistent with preservation of
capital by investing in short-term debt securities. Short-Term Bond,
however, invests mainly in domestic debt securities while Short-Term World
focuses on debt securities issued anywhere in the world. Short-Term World's
current strategy involves hedging substantially all of its foreign currency
exposure into U.S. dollars, which reduces the currency risk involved in
foreign investing. Since early 1995, when Short-Term World began to
implement its current hedging strategy, the Fund's performance and
volatility have closely resembled that of Short Term Bond.
Short-Term World's assets have declined significantly in recent years,
from a peak of approximately $800 million in 1992 to $105.4 million at
April 30, 1996. Short-Term Bond, on the other hand, has over $1 billion in
assets. Short-Term Bond enjoys lower operating expenses than Short-Term
World, with a management fee 0.15% lower (0. 45 % vs. 0.6 0 %)
and total expenses 0.34% lower (0.69% vs. 1.03%) than Short-Term World's
for the 12 months ended April 30, 1996. The higher expense ratio of
Short-Term World, in part, reflects the higher costs of operating a smaller
fund and the higher costs of investing to a greater extent in foreign
securities. It is not anticipated that the merger will result in a material
increase in expenses for Short-Term Bond.
The Funds share identical service features, including purchase and
exchange provisions, redemption procedures, automatic reinvestment
policies, and dividend policies (each declares dividends daily and pays
them monthly). In addition, the same portfolio manager manages both
Short-Term Bond and the U.S. investments held by Short-Term World.
In sum, the merger would give shareholders of Short-Term World the
opportunity to participate in a larger fund with an investment objective
and performance level similar to Short-Term World's. At the same time, as
shareholders of Short-Term Bond, current Short-Term World shareholders can
expect to experience significantly lower expenses.
THE PROPOSED REORGANIZATION
Shareholders of Short-Term World will be asked at the Meeting to vote upon
and approve the Reorganization and the Agreement, which provides for the
acquisition by Short-Term Bond of all of the assets of Short-Term World in
exchange solely for shares of Short-Term Bond and the assumption by
Short-Term Bond of the liabilities of Short-Term World. Short-Term World
will then distribute the shares of Short-Term Bond to its shareholders, so
that each shareholder will receive the number of full and fractional shares
of Short-Term Bond equal in value to the aggregate net asset value of the
shareholder's shares of Short-Term World on the Closing Date (defined
below). The exchange of Short-Term World's assets for Short-Term Bond's
shares will occur at 4:00 p.m. Eastern time on October 31, 1996, or such
other time and date as the parties may agree (the Closing Date). Short-Term
World will then be liquidated as soon as practicable thereafter.
The rights and privileges of the former shareholders of Short-Term World
will be effectively unchanged by the Reorganization, except with respect to
the manner in which shares are voted (described below).
COMPARATIVE FEE TABLES
Each Fund pays a management fee to FMR for managing its investments and
business affairs which is calculated and paid to FMR every month. The fee
is calculated by adding a group fee rate to an individual fund fee rate,
and multiplying the result by the Fund's average net assets. The group fee
rate, which is the same for both Funds, is based on the average net assets
of all mutual funds advised by FMR. This rate cannot exceed 0.37% and
decreases as total assets under management increase. As of April 30, 1996,
the group fee rate for both Short-Term World and Short-Term Bond was
0.1458%. The individual fund fee rate is 0.45% for Short-Term World and
0.30% for Short-Term Bond.
In addition to the management fee payable to FMR, each Fund also incurs
other expenses for services such as maintaining shareholder records and
furnishing shareholder statements and financial reports. For the 12
months ended April 30, 1996, the total operating expenses for
Short-Term World were 1.03%, while Short-Term Bond's total operating
expenses were 0.69%. The estimated total expenses of the merged Fund
wo u ld be 0.34% lower than Short-Term World's expenses, and the
management fee would be 0.15% lower. If the proposed Reorganization is not
approved, each Fund's total operating expenses are expected to remain at
their comparative levels.
With respect to both Funds, Fidelity reserves the right to deduct an
annual maintenance fee of $12.00 from accounts with a value of less than
$2,500, subject to an annual maximum charge of $60.00 per shareholder. For
more information about the Funds' fees, refer to their Prospectuses.
The following table shows the current fees and expenses of Short-Term Bond
and Short-Term World for the year ended April 30, 1996 and pro forma fees
for the combined fund based on the same period after giving effect to the
Reorganization.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Annual fund operating expenses are paid out of each Fund's assets. Expenses
are factored into the Fund's share price or dividends and are not charged
directly to shareholder accounts. The following expenses are based on
historical expenses and are calculated as a percentage of average net
assets.
Short-Term Short-Term Pro Forma
World Bond Expenses
Combined
Fund
Management Fees 0.60% 0.45% 0.45%
Other Expenses 0.43% 0.24% 0.24%
Total Fund 1.03% 0.69% 0.69%
Operating Expenses
EXAMPLES OF EFFECT OF FUND EXPENSES
The following table illustrates the expenses on a hypothetical $1,000
investment in each Fund under the current and pro forma (combined fund)
expenses calculated at the rates stated above, assuming a 5% annual return.
After 1 Year After 3 After 5 After 10
Years Years Years
Short-Term $ 11 $ 33 $ 57 $ 126
World
Short-Term $ 7 $ 22 $ 38 $ 86
Bond
Combined $ 7 $ 22 $ 38 $ 86
Fund
This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund
Operating Expenses remain the same in the years shown. These examples
illustrate the effect of expenses, but are not meant to suggest actual or
expected costs, which may vary. The assumed return of 5% is not a
prediction of, and does not represent, actual or expected performance of
any fund.
FORMS OF ORGANIZATION
Short-Term World is a non-diversified fund of Fidelity Investment Trust,
an open-end management investment company organized as a Massachusetts
business trust on April 20, 1984. Short-Term Bond is a diversified fund of
Fidelity Fixed-Income Trust, an open-end management investment company
organized as a Massachusetts business trust on September 5, 1984. Both
trusts are authorized to issue an unlimited number of shares of beneficial
interest. Because Short-Term World and Short-Term Bond are series of
Massachusetts business trusts, organized under generally similar
Declarations of Trust, the rights of Short-Term World shareholders under
state law and the governing documents are expected to remain unchanged
after the Reorganization, except with regard to shareholder voting rights
as described below. Shareholder voting rights for Short-Term World are
based on the number of shares owned (share-based voting) while shareholder
voting rights for Short-Term Bond are based on the total dollar interest in
the Fund (dollar-based voting). While the differences between the two
Funds' voting rights would have no bearing on matters affecting only one
Fund, on matters requiring trust-wide votes where all funds in a trust are
required to vote, dollar-based voting provides shareholders voting power
that is proportionate to their economic interest whereas share-based voting
may provide shareholders who own shares with a lower net asset value than
other funds in the trust with a disproportionate ability to affect the vote
relative to shareholders of the other funds in the trust. After the
Reorganization, the voting rights of Short-Term World shareholders will
change to reflect those of Short Term Bond shareholders. For more
information regarding shareholder rights, refer to the section of each
Fund's Statement of Additional Information called "Description of the
Trust."
INVESTMENT OBJECTIVE AND POLICIES
The investment objectives and policies of the Funds are set forth below.
There can be no assurance that either Fund will achieve its objective.
As a general matter, the Funds have similar investment objectives and
policies in that both seek as high a level of current income as is
consistent with preservation of capital. Although both Funds can invest
in domestic and foreign securities, a higher percentage of Short-Term
World's assets are normally invested in foreign securities (see Comparison
of Other Policies of the Funds). As of April 30, 1996, 1.0% of Short-Term
Bond's investment portfolio was invested in securities of foreign issuers,
100% of which was U.S. dollar-denominated. As of the same date, 38.3% of
Short-Term World's portfolio was invested in securities of foreign issuers,
none of which was U.S. dollar-denominated. However, as described below,
Short-Term World has followed a strategy to hedge its foreign currency
exposure.
The investment objective of each Fund is a fundamental policy and may not
be changed without the approval of a vote of at least a majority of the
outstanding voting securities of the Fund. With the exception of
fundamental policies, investment policies of the Funds can be changed
without shareholder approval. Thus, the differences between the Funds
discussed below, except as noted, could be changed by the Boards of
Trustees without a vote of shareholders.
COMPARISON OF OTHER POLICIES OF THE FUNDS
DEBT SECURITIES. Both Funds seek to achieve their investment objective by
investing in foreign and domestic short-term debt securities. Historically,
Short-Term Bond invested in both domestic and foreign securities, but since
early 1995 it has focused mainly on domestic securities. Short-Term World
has focused on both foreign and domestic securities since its inception.
Short-Term World's foreign exposure may offer opportunities for higher
returns than comparable domestic investments, due to the different risk
factors associated with investments in foreign securities (see Comparison
of Principal Risk Factors). In past years, however, foreign exposure has
also caused the Fund to experience significant share-price volatility. To
reduce volatility while retaining foreign market exposure, Short-Term
World's current investment strategy is to hedge all non-U.S.
dollar-denominated debt directly to U.S. dollars. This strategy reduces
foreign currency risk, but also offers less potential for outperformance of
a similarly situated domestic fund such as Short-Term Bond. In general, a
fully-hedged short-term foreign portfolio can be expected to perform
similarly to a domestic portfolio of similar average maturity and credit
quality. Since early 1995, when Short-Term World implemented its current
hedging strategy, the volatility and performance of the Funds have closely
resembled each other.
The following table compares the Funds' average annual total
returns for the periods indicated, as well as each Fund's cumulative total
return for the period from October 4, 1991 (commencement of operations of
Short-Term World) to April 30, 1996. Please note that total returns are
based on past results and are not an indication of future performance.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One-Year Average Cumulative
Annual Total Return s Total Return
(periods ended April 30)
</TABLE>
19921 1993 1994 1995 1996 October 4,
1991 to April
30, 1996
Short-Ter 4.42% 5.43% 3.17% -0.01% 7.83% 22.47%
m World
Short-Ter 6.60% 8.85% 1.99% 2.17% 6.52% 28.79%
m Bond
1 Cumulative total return from the inception date of Short-Term
World (October 4, 1991).
The following graph shows the value of a hypothetical $10,000 investment
in each Fund made on October 4, 1991, assuming all distributions are
reinvested. The graph compares the cumulative returns of the Funds on a
monthly basis over the same periods, and illustrates the short-term
volatility of their performance.
Short-Term World Short-Term Bond
Row: 1, Col: 1, Value: 10000.0
Row: 1, Col: 2, Value: 10000.0
Row: 2, Col: 1, Value: 10097.69
Row: 2, Col: 2, Value: 10108.75
Row: 3, Col: 1, Value: 10050.79
Row: 3, Col: 2, Value: 10213.34
Row: 4, Col: 1, Value: 10111.72
Row: 4, Col: 2, Value: 10397.3
Row: 5, Col: 1, Value: 10172.35
Row: 5, Col: 2, Value: 10439.98
Row: 6, Col: 1, Value: 10267.1
Row: 6, Col: 2, Value: 10530.55
Row: 7, Col: 1, Value: 10303.32
Row: 7, Col: 2, Value: 10602.78
Row: 8, Col: 1, Value: 10441.54
Row: 8, Col: 2, Value: 10660.44
Row: 9, Col: 1, Value: 10494.83
Row: 9, Col: 2, Value: 10763.09
Row: 10, Col: 1, Value: 10552.64
Row: 10, Col: 2, Value: 10863.52
Row: 11, Col: 1, Value: 10666.97
Row: 11, Col: 2, Value: 10992.21
Row: 12, Col: 1, Value: 10697.54
Row: 12, Col: 2, Value: 11088.4
Row: 13, Col: 1, Value: 10449.21
Row: 13, Col: 2, Value: 11180.03
Row: 14, Col: 1, Value: 10613.13
Row: 14, Col: 2, Value: 11100.93
Row: 15, Col: 1, Value: 10544.47
Row: 15, Col: 2, Value: 11090.42
Row: 16, Col: 1, Value: 10600.26
Row: 16, Col: 2, Value: 11165.4
Row: 17, Col: 1, Value: 10698.97
Row: 17, Col: 2, Value: 11349.47
Row: 18, Col: 1, Value: 10823.46
Row: 18, Col: 2, Value: 11476.14
Row: 19, Col: 1, Value: 10931.59
Row: 19, Col: 2, Value: 11547.2
Row: 20, Col: 1, Value: 11008.45
Row: 20, Col: 2, Value: 11603.93
Row: 21, Col: 1, Value: 11127.4
Row: 21, Col: 2, Value: 11623.84
Row: 22, Col: 1, Value: 11312.79
Row: 22, Col: 2, Value: 11750.32
Row: 23, Col: 1, Value: 11459.35
Row: 23, Col: 2, Value: 11818.33
Row: 24, Col: 1, Value: 11599.3
Row: 24, Col: 2, Value: 11948.23
Row: 25, Col: 1, Value: 11583.81
Row: 25, Col: 2, Value: 11992.46
Row: 26, Col: 1, Value: 11746.91
Row: 26, Col: 2, Value: 12069.06
Row: 27, Col: 1, Value: 11790.67
Row: 27, Col: 2, Value: 12093.34
Row: 28, Col: 1, Value: 11934.6
Row: 28, Col: 2, Value: 12184.8
Row: 29, Col: 1, Value: 12006.95
Row: 29, Col: 2, Value: 12264.18
Row: 30, Col: 1, Value: 11815.07
Row: 30, Col: 2, Value: 12157.51
Row: 31, Col: 1, Value: 11481.02
Row: 31, Col: 2, Value: 11925.9
Row: 32, Col: 1, Value: 11357.86
Row: 32, Col: 2, Value: 11834.4
Row: 33, Col: 1, Value: 11528.86
Row: 33, Col: 2, Value: 11899.85
Row: 34, Col: 1, Value: 11266.58
Row: 34, Col: 2, Value: 11790.23
Row: 35, Col: 1, Value: 11348.88
Row: 35, Col: 2, Value: 11878.96
Row: 36, Col: 1, Value: 11431.41
Row: 36, Col: 2, Value: 11927.7
Row: 37, Col: 1, Value: 11491.78
Row: 37, Col: 2, Value: 11947.07
Row: 38, Col: 1, Value: 11533.58
Row: 38, Col: 2, Value: 11941.09
Row: 39, Col: 1, Value: 11574.65
Row: 39, Col: 2, Value: 11959.49
Row: 40, Col: 1, Value: 11242.97
Row: 40, Col: 2, Value: 11686.05
Row: 41, Col: 1, Value: 11172.42
Row: 41, Col: 2, Value: 11775.27
Row: 42, Col: 1, Value: 11191.68
Row: 42, Col: 2, Value: 11899.43
Row: 43, Col: 1, Value: 11219.56
Row: 43, Col: 2, Value: 11975.15
Row: 44, Col: 1, Value: 11356.83
Row: 44, Col: 2, Value: 12090.79
Row: 45, Col: 1, Value: 11548.69
Row: 45, Col: 2, Value: 12306.26
Row: 46, Col: 1, Value: 11608.5
Row: 46, Col: 2, Value: 12380.21
Row: 47, Col: 1, Value: 11682.41
Row: 47, Col: 2, Value: 12414.87
Row: 48, Col: 1, Value: 11754.45
Row: 48, Col: 2, Value: 12493.55
Row: 49, Col: 1, Value: 11839.03
Row: 49, Col: 2, Value: 12557.91
Row: 50, Col: 1, Value: 11914.01
Row: 50, Col: 2, Value: 12640.39
Row: 51, Col: 1, Value: 12028.36
Row: 51, Col: 2, Value: 12749.62
Row: 52, Col: 1, Value: 12118.45
Row: 52, Col: 2, Value: 12833.63
Row: 53, Col: 1, Value: 12208.73
Row: 53, Col: 2, Value: 12932.04
Row: 54, Col: 1, Value: 12175.37
Row: 54, Col: 2, Value: 12895.84
Row: 55, Col: 1, Value: 12197.76
Row: 55, Col: 2, Value: 12866.6
Row: 56, Col: 1, Value: 12246.55
Row: 56, Col: 2, Value: 12879.2
$
$12,879
$
$12,247
$
$
10/4/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96
As illustrated by the graph, Short-Term Bond's cumulative total return has
been superior to Short-Term World's over the period since Short-Term
World's inception. At the same time, Short-Term World has historically
experienced greater volatility of returns from month to month,
particularly in the period from 1992 through 1994.
QUALITY OF PORTFOLIO SECURITIES. Short-Term World's policies limit its
investments to securities of Ba-quality or above and limit investments in
securities below Baa-quality (lower quality securities) to 10% of its
portfolio. In contrast, Short-Term Bond's policies allow it to invest up to
5% of its portfolio in securities rated below Baa-quality without
limitation. Thus, while Short-Term Bond has the ability to invest in
securities of lower quality than Short-Term World with respect to 5% of its
portfolio, Short-Term World may invest up to 10% of its assets in
securities rated below Baa (but not lower than Ba). However, Short-Term
World is required to invest 65% of its assets in securities of A-quality or
above and may, therefore, invest a higher portion of its assets in higher
quality securities than Short-Term Bond, which is not subject to a similar
limitation. As of April 30, 1996, assets invested in lower quality
securities for Short-Term World and Short-Term Bond were 1.6% and 2.2%,
respectively, and assets invested in securities rated A or above were 85.8%
and 71.8%, respectively.
DIVERSIFICATION. Short-Term World differs from Short-Term Bond with
respect to its policies on diversification. Unlike Short-Term Bond,
Short-Term World is a non-diversified fund. Generally, to meet federal tax
requirements at the close of each quarter, Short-Term World does not invest
more than 25% of its total assets in any one issuer and, with respect to
50% of total assets, does not invest more than 5% of its total assets in
any one issuer. Short-Term Bond, as a matter of fundamental policy, may
invest no more than 25% of its total assets in any one issuer, and with
respect to 75% of total assets, may not invest more than 5% in any one
issuer. Because Short-Term World can invest a greater portion of its assets
in securities of individual issuers than Short-Term Bond, changes in the
market value of a single issuer could cause greater share-price fluctuation
in Short-Term World than would occur in a more diversified fund such as
Short-Term Bond.
CONCENTRATION. As a matter of fundamental policy, Short-Term Bond may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry. Unlike Short-Term Bond,
Short-Term World must, under normal conditions, invest more than 25% of its
total assets in securities of issuers in the financial services industry.
It follows the same policy as Short-Term Bond, however, with respect to
concentration in the securities of issuers in any other industry. Companies
in the financial services industry are subject to various risks related to
that industry, such as government regulation, changes in interest rates,
and exposure on loans, including loans to foreign borrowers. Because
Short-Term World invests substantially in this industry, its performance
may be more directly affected by conditions affecting the industry than a
less concentrated fund such as Short-Term Bond.
ILLIQUID SECURITIES. Short-Term World may invest up to 15% of its assets
in illiquid securities while Short-Term Bond limits its investments in
illiquid securities to 10% of its assets. Because illiquid securities may
be difficult to sell at the prices at which they are valued, they may be
costly or result in a loss to a Fund. However, since January 1995, each
Fund has invested less than 5% of its assets in illiquid securities.
OTHER INVESTMENT POLICIES. Each Fund may borrow from banks or other funds
advised by FMR, or through reverse repurchase agreements. Each Fund may
lend securities to broker-dealers and institutions, including Fidelity
Brokerage Services Inc. (FBSI), an affiliate of FMR, or to other funds
advised by FMR, as a means of earning income and may also acquire loans,
loan participations, or other forms of direct debt instruments. As a matter
of fundamental policy, each Fund may borrow only for temporary or emergency
purposes in an amount equal to not more than 33 % of its total assets,
and each Fund may lend securities or make other loans in an amount equal
to not more than 33 % of its total assets.
FMR normally invests each Fund's assets according to its investment
strategy. However, Short-Term Bond reserves the right to invest without
limitation in investment-grade money market instruments, and Short-Term
World may invest substantially in U.S. financial markets or U.S.
dollar-denominated instruments for temporary, defensive purposes. Both
Funds may also enter into when-issued and delayed delivery transactions and
invest in asset-backed and mortgage-backed securities and stripped
securities. As stated above, for more information about the risks and
restrictions associated with these polic i es see each Fund's
Prospectus, and for a more detailed discussion of the Funds' investments,
see their Statements of Additional Information, which are incorporated
herein by reference.
OPERATIONS OF SHORT-TERM BOND FOLLOWING THE REORGANIZATION
FMR does not expect Short-Term Bond to revise its investment policies as a
result of the Reorganization. In addition, FMR does not anticipate
significant changes to the Fund's management or to agents that provide the
Fund with services. Specifically, the Trustees and officers, the investment
adviser, distributor, and other agents will continue to serve Short-Term
Bond in their current capacities. Charles Morrison, who currently manages
Short-Term Bond's entire portfolio and Short-Term World's U.S. investments,
will continue to be responsible for Short-Term Bond's portfolio management
after the Reorganization.
All of the current investments held by Short-Term World are permissible
investments for Short-Term Bond. As explained above, however, Short-Term
World has a much larger percentage of its portfolio invested in foreign
securities. Therefore, if the Reorganization is approved, it is anticipated
that Short-Term World and Short-Term Bond may sell a portion of their
investments prior to or after the Closing Date so that the portfolio of the
combined fund will be more consistent with the allocation of assets of
Short-Term Bond's current portfolio. With respect to Short-Term World, if
the present strategy is maintained, the Fund may sell substantially all of
its foreign holdings between the date of shareholder approval of the
Reorganization and the Closing Date. Any transaction costs associated with
such adjustment to the portfolios of Short-Term World and Short-Term Bond
will be borne by Short-Term World and Short-Term Bond, respectively, or by
Short-Term Bond after the Reorganization takes place.
The Funds may recognize a taxable gain or loss due to these portfolio
adjustments. The sale or maturity of bonds or other short-term debt
instruments denominated in a foreign currency by Short-Term World or
Short-Term Bond may result in foreign currency gains or losses . The
sale or disposition of foreign currency contracts by the Funds may also
result in foreign currency gain or loss. Short-Term Bond may acquire
certain bonds from Short-Term World with unrealized foreign currency
losses; Short-Term Bond may subsequently sell such bonds and realize these
foreign currency losses. Foreign currency gains and losses are treated
as ordinary income or loss for federal tax purposes. If either Fund
realizes foreign currency losses, all or a portion of the Funds'
dividend distributions may be recharacterized as a return of
capital.
PURCHASES AND REDEMPTIONS
The purchase and redemption policies for both Funds are substantially the
same and those for Short-Term Bond will remain unchanged after the
Reorganization.
Both Funds' share price, or net asset value per share (NAV), is normally
calculated at 4:00 p.m. Eastern time every business day. Shares of both
Funds are sold without a sales charge. Shares are purchased at the next
share price calculated after an investment is received and accepted. Refer
to a Fund's Prospectus for more information regarding how to buy shares.
Shares of both Funds may be redeemed on any business day at their NAV.
Shares of both Funds are redeemed at the next share price calculated after
an order is received and accepted, normally 4:00 p.m. Eastern time.
On July 15, 1996, Short-Term World's shares ceased to be available to new
accounts, so that starting on July 16, 1996, the Fund's shares were no
longer available for purchase or exchange by non-shareholders. However,
existing shareholders of Short-Term World, including participants in an
employee benefit plan which offered the Fund as an investment vehicle on or
prior to that date (except participants in an employee benefit plan for
which an affiliate of FMR maintains the accounts at the participant level
other than pursuant to a record-keeping agreement), will continue to be
able to purchase shares of Short-Term World up to the close of business
on August 14, 1996 (the Record Date). As of the Record Date,
Short-Term World will be closed to all new and subsequent purchases with
the exception of reinvestment of dividends or other distributions; however,
all shareholders will be permitted to continue to redeem shares through the
Closing Date.
EXCHANGES
The exchange privilege currently offered by both Funds is the same and is
not expected to change after the Reorganization. Shareholders of the Funds
may exchange their shares of a Fund for shares of any other Fidelity fund
registered in a shareholder's state. Refer to each Fund's Prospectus for
restrictions governing exchanges.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Short-Term Bond declares dividends
daily and pays them monthly and normally distributes capital gains in June
and December. Short-Term World declares dividends daily and pays them
monthly and normally distributes capital gains in February and December. On
or before the Closing Date, Short-Term World will distribute substantially
all of its investment company taxable income and net realized capital gain,
if any, in order to maintain its tax status as a regulated investment
company.
Short-Term World will be required to recognize gain or loss on Section
1256 contracts held by the Fund on the last day of its taxable year, which
is typically December 31. If the Reorganization is approved, gains or
losses on Section 1256 contracts held on the Closing Date will be
recognized on the Closing Date.
Dispositions of securities and foreign currency contracts prior to the
merger may result in foreign currency losses which, for tax purposes, may
require the recharacterization of certain distributions as
non-taxable (or return of capital) distributions. Such recharacterization
would reduce the taxable portion of a shareholder's distributions. A
shareholder's cost basis will be reduced by the amount of the return of
capital.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
Each Fund has received an opinion of its counsel, Kirkpatrick & Lockhart
LLP, that the Reorganization will constitute a tax-free reorganization
within the meaning of Section 368 (a)(1)(C) of the Internal Revenue Code of
1986, as amended (the Code). Accordingly, except with respect to Section
1256 contracts, no gain or loss will be recognized to the Funds or their
shareholders as a result of the Reorganization. Please see the section
entitled "Federal Income Tax Considerations" for more information.
Short-Term World and Short-Term Bond have capital loss carryforwards for
federal tax purposes of $32,195,526 and $134,757,243 as of December 31,
1995 and April 30, 1996, respectively. Under current federal tax law,
Short-Term Bond may be limited to using only a portion, if any, of the
capital loss carryforward transferred by Short-Term World at the time of
the Reorganization. There is no assurance that Short-Term Bond will be able
to realize sufficient capital gains to use its capital loss carryforward as
well as a portion, if any, of Short-Term World's capital loss carryforward,
before they expire. The capital loss carryforward attributable to
Short-Term World will expire between April 30, 1999 and April 30, 2003. The
capital loss carryforward attributable to Short-Term Bond will expire
between April 30, 1997 and April 30, 2004.
COMPARISON OF PRINCIPAL RISK FACTORS
Both Funds are subject to the risks normally associated with bond funds.
As described more fully below, however, although both Funds have the
ability to invest in foreign debt securities, Short-Term World currently
exercises this flexibility to a more significant extent. Investments in
foreign securities may involve risks in addition to those attributable to
domestic investments.
FOREIGN DEBT SECURITIES. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations compared to the risks
associated with domestic securities. These risks include those relating to
political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign securities may be unwilling to repay
principal and interest when due or allow repatriation of amounts paid, and
may require that the conditions for payment be renegotiated. All of these
factors can make the prices of foreign investments more volatile.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. Diversification may include limiting the amount of
money invested in any one issuer or, on a broader scale, in any one
industry. A fund that is not diversified may be more sensitive to changes
in the market value of a single issuer or industry. As described above,
Short-Term World has the flexibility to invest in fewer issuers than
Short-Term Bond because it is a non-diversified fund.
CONCENTRATION. Concentrating a fund's investment portfolio in a certain
industry can increase the risks of investing. As described above,
Short-Term World, as a matter of fundamental policy, invests at least 25%
of its assets in the financial services industry. A fund that is
concentrated in the financial services industry is subject to various risks
related to that industry, including government regulation, changes in
interest rates, and exposure on loans, including loans to foreign
borrowers. Therefore, because Short-Term World is required to invest at
least 25% of its assets in the financial services industry, its performance
may be affected to a greater extent than would Short-Term Bond's by
conditions affecting the industry.
THE PROPOSED TRANSACTION
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN FIDELITY
SHORT-TERM WORLD BOND FUND AND FIDELITY SHORT-TERM BOND FUND.
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction may be
consummated are set forth in the Agreement. Significant provisions of the
Agreement are summarized below; however, this summary is qualified in its
entirety by reference to the Agreement, a copy of which is attached as
Exhibit I to this Proxy Statement.
The Agreement contemplates (a) Short-Term Bond acquiring on the Closing
Date all of the assets of Short-Term World in exchange solely for shares of
Short-Term Bond and the assumption by Short-Term Bond of Short-Term World's
liabilities; and (b) the distribution of shares of Short-Term Bond on the
Closing Date to the shareholders of Short-Term World as provided for in the
Agreement.
The assets of Short-Term World to be acquired by Short-Term Bond include
all cash, cash equivalents, securities, receivables (including interest or
dividends receivable), claims, choses in action, and other property owned
by Short-Term World, and any deferred or prepaid expenses shown as an asset
on the books of Short-Term World on the Closing Date. Short-Term Bond will
assume from Short-Term World all liabilities, debts, obligations, and
duties of Short-Term World of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the ordinary
course of business, whether or not determinable on the Closing Date, and
whether or not specifically referred to in the Agreement; provided,
however, that Short-Term World will use its best efforts, to the extent
practicable, to discharge all of its known liabilities prior to the Closing
Date. Short-Term Bond will deliver to Short-Term World the number of
full and fractional shares of Short-Term Bond having an aggregate
net asset value equal to the value of the assets of Short-Term World
less the liabilities of Short-Term World on the Closing Date , which
Short-Term World shall then distribute PRO RATA to its shareholders.
The value of Short-Term World's assets to be acquired by Short-Term Bond
and the amount of its liabilities to be assumed by Short-Term Bond will be
determined as of the close of business (4:00 p.m. Eastern time) of
Short-Term World on the Closing Date, using the valuation procedures set
forth in Short-Term World's then-current Prospectus and Statement of
Additional Information. The net asset value of a share of Short-Term Bond
will be determined as of the same time using the valuation procedures set
forth in its then-current Prospectus and Statement of Additional
Information.
On the Closing Date, Short-Term World will distribute to its shareholders
of record the shares of Short-Term Bond it received in exchange for their
shares of Short-Term World, so that each Short-Term World shareholder will
receive the number of full and fractional shares of Short-Term Bond equal
in value to the aggregate net asset value of shares of Short-Term World
held by such shareholder on the Closing Date; Short-Term World will be
liquidated as soon as practicable thereafter. Such distribution will be
accomplished by opening accounts on the books of Short-Term Bond in the
names of the Short-Term World shareholders and by transferring thereto
shares of Short-Term Bond. Each Short-Term World shareholder's account
shall be credited with the respective PRO RATA number of full and
fractional shares (rounded to the third decimal place) of Short-Term Bond
due that shareholder. Short-Term Bond shall not issue certificates
representing its shares in connection with such exchange.
Accordingly, immediately after the Reorganization, each former Short-Term
World shareholder will own shares of Short-Term Bond equal to the aggregate
net asset value of that shareholder's shares of Short-Term World
immediately prior to the Reorganization. The net asset value per share of
Short-Term Bond will be unchanged by the transaction. Thus, the
Reorganization will not result in a dilution of any shareholder interest.
Any transfer taxes payable upon issuance of shares of Short-Term Bond in a
name other than that of the registered holder of the shares on the books of
Short-Term World as of that time shall be paid by the person to whom such
shares are to be issued as a condition of such transfer. Any reporting
responsibility of Short-Term World is and will continue to be its
responsibility up to and including the Closing Date and such later date on
which Short-Term World is liquidated.
Short-Term World will bear the cost of the Reorganization, including
professional fees, expenses associated with the filing of registration
statements, and the cost of soliciting proxies for the Meeting, which will
consist principally of printing and mailing prospectuses and proxy
statements, together with the cost of any supplementary solicitation.
Additionally, there may be some transaction costs associated with portfolio
adjustments to Short-Term World and Short-Term Bond due to the
Reorganization, which will be borne by Short-Term World and Short-Term
Bond, respectively. The Funds may recognize a taxable gain or loss on the
disposition of securities pursuant to these portfolio adjustments. See the
section entitled "Reasons for the Reorganization."
The consummation of the Reorganization is subject to a number of
conditions set forth in the Agreement, some of which may be waived by a
Fund. In addition, the Agreement may be amended in any mutually agreeable
manner, except that no amendment that may have a materially adverse effect
on the shareholders' interests may be made subsequent to the Meeting.
REASONS FOR THE REORGANIZATION
The Boards of Trustees (the Boards) of both Funds have determined that the
Reorganization is in the best interests of the shareholders of both Funds
and that the Reorganization will not result in a dilution of any
shareholders' interests.
In considering the Reorganization, the Boards considered a number of
factors, including the following:
(1) the compatibility of the Funds' investment objectives and policies;
(2) the historical performance and volatility of the Funds;
(3) the relative expense ratios of the Funds;
(4) the costs to be incurred by each Fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
(6) the services available to shareholders before and after the
Reorganization;
(7) the relative size of the Funds; and
(8) the elimination of duplicative funds and benefit to FMR.
FMR recommended the Reorganization to the Boards at a meeting of the
Boards on May 16, 1996. In recommending the Reorganization, FMR also
advised the Boards that the Funds have generally compatible investment
objectives and policies, with the material differences noted, and that the
Funds have similar investment strategies, with the material differences
noted.
The Boards further considered the relative risk/return characteristics of
the Funds. The Board specifically weighed the fact that Short-Term World's
attempt to reduce volatility by hedging its investments in foreign currency
denominated securities into U.S. dollars has reduced the potential for
higher returns that otherwise might be gained from foreign exposure and
considered that, while this strategy still exposes the Fund to foreign
investment risk, it does not provide any significant benefit over similarly
positioned domestic funds. Accordingly, the Boards considered that if the
Reorganization is approved, the former shareholders of Short-Term World
would have the opportunity to invest in a short-term bond fund with a
similar performance and volatility profile as Short-Term World.
The Boards also considered that former shareholders of Short-Term World
will receive shares of Short-Term Bond equal to the value of their shares
of Short-Term World. In addition, the Funds have receive d an
opinion of counsel that , except with respect to Section 1256
contracts, the Reorganization will not result in any gain or loss for
federal income tax purposes either to Short-Term World or Short-Term Bond
or to the shareholders of either Fund.
Furthermore, the Boards considered that combining the Funds would result
in an immediate benefit to shareholders of Short-Term World by lowering
expenses, as a percentage of net assets, currently borne by the
shareholders of Short-Term World, because Short-Term Bond's management fee
and other expenses are lower than Short-Term World's. In addition, FMR
informed the Boards that Short-Term World would pay the costs associated
with the Reorganization, including professional fees and the costs of proxy
solicitation. FMR further informed the Boards that although the Funds would
bear any costs (as described above) associated with portfolio adjustments
resulting from the Reorganization, FMR believed that such costs would be
minimal. Moreover, the Boards weighed these potential costs against the
reduction in expenses that would be experienced by Short-Term World
shareholders if the Reorganization is approved.
In addition, the Boards considered that the Funds have the same dividend
policies, purchase and exchange provisions, fees, redemption procedures,
and automatic reinvestment policies.
Finally, the Boards considered the proposed Reorganization in the context
of a general goal of reducing the number of duplicative funds managed by
FMR. FMR advised the Boards that Short-Term World has not been successful
in attracting or retaining assets and that Short-Term Bond has a wider
appeal among investors. While the reduction of duplicative funds and funds
with lower assets potentially would benefit FMR, it also should benefit
shareholders by facilitating increased operational efficiencies.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
Fidelity Fixed-Income Trust (the trust) is registered with the Securities
and Exchange Commission as an open-end management investment company. The
trust's Trustees are authorized to issue an unlimited number of shares of
beneficial interest of separate series. Short-Term Bond is one of five
funds of the trust. Each share of Short-Term Bond represents an equal
proportionate interest with each other share of the Fund, and each such
share of Short-Term Bond is entitled to equal voting, dividend,
liquidation, and redemption rights. Each shareholder of the Fund is
entitled to one vote for each dollar value of net asset value of the Fund
that shareholder owns. Shares of Short-Term Bond have no preemptive or
conversion rights. The voting and dividend rights, the right of redemption,
and the privilege of exchange are described in the Fund's Prospectus.
Shares are fully paid and nonassessable, except as set forth in the Fund's
Statement of Additional Information under the heading "Shareholder and
Trustee Liability."
The trust does not hold annual meetings of shareholders. There normally
will be no meetings of shareholders for the purpose of electing Trustees
unless less than a majority of the Trustees holding office have been
elected by shareholders, at which time the Trustees then in office will
call a shareholders meeting for the election of Trustees. Under the 1940
Act, shareholders of record of at least two-thirds of the outstanding
shares of an investment company may remove a Trustee by votes cast in
person or by proxy at a meeting called for that purpose. The Trustees are
required to call a meeting of shareholders for the purpose of voting upon
the question of removal of any Trustee when requested in writing to do so
by the shareholders of record holding at least 10% of the trust's
outstanding shares.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Short-Term World's assets for Short-Term Bond's shares and
the assumption of the liabilities of Short-Term World by Short-Term Bond
are intended to qualify for federal income tax purposes as a tax-free
reorganization under the Code. With respect to the Reorganization, the
participating Funds have received an opinion from Kirkpatrick & Lockhart
LLP, counsel to Short-Term World and Short-Term Bond, substantially to the
effect that:
(i) The acquisition by Short-Term Bond of all of the assets of Short-Term
World solely in exchange for Short-Term Bond shares and the assumption by
Short-Term Bond of Short-Term World's liabilities, followed by the
distribution by Short-Term World of Short-Term Bond shares to the
shareholders of Short-Term World pursuant to the liquidation of Short-Term
World and constructively in exchange for their Short-Term World shares will
constitute a reorganization within the meaning of section 368(a)(1)(C) of
the Code, and Short-Term World and Short-Term Bond will each be "a party to
a reorganization" within the meaning of section 368(b) of the Code;
(ii) No gain or loss will be recognized by Short-Term World upon the
transfer of all of its assets to Short-Term Bond in exchange solely for
Short-Term Bond shares and Short-Term Bond's assumption of Short-Term
World's liabilities, followed by Short-Term World's subsequent distribution
of those shares to shareholders in liquidation of Short-Term World;
(iii) No gain or loss will be recognized by Short-Term Bond upon the
receipt of the assets of Short-Term World in exchange solely for Short-Term
Bond shares and its assumption of Short-Term World's liabilities;
(iv) The shareholders of Short-Term World will recognize no gain or loss
upon the exchange of their Short-Term World shares solely for Short-Term
Bond shares pursuant to the terms of the Reorganization;
(v) The basis of Short-Term World's assets in the hands of Short-Term Bond
will be the same as the basis of those assets in the hands of Short-Term
World immediately prior to the Reorganization, and the holding period of
those assets in the hands of Short-Term Bond will include the holding
period of those assets in the hands of Short-Term World;
(vi) The basis of Short-Term World shareholders in Short-Term Bond shares
will be the same as their basis in Short-Term World shares to be
surrendered in exchange therefor; and
(vii) The holding period of the Short-Term Bond shares to be received by
the Short-Term World shareholders will include the period during which the
Short-Term World shares to be constructively surrendered in exchange
therefor were held, provided such Short-Term World shares were held as
capital assets by those shareholders on the date of the Reorganization.
Shareholders of Short-Term World should consult their tax advisers
regarding the effect, if any, of the proposed Reorganization in light of
their individual circumstances. Because the foregoing discussion only
relates to the federal income tax consequences of the Reorganization, those
shareholders also should consult their tax advisers as to state and local
tax consequences, if any, of the Reorganization.
CAPITALIZATION
The following tables show the capitalization of the Funds as of June
30, 1996 and on a pro forma combined basis (unaudited) as of that date
giving effect to the Reorganization.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Short-Term Short-Term Pro Forma
World Bond Combined Fund
Net Assets $ 98 , 387 , 272 $ 1,0 2 8, 781 , 386 $ 1,1 27 , 168 , 658
Net Asset Value $ 8.9 1 $ 8.7 0 $ 8.7 0
Per Share
Shares 11, 044 , 424 1 18 ,2 08 , 248 1 29 , 51 7, 130
Outstanding
</TABLE>
CONCLUSION
The Agreement and Plan of Reorganization and the transactions provided for
therein were approved by the Boards at a meeting held on May 16, 1996. The
Boards of Trustees of Fidelity Investment Trust and Fidelity Fixed-Income
Trust determined that the proposed Reorganization is in the best interests
of shareholders of each Fund and that the interests of existing
shareholders of Short-Term World and Short-Term Bond would not be diluted
as a result of the Reorganization. In the event that the Reorganization is
not consummated, Short-Term World will continue to engage in business as a
fund of a registered investment company and the Board of Fidelity
Investment Trust will consider other proposals for the reorganization or
liquidation of the Fund.
ADDITIONAL INFORMATION ABOUT FIDELITY SHORT-TERM BOND FUND
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.Years ended 1996 1995F 1994C 1993 1992 1991 1990 1989 1988 1987D
April 30
2.Net asset value, $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67 $ 10.0
beginning of period 0 0 0 0 0 0 0 0 0 00
3.Income from .579 .344 .588 .744 .810 .792 .778 .809 .840 .481
Investment
Operations
Net investment
income
4. Net realized (.020) (.156) (.392) .063 .251 .040 (.010) (.290) (.200) (.330)
and E
unrealized gain
(loss)
5. Total from .559 .188 .196 .807 1.061 .832 .768 .519 .640 .151
investment
operations
6.Less (.504) (.430) (.592) (.727) (.811) (.822) (.778) (.809) (.840) (.481)
Distributions
From net
investment income
7. In excess of -- -- (.034) -- -- -- -- -- -- --
net
investment
income
8. Return of (.055) (.118) -- -- -- -- -- -- -- --
capital
9. Total (.559) (.548) (.626) (.727) (.811) (.822) (.778) (.809) (.840) (.481)
distributions
10.Net asset $ 8.72 $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67
value, end of 0 0 0 0 0 0 0 0 0 0
period
11.Total returnA,G 6.52 2.17 1.99 8.85 12.00 9.49 8.58 5.74 6.91 1.49
% % % % % % % % % %
</TABLE>
RATIOS AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12.Net assets, $ 1,04 $ 1,30 $ 1,96 $ 1,99 $ 984 $ 235 $ 197 $ 237 $ 382 $ 137
end of period 8 4 2 0
(In millions)
13.Ratio of .69% .69% .80% .77% .86% .83% .83% .89% .88% .90%
expenses H H,I
to average net
assets
14.Ratio of .68% .69% .80% .77% .86% .83% .83% .89% .88% .90%I
expenses to B
average net assets
after expense
reductions
15.Ratio of net 6.37 6.37 6.70 7.68 8.23 8.65 8.28 8.77 8.77 8.40
investment income % % % % % % % % % %I
to average net
assets
16.Portfolio 151% 113% 73% 63% 87% 164% 148% 171% 251% 149%I
turnover rate
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C EFFECTIVE MAY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D FROM SEPTEMBER 15, 1986 (COMMENCEMENT OF OPERATIONS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF INVESTMENTS OF THE FUND.
F AMOUNTS HAVE BEEN ADJUSTED TO CONFORM WITH PRESENT PERIOD ACCOUNTING
POLICIES.
G TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
I ANNUALIZED
MISCELLANEOUS
AVAILABLE INFORMATION. Fidelity Fixed-Income Trust and Fidelity Investment
Trust are subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act, and in accordance therewith file
reports, proxy material, and other information with the Securities and
Exchange Commission (the Commission). Such reports, proxy material, and
other information can be inspected and copied at the Public Reference Room
maintained by the Commission at 450 Fifth Street, N.W., Washington D.C.
20549. Copies of such material can also be obtained from the Public
Reference Branch Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington D.C. 20549, at prescribed
rates.
LEGAL MATTERS. Certain legal matters in connection with the issuance of
Short-Term Bond's shares will be passed upon by Kirkpatrick & Lockhart LLP,
counsel to the trusts.
EXPERTS. The audited financial statements of Short-Term Bond, incorporated
herein by reference into the Statement of Additional Information, have been
examined by Coopers & Lybrand, L.L.P, independent accountants (Coopers),
whose report thereon is included in the Annual Report to Shareholders for
the fiscal year ended April 30, 1996. The audited financial statements of
Short-Term World, incorporated herein by reference into the Statement of
Additional Information, have been examined by Coopers, whose report thereon
is included in the Annual Report to Shareholders for the fiscal year ended
December 31, 1995. The financial statements audited by Coopers have been
incorporated by reference in reliance on their reports given on their
authority as experts in auditing and accounting.
EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as of
the 12th day of August, 1996, by and between Fidelity Investment Trust, a
Massachusetts business trust, on behalf of Fidelity Short-Term World Bond
Fund (Short-Term World), a series of Fidelity Investment Trust, and
Fidelity Fixed-Income Trust, a Massachusetts business trust, on behalf of
Fidelity Short-Term Bond Fund (Short-Term Bond), a series of Fidelity
Fixed-Income Trust. Fidelity Investment Trust and Fidelity Fixed-Income
Trust may be referred to herein collectively as the "Trusts" or each
individually as a "Trust." Short-Term Bond and Short-Term World may be
referred to herein collectively as the "Funds" or each individually as the
"Fund."
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the Code). The reorganization will
comprise: (a) the transfer of all of the assets of Short-Term World to
Short-Term Bond solely in exchange for shares of beneficial interest in
Short-Term Bond (the Short-Term Bond Shares) and the assumption by
Short-Term Bond of Short-Term World's liabilities; and (b) the constructive
distribution of such shares by Short-Term World PRO RATA to its
shareholders in complete liquidation and termination of Short-Term World in
exchange for all of Short-Term World's outstanding shares. Short-Term World
shall receive shares of Short-Term Bond having an aggregate net asset value
equal to the value of the assets of Short-Term World on the closing date
(as defined below), which Short-Term World shall then distribute PRO RATA
to its shareholders. The foregoing transactions are referred to herein as
the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF SHORT-TERM WORLD. SHORT-TERM WORLD
REPRESENTS AND WARRANTS TO AND AGREES WITH SHORT-TERM BOND THAT:
(a) Short-Term World is a series of Fidelity Investment Trust, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts, and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Investment Trust is an open-end, management investment
company duly registered under the Investment Company Act of 1940, as
amended (the 1940 Act), and such registration is in full force and effect;
(c) The Prospectus and Statement of Additional Information of Short-Term
World dated February 26, 1996 and Supplements dated July 16, 1996 to
the Prospectus and Statement of Additional Information previously
furnished to Short-Term Bond, did not and do not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Short-Term World, threatened against
Short-Term World which assert liability on the part of Short-Term World.
Short-Term World knows of no facts which might form the basis for the
institution of such proceedings;
(e) Short-Term World is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Restated Declaration of Trust or By-laws, or, to the
knowledge of Short-Term World, of any agreement, indenture, instrument,
contract, lease, or other undertaking to which Short-Term World is a party
or by which Short-Term World is bound or result in the acceleration of any
obligation or the imposition of any penalty under any agreement, judgment
or decree to which Short-Term World is a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Financial Highlights, and the
Schedule of Investments (including market values) of Short-Term World at
December 31, 1995, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, and have been furnished to Short-Term Bond. Said
Statement of Assets and Liabilities and Schedule of Investments fairly
present the Fund's financial position as of such date and said Statement of
Operations, Changes in Net Assets, and Financial Highlights fairly reflect
its results of operations, changes in financial position, and financial
highlights for the periods covered thereby in conformity with generally
accepted accounting principles consistently applied;
(g) Short-Term World has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
Statement of Assets and Liabilities as of December 31, 1995 and those
incurred in the ordinary course of Short-Term World's business as an
investment company since December 31, 1995;
(h) The registration statement (Registration Statement) filed with the
Securities and Exchange Commission (Commission) by Short-Term Bond on Form
N-14 relating to the shares of Short-Term Bond issuable hereunder and the
proxy statement of Short-Term World included therein (Proxy Statement), on
the effective date of the Registration Statement and insofar as they relate
to Short-Term World (i) will comply in all material respects with the
provisions of the Securities Act of 1933, as amended (the 1933 Act), the
Securities Exchange Act of 1934, as amended (the 1934 Act), and the 1940
Act, and the rules and regulations thereunder, and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders' meeting referred to in
Section 7 and on the Closing Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
Prospectus), as amended or supplemented, insofar as it relates to
Short-Term World, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(i) All material contracts and commitments of Short-Term World (other than
this Agreement) will be terminated without liability to Short-Term World
prior to the Closing Date (other than those made in connection with
redemption of shares and the purchase and sale of portfolio securities made
in the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Short-Term World
of the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and state
securities or blue sky laws (which term as used herein shall include the
District of Columbia and Puerto Rico);
(k) Short-Term World has filed or will file all federal and state tax
returns which, to the knowledge of Short-Term World's officers, are
required to be filed by Short-Term World and has paid or will pay all
federal and state taxes shown to be due on said returns or provision shall
have been made for the payment thereof, and, to the best of Short-Term
World's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(l) Short-Term World has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company for all
prior taxable years and intends to meet such requirements for its current
taxable year ending on the Closing Date (as defined in Section 6);
(m) All of the issued and outstanding shares of Short-Term World are, and
at the Closing Date will be, duly and validly issued and outstanding and
fully paid and nonassessable as a matter of Massachusetts law (except as
disclosed in the Fund's Statement of Additional Information), and have been
offered for sale and in conformity with all applicable federal securities
laws. All of the issued and outstanding shares of Short-Term World will, at
the Closing Date, be held by the persons and in the amounts set forth in
the list of shareholders submitted to Short-Term Bond in accordance with
this Agreement;
(n) At both the Valuation Time (as defined in Section 4) and the Closing
Date (as defined in Section 6), Short-Term World will have the full right,
power, and authority to sell, assign, transfer, and deliver its portfolio
securities and any other assets of Short-Term World to be transferred to
Short-Term Bond pursuant to this Agreement. At the Closing Date, subject
only to the delivery of Short-Term World's portfolio securities and any
such other assets as contemplated by this Agreement, Short-Term Bond will
acquire Short-Term World's portfolio securities and any such other assets
subject to no encumbrances, liens, or security interests (except for those
that may arise in the ordinary course and are disclosed to Short-Term Bond)
and without any restrictions upon the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Short-Term World, and this Agreement constitutes a
valid and binding obligation of Short-Term World enforceable in accordance
with its terms, subject to shareholder approval.
2. REPRESENTATIONS AND WARRANTIES OF SHORT-TERM BOND. SHORT-TERM BOND
REPRESENTS AND WARRANTS TO AND AGREES WITH SHORT-TERM WORLD THAT:
(a) Short-Term Bond is a series of Fidelity Fixed-Income Trust, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts, and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Fixed-Income Trust is an open-end, management investment
company duly registered under the 1940 Act, and such registration is in
full force and effect;
(c) The Prospectus and Statement of Additional Information of Short-Term
Bond, dated June 24, 1996, previously furnished to Short-Term World did not
and do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Short-Term Bond, threatened against
Short-Term Bond which assert liability on the part of Short-Term Bond.
Short-Term Bond knows of no facts which might form the basis for the
institution of such proceedings;
(e) Short-Term Bond is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws, or,
to the knowledge of Short-Term Bond, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Short-Term Bond
is a party or by which Short-Term Bond is bound or result in the
acceleration of any obligation or the imposition of any penalty under any
agreement, judgment, or decree to which Short-Term Bond is a party or is
bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Financial Highlights, and the
Schedule of Investments (including market values) of Short-Term Bond at
April 30, 1996, have been audited by Coopers & Lybrand L.L.P., independent
accountants, and have been furnished to Short-Term World. Said statement of
Assets and Liabilities and Schedule of Investments fairly present its
financial position as of such date and said Statement of Operations,
Changes in Net Assets, and Financial Highlights fairly reflect its results
of operations, changes in financial position, and financial highlights for
the periods covered thereby in conformity with generally accepted
accounting principles consistently applied;
(g) Short-Term Bond has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
Statement of Assets and Liabilities as of April 30, 1996 and those incurred
in the ordinary course of Short-Term Bond's business as an investment
company since April 30, 1996;
(h) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Short-Term Bond
of the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and state
securities or blue sky laws (which term as used herein shall include the
District of Columbia and Puerto Rico);
(i) Short-Term Bond has filed or will file all federal and state tax
returns which, to the knowledge of Short-Term Bond's officers, are required
to be filed by Short-Term Bond and has paid or will pay all federal and
state taxes shown to be due on said returns or provision shall have been
made for the payment thereof, and, to the best of Short-Term Bond's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(j) Short-Term Bond has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company for all
prior taxable years and intends to meet such requirements for its current
taxable year ending on April 30, 1997;
(k) By the Closing Date, the shares of beneficial interest of Short-Term
Bond to be issued to Short-Term World will have been duly authorized and,
when issued and delivered pursuant to this Agreement, will be legally and
validly issued and will be fully paid and nonassessable (except as
disclosed in the Fund's Statement of Additional Information) by Short-Term
Bond, and no shareholder of Short-Term Bond will have any preemptive right
of subscription or purchase in respect thereof;
(l) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Short-Term Bond, and this Agreement constitutes a
valid and binding obligation of Short-Term Bond enforceable in accordance
with its terms, subject to approval by the shareholders of Short-Term
World;
(m) The Registration Statement and the Proxy Statement, on the effective
date of the Registration Statement and insofar as they relate to Short-Term
Bond, (i) will comply in all material respects with the provisions of the
1933 Act, the 1934 Act, and the 1940 Act, and the rules and regulations
thereunder, and (ii) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of
the shareholders' meeting referred to in Section 7 and on the Closing Date,
the Prospectus, as amended or supplemented, insofar as it relates to
Short-Term Bond, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(n) The issuance of the Short-Term Bond Shares pursuant to this Agreement
will be in compliance with all applicable federal securities laws; and
(o) All of the issued and outstanding shares of Short-Term Bond have been
offered for sale and sold in conformity with the federal securities laws.
3. REORGANIZATION.
(a) Subject to the requisite approval of the shareholders of Short-Term
World and to the other terms and conditions contained herein, Short-Term
World agrees to assign, sell, convey, transfer, and deliver to Short-Term
Bond on the Closing Date (as defined in Section 6) all of the assets of
Short-Term World of every kind and nature existing on the Closing Date.
Short-Term Bond agrees in exchange therefor: (i) to assume all of
Short-Term World's liabilities existing on or after the Closing Date,
whether or not determinable on the Closing Date, and (ii) to issue and
deliver to Short-Term World the number of full and fractional shares of
Short-Term Bond having an aggregate net asset value equal to the value of
the assets of Short-Term World transferred hereunder, less the value of the
liabilities of Short-Term World, determined as provided for under Section
4.
(b) The assets of Short-Term World to be acquired by Short-Term Bond shall
include, without limitation, all cash, cash equivalents, securities,
receivables (including interest or dividends receivable), claims, choses in
action, and other property owned by Short-Term World, and any deferred or
prepaid expenses shown as an asset on the books of Short-Term World on the
Closing Date. Short-Term World will pay or cause to be paid to Short-Term
Bond any dividend or interest payments received by it on or after the
Closing Date with respect to the assets transferred to Short-Term Bond
hereunder, and Short-Term Bond will retain any dividend or interest
payments received by it after the Valuation Time (as defined in Section 4)
with respect to the assets transferred hereunder without regard to the
payment date thereof.
(c) The liabilities of Short-Term World to be assumed by Short-Term Bond
shall include (except as otherwise provided for herein) all of Short-Term
World's liabilities, debts, obligations, and duties, of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable on
the Closing Date, and whether or not specifically referred to in this
Agreement. Notwithstanding the foregoing, Short-Term World agrees to use
its best efforts to discharge all of its known liabilities prior to the
Closing Date.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), Short-Term World will
constructively distribute PRO RATA to its shareholders of record,
determined as of the Valuation Time on the Closing Date, the Short-Term
Bond Shares in exchange for such shareholders' shares of beneficial
interest in Short-Term World and Short-Term World will be liquidated in
accordance with Short-Term World's Restated Declaration of Trust. Such
distribution shall be accomplished by the Funds' transfer agent opening
accounts on Short-Term Bond's Share transfer books for the Short-Term Bond
Shares in the names of Short-Term World shareholders and transferring the
Short-Term Bond Shares thereto. Each Short-Term World shareholder's account
shall be credited with the respective PRO RATA number of full and
fractional (rounded to the third decimal place) Short-Term Bond Shares due
that shareholder. All outstanding Short-Term World shares, including any
represented by certificates, shall simultaneously be canceled on Short-Term
World's share transfer records. Short-Term Bond shall not issue
certificates representing the Short-Term Bond Shares in connection with the
Reorganization.
(e) Any reporting responsibility of Short-Term World is and shall remain
its responsibility up to and including the date on which it is terminated.
(f) Any transfer taxes payable upon issuance of the Short-Term Bond Shares
in a name other than that of the registered holder on Short-Term World's
books of the Short-Term World shares constructively exchanged for the
Short-Term Bond Shares shall be paid by the person to whom such Short-Term
Bond Shares are to be issued, as a condition of such transfer.
4. VALUATION.
(a) The Valuation Time shall be 4:00 p.m. Eastern time on the Closing Date
(as defined in Section 6), or such other date as may be mutually agreed
upon in writing by the parties hereto (the Valuation Time).
(b) On the Closing Date, Short-Term Bond will deliver to Short-Term World
the number of Short-Term Bond Shares having an aggregate net asset value
equal to the value of the assets of Short-Term World transferred hereunder
less the liabilities of Short-Term World, determined as provided in this
Section 4.
(c) The net asset value of the Short-Term Bond Shares to be delivered to
Short-Term World, the value of the assets of Short-Term World transferred
hereunder, and the value of the liabilities of Short-Term World to be
assumed hereunder shall in each case be determined as of the Valuation
Time.
(d) The net asset value of the Short-Term Bond Shares shall be computed in
the manner set forth in the then-current Short-Term Bond Prospectus and
Statement of Additional Information, and the value of the assets and
liabilities of Short-Term World shall be computed in the manner set forth
in the then-current Short-Term World Prospectus and Statement of Additional
Information.
(e) All computations pursuant to this Section shall be made by or under
the direction of Fidelity Service Co., a division of FMR Corp., in
accordance with its regular practice as pricing agent for Short-Term World
and Short-Term Bond.
5. FEES; EXPENSES.
(a) Short-Term World shall be responsible for all expenses, fees and other
charges in connection with entering into and carrying out the provisions of
this Agreement, whether or not the transactions contemplated hereby are
consummated. Such expenses shall include legal, accounting, printing,
filing, and proxy solicitation expenses, portfolio transfer taxes (if any),
costs incurred in connection with the purchase or sale of portfolio
securities, or other similar expenses incurred with respect to the
Reorganization.
(b) Each of Short-Term Bond and Short-Term World represents that there is
no person who has dealt with it who by reason of such dealings is entitled
to any broker's or finder's or other similar fee or commission arising out
of the transactions contemplated by this Agreement.
6. CLOSING DATE.
(a) The Reorganization, together with related acts necessary to consummate
the same (the Closing), unless otherwise provided herein, shall occur at
the principal office of the Trusts, 82 Devonshire Street, Boston,
Massachusetts, at the Valuation Time on October 31, 1996, or at some other
time, date, and place agreed to by Short-Term World and Short-Term Bond
(the Closing Date).
(b) In the event that on the Closing Date: (i) any of the markets for
securities held by the Funds is closed to trading, or (ii) trading thereon
is restricted, or (iii) trading or the reporting of trading on said market
or elsewhere is disrupted, all so that accurate appraisal of the total net
asset value of Short-Term World and the total net asset value of Short-Term
Bond is impracticable, the Valuation Time and the Closing Date shall be
postponed until the first business day after the day when such trading
shall have been fully resumed and such reporting shall have been restored,
or such other date as the parties may agree.
7. SHAREHOLDER MEETING AND TERMINATION OF SHORT-TERM WORLD.
(a) Short-Term World agrees to call a meeting of its shareholders after
the effective date of the Registration Statement, to consider transferring
its assets to Short-Term Bond as herein provided, adopting this Agreement,
and authorizing the liquidation of Short-Term World.
(b) Short-Term World agrees that as soon as reasonably practicable after
distribution of the Short-Term Bond Shares, Short-Term World shall be
terminated as a series of Fidelity Investment Trust pursuant to its
Restated Declaration of Trust, any further actions shall be taken in
connection therewith as required by applicable law, and on and after the
Closing Date Short-Term World shall not conduct any business except in
connection with its liquidation and termination.
8. CONDITIONS TO SHORT-TERM BOND'S OBLIGATIONS. THE OBLIGATIONS OF
SHORT-TERM BOND HEREUNDER SHALL BE SUBJECT TO THE FOLLOWING CONDITIONS:
(a) That Short-Term World furnishes to Short-Term Bond a statement, dated
as of the Closing Date, signed by an officer of Fidelity Investment Trust,
certifying that as of the Valuation Time and the Closing Date all
representations and warranties of Short-Term World made in this Agreement
are true and correct in all material respects and that Short-Term World has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such dates;
(b) That Short-Term World furnishes Short-Term Bond with copies of the
resolutions, certified by an officer of Fidelity Investment Trust,
evidencing the adoption of this Agreement and the approval of the
transactions contemplated herein by the requisite vote of the holders of
the outstanding shares of beneficial interest of Short-Term World;
(c) That, on or prior to the Closing Date, Short-Term World will declare
one or more dividends or distributions which, together with all previous
such dividends or distributions, shall have the effect of distributing to
the shareholders of Short-Term World substantially all of Short-Term
World's investment company taxable income and all of its net realized
capital gain, if any, as of the Closing Date;
(d) That Short-Term World shall deliver to Short-Term Bond at the Closing
a statement of its assets and liabilities, together with a list of its
portfolio securities showing each such security's adjusted tax basis and
holding period by lot, with values determined as provided in Section 4 of
this Agreement, all as of the Valuation Time, certified on Short-Term
World's behalf by its Treasurer or Assistant Treasurer;
(e) That Short-Term World's custodian shall deliver to Short-Term Bond a
certificate identifying the assets of Short-Term World held by such
custodian as of the Valuation Time on the Closing Date and stating that at
the Valuation Time: (i) the assets held by the custodian will be
transferred to Short-Term Bond; (ii) Short-Term World's assets have been
duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof; and (iii) to the best of the custodian's
knowledge, all necessary taxes in conjunction with the delivery of the
assets, including all applicable federal and state stock transfer stamps,
if any, have been paid or provision for payment has been made;
(f) That Short-Term World's transfer agent shall deliver to Short-Term
Bond at the Closing a certificate setting forth the number of shares of
Short-Term World outstanding as of the Valuation Time and the name and
address of each holder of record of any such shares and the number of
shares held of record by each such shareholder;
(g) That Short-Term World calls a meeting of its shareholders to be held
after the effective date of the Registration Statement, to consider
transferring its assets to Short-Term Bond as herein provided, adopting
this Agreement, and authorizing the liquidation and termination of
Short-Term World;
(h) That Short-Term World delivers to Short-Term Bond a certificate of an
officer of Fidelity Investment Trust, dated the Closing Date, that there
has been no material adverse change in Short-Term World's financial
position since December 31, 1995, other than changes in the market value of
its portfolio securities, or changes due to net redemptions of its shares,
dividends paid, or losses from operations; and
(i) That all of the issued and outstanding shares of beneficial interest
of Short-Term World shall have been offered for sale and sold in conformity
with all applicable state securities laws and, to the extent that any audit
of the records of Short-Term World or its transfer agent by Short-Term Bond
or its agents shall have revealed otherwise, Short-Term World shall have
taken all actions that in the opinion of Short-Term Bond are necessary to
remedy any prior failure on the part of Short-Term World to have offered
for sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF SHORT-TERM WORLD.
(a) That Short-Term Bond shall have executed and delivered to Short-Term
World an Assumption of Liabilities, certified by an officer of Fidelity
Fixed-Income Trust, dated as of the Closing Date pursuant to which
Short-Term Bond will assume all of the liabilities of Short-Term World
existing at the Valuation Time in connection with the transactions
contemplated by this Agreement;
(b) That Short-Term Bond furnishes to Short-Term World a statement, dated
as of the Closing Date, signed by an officer of Fidelity Fixed-Income
Trust, certifying that as of the Valuation Time and the Closing Date all
representations and warranties of Short-Term Bond made in this Agreement
are true and correct in all material respects, and Short-Term Bond has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such dates; and
(c) That Short-Term World shall have received an opinion of Kirkpatrick &
Lockhart LLP, counsel to Short-Term World and Short-Term Bond, to the
effect that the Short-Term Bond Shares are duly authorized and upon
delivery to Short-Term World as provided in this Agreement will be validly
issued and will be fully paid and nonassessable by Short-Term Bond (except
as disclosed in Short-Term World's Statement of Additional Information) and
no shareholder of Short-Term Bond has any preemptive right of subscription
or purchase in respect thereof.
10. CONDITIONS TO OBLIGATIONS OF SHORT-TERM BOND AND SHORT-TERM WORLD.
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of the
holders of the outstanding shares of beneficial interest of Short-Term
World;
(b) That all consents of other parties and all other consents, orders, and
permits of federal, state, and local regulatory authorities (including
those of the Commission and of state b lue s ky and securities
authorities, including "no action" positions of such federal or state
authorities) deemed necessary by Short-Term Bond or Short-Term World to
permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain any such consent, order, or permit would not involve a risk of a
material adverse effect on the assets or properties of Short-Term Bond or
Short-Term World, provided that either party hereto may for itself waive
any of such conditions;
(c) That all proceedings taken by either Fund in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto shall be satisfactory in form and substance to it and its counsel,
Kirkpatrick & Lockhart LLP;
(d) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement;
(e) That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Short-Term Bond and Short-Term World,
threatened by the Commission; and
(f) That Short-Term Bond and Short-Term World shall have received an
opinion of Kirkpatrick & Lockhart LLP satisfactory to Short-Term Bond and
Short-Term World that for federal income tax purposes:
(i) The Reorganization will be a reorganization under section
368(a)(1)(C) of the Code, and Short-Term World and Short-Term Bond will
each be parties to the Reorganization under section 368(b) of the Code;
(ii) No gain or loss will be recognized by Short-Term World upon the
transfer of all of its assets to Short-Term Bond in exchange solely for the
Short-Term Bond Shares and the assumption of Short-Term World's liabilities
followed by the distribution of those Short-Term Bond Shares to the
shareholders of Short-Term World in liquidation of Short-Term World;
(iii) No gain or loss will be recognized by Short-Term Bond on the
receipt of Short-Term World's assets in exchange solely for the Short-Term
Bond Shares and the assumption of Short-Term World's liabilities;
(iv) The basis of Short-Term World's assets in the hands of Short-Term
Bond will be the same as the basis of such assets in Short-Term World's
hands immediately prior to the Reorganization;
(v) Short-Term Bond's holding period in the assets to be received from
Short-Term World will include Short-Term World's holding period in such
assets;
(vi) A Short-Term World shareholder will recognize no gain or loss on the
exchange of his or her shares of beneficial interest in Short-Term World
for the Short-Term Bond Shares in the Reorganization;
(vii) A Short-Term World shareholder's basis in the Short-Term Bond
Shares to be received by him or her will be the same as his or her basis in
the Short-Term World shares exchanged therefor;
(viii) A Short-Term World shareholder's holding period for his or
her Short-Term Bond Shares will include the holding period of Short-Term
World shares exchanged therefor, provided that those Short-Term World
shares were held as capital assets on the date of the Reorganization.
Notwithstanding anything herein to the contrary, each of Short-Term World
and Short-Term Bond may not waive the conditions set forth in this
subsection 10(f).
11. COVENANTS OF SHORT-TERM BOND AND SHORT-TERM WORLD.
(a) Short-Term Bond and Short-Term World each covenants to operate its
respective business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business
will include the payment of customary dividends and distributions;
(b) Short-Term World covenants that it is not acquiring the Short-Term
Bond Shares for the purpose of making any distribution other than in
accordance with the terms of this Agreement;
(c) Short-Term World covenants that it will assist Short-Term Bond in
obtaining such information as Short-Term Bond reasonably requests
concerning the beneficial ownership of Short-Term World's shares; and
(d) Short-Term World covenants that its liquidation and termination will
be effected in the manner provided in its Restated Declaration of Trust in
accordance with applicable law and after the Closing Date, Short-Term World
will not conduct any business except in connection with its liquidation and
termination.
12. TERMINATION; WAIVER.
Short-Term Bond and Short-Term World may terminate this Agreement by
mutual agreement. In addition, either Short-Term Bond or Short-Term World
may at its option terminate this Agreement at or prior to the Closing Date
because:
(i) of a material breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to the Closing Date;
or
(ii) a condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears that it
will not or cannot be met.
In the event of any such termination, there shall be no liability for
damages on the part of Short-Term World or Short-Term Bond, or their
respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter, may
not be changed except by a letter of agreement signed by each party hereto
and shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of Short-Term Bond or
Short-Term World; provided, however, that following the shareholders'
meeting called by Short-Term World pursuant to Section 7 of this Agreement,
no such amendment may have the effect of changing the provisions for
determining the number of Short-Term Bond Shares to be paid to Short-Term
World shareholders under this Agreement to the detriment of such
shareholders without their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on the
interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the Agreement,
or in any document delivered pursuant hereto or in connection herewith,
shall survive the consummation of the transactions contemplated hereunder.
14. DECLARATIONS OF TRUST.
A copy of the Declaration of Trust of each Fund, as restated and amended,
is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
on behalf of the Trustees of each Fund as trustees and not individually and
that the obligations of each Fund under this instrument are not binding
upon any of such Fund's Trustees, officers, or shareholders individually
but are binding only upon the assets and property of such Fund. Each Fund
agrees that its obligations hereunder apply only to such Fund and not to
its shareholders individually or to the Trustees of such Fund.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
of any rights or obligations hereunder shall be made by any party without
the written consent of the other parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any
person, firm, or corporation other than the parties hereto and their
respective successors and assigns any rights or remedies under or by reason
of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by an appropriate officer.
SIGNATURE LINES OMITTED
STW-PXS-896 CUSIP #315910703/FUND #465
FIDELITY SHORT-TERM WORLD BOND FUND
Dear Shareholder:
I am writing to let you know about an important proposal to merge Fidelity
Short-Term World Bond Fund with another Fidelity bond fund, and to ask you
to send in your vote. A Special Meeting of shareholders will be held in
October, and the votes submitted in time to be counted at the meeting will
decide whether the merger takes place. This package contains information
about the proposal and includes all the materials you will need to vote by
mail.
Please take the time to read the enclosed materials and cast your vote on
the yellow proxy card. PLEASE VOTE PROMPTLY. YOUR VOTE IS EXTREMELY
IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN.
HERE IS A BRIEF SUMMARY OF THE PROPOSAL.
The Trustees of Fidelity Short-Term World Bond Fund are recommending that
the fund merge with Fidelity Short-Term Bond Fund, a larger bond fund also
managed by Fidelity Management & Research Company. The merger would be a
tax-free reorganization, with no gain or loss to you as a shareholder. If
shareholders vote to approve the merger, Fidelity Short-Term World Bond
Fund will cease to exist and you will become a shareholder of Fidelity
Short-Term Bond Fund instead.
Short-Term World and Short-Term Bond have similar investment objectives and
offer identical shareholder services. Short-Term Bond, however, is a much
larger fund than Short-Term World, and has lower management fees and other
operating expenses. Short-Term Bond has also performed better than
Short-Term World over Short-Term World's lifetime, with a lower level of
volatility. The enclosed materials include a detailed description of the
Funds.
The Trustees, most of whom are not affiliated with Fidelity, are
responsible for protecting your interests as a shareholder. The Trustees
believe that the merger is in shareholders' best interests, and recommend
that you vote for the proposal. But the final decision is up to you.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
We encourage you to exercise your right as a shareholder and to vote
promptly. To cast your vote, simply complete the yellow proxy card
enclosed in this package. Be sure to sign the card before mailing it in
the postage-paid envelope provided.
If you have any questions before you vote, please call us at
1-800-544-8888. We'll be glad to help you get your vote in quickly. Thank
you for your participation in this important initiative for your fund.
Sincerely,
Edward C. Johnson 3d
President
Vote this proxy card TODAY! Your prompt response will
save your Fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- --------------------
FIDELITY INVESTMENT TRUST: FIDELITY SHORT-TERM WORLD BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The un dersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Arthur S. Loring, and Ralph F. Cox, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
Fidelity Investment Trust: Fidelity Short-Term World Bond Fund, which the
undersigned is entitled to vote at the Special Meeting of Shareholders of
the Fund to be held at the office of the trust at 82 Devonshire St.,
Boston, MA 02109, on Friday, October 11, 1996 at 9:00 a.m. Eastern time and
at any adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one votes
and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt
of the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1996
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 315910703/fund# 465
Please refer to the Proxy Statement discussion of this matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- --------------------------------------------------------------------------
- --------------------
__________________________________________________________________________
___________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To approve an Agreement and Plan of Reorganization FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
between Fidelity Short-Term World Bond Fund and
Fidelity Short-Term Bond Fund.
</TABLE>
SWI-PXC-896 cusip # 315910703/fund# 465
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about the funds and their investments, you can obtain a copy
of each fund's most recent financial report and portfolio listing, or a
copy of the Statement of Additional Information (SAI) dated June 24, 1996.
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is available along with other related materials, for reference on the
SEC's Internet Web site (http://www.sec.gov). The SAI is incorporated
herein by reference (legally forms a part of the prospectus). For a free
copy of either document, call Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, Federal
Reserve Board, or any other agency, and are subject to investment risks,
including possible loss of principal amount invested.
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
BON-pro-696
Each fund invests normally in investment-grade debt securities. Short-Term
Bond seeks high current income with preservation of capital. Investment
Grade Bond seeks high current income from securities with longer
maturities.
FIDELITY
SHORT-TERM
BOND
FUND
and
FIDELITY
INVESTMENT
GRADE BOND
FUND
PROSPECTUS
JUNE 24, 1996 (FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES Each fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
PERFORMANCE How each fund has
done over time.
THE FUNDS IN DETAIL CHARTER How each fund is
organized.
INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS,
ACCOUNT POLICIES AND TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
KEY FACTS
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the management
arm of Fidelity Investments, which was established in 1946 and is now
America's largest mutual fund manager.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SHORT-TERM BOND
GOAL: High current income with preservation of capital.
STRATEGY: Invests normally in investment-grade debt securities while
maintaining an average maturity of three years or less.
SIZE: As of April 30, 1996, the fund had over $1 billion in assets.
INVESTMENT GRADE BOND
GOAL: High current income.
STRATEGY: Invests normally in investment-grade debt securities.
SIZE: As of April 30, 1996, the fund had over $1.3 billion in assets.
WHO MAY WANT TO INVEST
Either fund may be appropriate for investors who seek high current income
with a focus on investment-grade debt securities. A fund's level of risk
and potential reward depend on the quality and maturity of its investments.
Short-Term Bond is designed to offer greater share price stability by
investing in shorter-term securities. Investment Grade Bond, because it can
invest in securities with any maturity, has potential for higher yields and
capital appreciation, but also carries more risk.
The value of the funds' investments and the income they generate will vary
from day to day, and generally reflect interest rates, market conditions,
and other economic and political news. When you sell your shares, they may
be worth more or less than what you paid for them. By themselves, the funds
do not constitute a balanced investment plan.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. The
funds in this prospectus are
in the INCOME category.
(solid bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(right arrow) INCOME Seeks income by
investing in bonds.
(solid bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(solid bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell or
hold shares of a fund. See page for more information about these fees.
Maximum sales charge on purchases and
reinvested distributions None
Deferred sales charge on redemptions None
Exchange fee None
Annual account maintenance fee
(for accounts under $2500) $12.00
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and financial reports. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are based on historical expenses, and are calculated as a
percentage of average net assets. Each fund has entered into arrangements
with its custodian and transfer agent whereby interest earned on uninvested
cash balances is used to reduce custodian and transfer agent expenses. If
these reductions are included, the total fund operating expenses presented
in the tables would be .68% for Short-Term Bond and .76% for Investment
Grade Bond.
SHORT-TERM BOND
Management fee .45%
12b-1 fee None
Other expenses .24%
Total fund operating expenses .69%
INVESTMENT GRADE BOND
Management fee .45%
12b-1 fee None
Other expenses .32%
Total fund operating expenses .77%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
SHORT-TERM BOND
After 1 year $ 7
After 3 years $ 22
After 5 years $ 38
After 10 years $ 86
INVESTMENT GRADE BOND
After 1 year $ 8
After 3 years $ 25
After 5 years $ 43
After 10 years $ 95
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The tables that follow are included in each fund's Annual Report and have
been audited by Coopers & Lybrand L.L.P., independent accountants. Their
reports on the financial statements and financial highlights are included
in the Annual Reports. The financial statements and financial highlights
are incorporated by reference into (are legally a part of) the funds'
Statement of Additional Information.
SHORT-TERM BOND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.Selected Per-Share
Data and Ratios
18.Years ended 1996 1995F 1994C 1993 1992 1991 1990 1989 1988 1987D
April 30
19.Net asset $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67 $ 10.0
value, 0 0 0 0 0 0 0 0 0 00
beginning of period
20.Income from .579 .344 .588 .744 .810 .792 .778 .809 .840 .481
Investment
Operations
Net investment
income
21. Net realized (.020) (.156) (.392) .063 .251 .040 (.010) (.290) (.200) (.330)
and E
unrealized gain
(loss)
22. Total from .559 .188 .196 .807 1.061 .832 .768 .519 .640 .151
investment
operations
23.Less (.504) (.430) (.592) (.727) (.811) (.822) (.778) (.809) (.840) (.481)
Distributions
From net
investment income
24. In excess of -- -- (.034) -- -- -- -- -- -- --
net
investment
income
25. Return of (.055) (.118) -- -- -- -- -- -- -- --
capital
26. Total (.559) (.548) (.626) (.727) (.811) (.822) (.778) (.809) (.840) (.481)
distributions
27.Net asset $ 8.72 $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67
value, end of 0 0 0 0 0 0 0 0 0 0
period
28.Total returnA,G 6.52 2.17 1.99 8.85 12.00 9.49 8.58 5.74 6.91 1.49
% % % % % % % % % %
29.Net assets, $ 1,04 $ 1,30 $ 1,96 $ 1,99 $ 984 $ 235 $ 197 $ 237 $ 382 $ 137
end of period 8 4 2 0
(In millions)
30.Ratio of .69% .69% .80% .77% .86% .83% .83% .89% .88% .90%
expenses H H,I
to average net
assets
31.Ratio of .68% .69% .80% .77% .86% .83% .83% .89% .88% .90%I
expenses to B
average net assets
after expense
reductions
32.Ratio of net 6.37 6.37 6.70 7.68 8.23 8.65 8.28 8.77 8.77 8.40
investment income % % % % % % % % % %I
to average net
assets
33.Portfolio 151% 113% 73% 63% 87% 164% 148% 171% 251% 149%I
turnover rate
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C EFFECTIVE MAY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D FROM SEPTEMBER 15, 1986 (COMMENCEMENT OF OPERATIONS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF INVESTMENTS OF THE FUND.
F AMOUNTS HAVE BEEN ADJUSTED TO CONFORM WITH PRESENT PERIOD ACCOUNTING
POLICIES.
G TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
I ANNUALIZED
INVESTMENT GRADE BOND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
34.Selected Per-Share Data and
Ratios
35.Years ended April 30 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
A
36.Net asset value, $ 7.01 $ 7.30 $ 7.57 $ 7.07 $ 6.83 $ 6.56 $ 6.67 $ 6.77 $ 7.00 $ 7.46
beginning of period 0 0 0 0 0 0 0 0 0 0
37.Income from .484 .464 .522 .570 .591 .592 .597 .595 .609 .674
Investment Operations
Net investment
income
38. Net realized and .047 (.147) (.254) .499 .244 .277 (.110) (.095) (.230) (.460)
unrealized gain (loss)
39. Total from .531 .317 .268 1.069 .835 .869 .487 .500 .379 .214
investment
operations
40.Less Distributions (.471) (.487) (.525) (.569) (.595) (.599) (.597) (.600) (.609) (.674)
From net investment
income
41. In excess of net -- -- (.013) -- -- -- -- -- -- --
investment income
42. From net realized -- (.120) -- -- -- -- -- -- -- --
gain
43. In excess of net (.030) -- -- -- -- -- -- -- -- --
realized gain
44. Total distributions (.501) (.607) (.538) (.569) (.595) (.599) (.597) (.600) (.609) (.674)
45.Net asset value, $ 7.04 $ 7.01 $ 7.30 $ 7.57 $ 7.07 $ 6.83 $ 6.56 $ 6.67 $ 6.77 $ 7.00
end of period 0 0 0 0 0 0 0 0 0 0
46.Total returnC 7.62 4.63 3.35 15.63 12.63 13.82 7.31 7.74 5.75 2.86
% % % % % % % % % %
47.Net assets, end of $ 1,35 $ 1,08 $ 943 $ 1,01 $ 943 $ 455 $ 360 $ 334 $ 316 $ 384
period (In millions) 8 7 8
48.Ratio of expenses to .77% .75% .74% .68% .70% .67% .70% .66% .76% .69%
average net assets
49.Ratio of expenses to .76% .75% .74% .68% .70% .67% .70% .66% .76% .69%
average net assets after B
expense reductions
50.Ratio of net 6.58 7.00 6.94 7.74 8.29 8.84 8.76 8.91 8.95 9.17
investment income to % % % % % % % % % %
average net assets
51.Portfolio turnover 134% 90% 61% 74% 77% 101% 103% 128% 118% 127%
rate
</TABLE>
A EFFECTIVE MAY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
Each fund's fiscal year runs from May 1 through April 30. The tables below
show each fund's performance over past fiscal years compared to different
measures, including a comparative index and a competitive funds average.
The charts on page present calendar-year performance.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
April 30, 1996 year years years
Short-Term Bond 6.52% 6.23% 6.57%
A
Lehman Bros. 1-3 Yr. Gov't/Corp. Bond 6.92% 6.37% n/a
Index
Lipper Sht. Inv. Gr. Debt Funds Avg. 6.47% 6.03% n/a
Investment Grade Bond 7.62% 8.67% 8.05%
Lehman Bros. Aggregate Bond Index 8.64% 8.13% 8.50%
Lipper Corp. Debt BBB Funds Avg. 8.95% 9.11% 8.48%
A FROM SEPTEMBER 15, 1986
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
April 30, 1996 year years years
Short-Term Bond 6.52% 35.31% 84.58%
A
Lehman Bros. 1-3 Yr. Gov't/Corp. Bond 6.92% 36.16% n/a
Index
Lipper Sht. Inv. Gr. Debt Funds Avg. 6.47% 34.06% n/a
Investment Grade Bond 7.62% 51.55% 116.92%
Lehman Bros. Aggregate Bond Index 8.64% 47.82% 126.10%
Lipper Corp. Debt BBB Funds Avg. 8.95% 54.82% 126.34%
A FROM SEPTEMBER 15, 1986
THE LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX, the
comparative index for Short-Term Bond, is comprised of government and
corporate fixed-rate debt issues. Issues included in the Index have
maturities of one to three years.
SHORT-TERM BOND
Calendar year total returns 1987 1988 1989 1990 1991 1992 1993 1994 1995
Short-Term Bond 3.97% 5.71% 10.52% 5.78% 14.03% 7.39% 9.13% -4.09% 9.
82%
Lehman Bros. 1-3 Yr.
Govt./Corp. Bond Index 5.76% 6.34% 10.97% 9.69% 11.83% 6.35% 5.55% 0.55%
10.
96%
Lipper Sht. Inv. Gr. Debt
Funds Avg. 4.32% 6.86% 10.22% 7.87% 12.88% 5.97% 6.45% -0.44% 10
.84%
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54
%
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 3.97
Row: 3, Col: 1, Value: 5.71
Row: 4, Col: 1, Value: 10.52
Row: 5, Col: 1, Value: 5.78
Row: 6, Col: 1, Value: 14.03
Row: 7, Col: 1, Value: 7.39
Row: 8, Col: 1, Value: 9.129999999999999
Row: 9, Col: 1, Value: -4.09
Row: 10, Col: 1, Value: 9.82
(LARGE SOLID BOX) Short-Term
Bond
INVESTMENT GRADE BOND
Calendar year total returns 1986 1987 1988 1989 1990 1991 1992 1993 1994
1995
Investment Grade Bond 13.62% .11% 7.92% 13.00% 6.07% 18.91% 8.31% 16.23%
- -5.35
% 15.51%
Lehman Bros. Aggregate
Bond Index 15.26% 2.76% 7.89% 14.53% 8.96% 16.00% 7.40% 9.75% -2.92%
18.47%
Lipper Corp. Debt BBB
Funds Avg. 15.02% 2.93% 9.32% 10.48% 5.06% 18.53% 8.79% 13.67% -4.69
% 20.07%
Consumer Price Index 1.10% 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67%
2.54
%
Percentage (%)
Row: 1, Col: 1, Value: 13.62
Row: 2, Col: 1, Value: 0.11
Row: 3, Col: 1, Value: 7.92
Row: 4, Col: 1, Value: 13.0
Row: 5, Col: 1, Value: 6.07
Row: 6, Col: 1, Value: 18.91
Row: 7, Col: 1, Value: 8.31
Row: 8, Col: 1, Value: 16.23
Row: 9, Col: 1, Value: -5.35
Row: 10, Col: 1, Value: 15.51
(LARGE SOLID BOX) Investment
Grade Bond
THE LEHMAN BROTHERS AGGREGATE BOND INDEX, the comparative index for
Investment Grade Bond, is comprised of fixed-rate debt issues, including
government, corporate, asset-backed, and mortgage-backed securities. Issues
included in the Index are rated investment-grade or above and have
maturities of at least one year.
THE COMPETITIVE FUNDS AVERAGES are the Lipper Short Investment Grade Debt
Funds Average (Short-Term Bond) and the Lipper Corporate Debt BBB Funds
Average (Investment Grade Bond), which currently reflect the performance of
over 98 and 92 mutual funds, respectively, with similar objectives. These
averages, which assume reinvestment of distributions, are published by
Lipper Analytical Services, Inc.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
UNDERSTANDING
PERFORMANCE
Because these funds invest in
fixed-income securities, their
performance is related to
changes in interest rates.
Funds that hold short-term
bonds are usually less affected
by changes in interest rates
than long-term bond funds.
For that reason, long-term
bond funds typically offer
higher yields and carry more
risk than short-term bond
funds.
(checkmark)
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Each fund is a diversified fund of
Fidelity Fixed-Income Trust, an open-end management investment company
organized as a Massachusetts business trust on September 5, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. The number of votes you are
entitled to is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs. Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, and Fidelity Management & Research (Far East)
Inc. (FMR Far East), in Tokyo, Japan, assist FMR with foreign investments.
Charles Morrison is manager of Short-Term Bond, which he has managed since
February 1995. He also manages Spartan Short-Term Bond and Advisor
Short-Fixed-Income. Mr. Morrison is vice president of Fidelity Management
Trust Company. He joined Fidelity in 1987.
Michael Gray is manager and vice president of Fidelity Investment Grade
Bond, which he has managed since September 1987. Mr. Gray also manages
several Fidelity funds. Mr. Gray joined Fidelity in 1982.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for each fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (the
1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
A broker-dealer may use a portion of the commissions paid by a fund to
reduce custodian or transfer agent fees for the fund. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
a fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
Short-Term Bond seeks as high a level of current income as consistent with
preservation of capital, by normally investing in fixed-income obligations
of investment-grade quality. Although the fund can invest in securities of
any maturity, the fund maintains a dollar-weighted average maturity of
three years or less under normal conditions. In determining a security's
maturity for purposes of calculating the fund's average maturity, an
estimate of the average time for its principal to be paid may be used. This
can be substantially shorter than its stated final maturity. As of April
30, 1996, the fund's dollar-weighted average maturity was approximately 2.2
years.
Investment Grade Bond seeks high current income, consistent with reasonable
risk, by normally investing in fixed-income obligations of investment-grade
quality. The fund also considers preservation of capital and, where
appropriate, takes advantage of opportunities to realize capital
appreciation. Although the fund can invest in securities of any maturity,
FMR seeks to manage the fund so that it generally reacts to changes in
interest rates similarly to bonds with maturities between four and ten
years. As of April 30, 1996, the fund's dollar-weighted average maturity
was approximately 7.4 years.
Both funds may also invest in futures contracts and other derivatives to
adjust their investment exposure. Short-Term Bond limits its average
maturity to three years or less while Investment Grade Bond has no stated
maturity policy.
The total return from a bond is a combination of income and price gains or
losses. While income is the most important component of bond returns over
time, a fund's emphasis on income does not mean that a fund invests only in
the highest-yielding bonds available, or that it can avoid risks to
principal. In selecting investments for the funds, FMR considers a bond's
income potential together with its potential for price gains or losses. FMR
focuses on assembling a portfolio of income-producing securities that it
believes will provide the best tradeoff between risk and return within the
range of securities that are eligible investments for the funds.
Each fund's yield and share price change daily and are based on changes in
interest rates, market conditions, and other economic and political news,
and on the quality and maturity of it's investments. In general, bond
prices rise when interest rates fall, and vice versa. This effect is
usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk. FMR may use
various investment techniques to hedge a portion of the funds' risks, but
there is no guarantee that these strategies will work as intended. When you
sell your shares of the funds, they may be worth more or less than what you
paid for them.
FMR normally invests each fund's assets according to its investment
strategy. Each fund also reserves the right to invest without limitation in
investment-grade money market instruments and Investment Grade Bond may
invest in short-term debt instruments for temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in a fund's SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings and recent investment strategies are detailed in each fund's
financial reports, which are sent to shareholders twice a year. For a free
SAI or financial report, call 1-800-544-8888.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa. Debt
securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
Investment-grade debt securities are medium- and high-quality securities.
Some, however, may possess speculative characteristics and may be more
sensitive to economic changes and to changes in the financial condition of
issuers.
RESTRICTIONS: A fund normally invests in investment-grade securities, but
reserves the right to invest up to 5% of its assets in below
investment-grade securities (sometimes called "junk bonds"). A security is
considered to be investment grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff and Phelps Credit Rating
Co., or Fitch Investor Service, L.P., or is unrated but judged to be of
equivalent quality by FMR.
MONEY MARKET SECURITIES are high-quality, short-term obligations issued by
the U.S. Government, corporations, financial institutions, and other
entities. These obligations may carry fixed, variable, or floating interest
rates.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. Government. Not all U.S. Government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under
certain circumstances. However, securities issued by the Federal Farm
Credit Bank Funding Corporation are supported only by the credit of the
entity that issued them.
EXPOSURE TO FOREIGN MARKETS. 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 or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign debt securities may be unwilling to repay
principal and interest when due and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments.
ASSET-BACKED SECURITIES include interests in pools of lower-rated debt
securities or consumer loans. The value of these securities may be
significantly affected by changes in the market's perception of the issuers
and the creditworthiness of the parties involved.
MORTGAGE SECURITIES are interests in pools of commercial or residential
mortgages, and may include complex instruments such as collateralized
mortgage obligations and stripped mortgage-backed securities. Mortgage
securities may be issued by the U.S. Government or by private entities. For
example, Ginnie Maes are interests in pools of mortgage loans insured or
guaranteed by a U.S. Government agency. Because mortgage securities pay
both interest and principal as their underlying mortgages are paid off,
they are subject to prepayment risk. This is especially true for stripped
securities. Also, the value of a mortgage security may be significantly
affected by changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other factors
difficult to predict, making their value highly volatile.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other debt securities,
although they may be more volatile and the value of certain types of
stripped securities may move in the same direction as interest rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities and some other securities may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period.
OTHER INSTRUMENTS may include convertible securities and preferred stocks.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of its total assets, Short-Term Bond and
Investment Grade Bond may not purchase a security if, as a result, more
than 5% of its total assets would be invested in the securities of any
issuer. A fund may not invest more than 25% of its total assets in any one
industry. These limitations do not apply to U.S. Government securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a means of earning
income. This practice could result in a loss or a delay in recovering a
fund's securities. A fund may also lend money to other funds advised by
FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SHORT-TERM BOND seeks to obtain a high level of current income, consistent
with preservation of capital, by investing primarily in a broad range of
fixed-income securities.
INVESTMENT GRADE BOND seeks to provide a high rate of income, consistent
with reasonable risk, by investing in a broad range of fixed-income
securities. In addition, the fund seeks to protect your capital. Where
appropriate, the fund will take advantage of opportunities to realize
capital appreciation.
EACH FUND, with respect to 75% of total assets, may not invest more than 5%
of its total assets in any one issuer. Each fund may not invest more than
25% of its total assets in any one industry. Each fund may borrow only for
temporary or emergency purposes, but not in an amount exceeding 33% of its
total assets. Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained on page .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For April 1996, the group fee rate was .1458%. The individual fee rate for
each fund is .30%. Each fund's total management fee rate for fiscal 1996
was .45%.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on issuers
based outside the United States. Under the sub-advisory agreements, FMR
pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively,
of the costs of providing these services.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1996, Short-Term Bond and Investment Grade Bond paid FSC fees equal to .23%
and .30%, respectively, of average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1996, the portfolio turnover rates for Short-Term Bond and
Investment Grade Bond were 151% and 134%, respectively. These rates vary
from year to year. High turnover rates increase transaction costs and may
increase taxable capital gains. FMR considers these effects when evaluating
the anticipated benefits of short-term investing.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, FBSI. Fidelity is also a leader
in providing tax-sheltered retirement plans for individuals investing on
their own or through their employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 80 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed in the table that follows.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(solid bullet) Number of Fidelity mutual
funds: over 215
(solid bullet) Assets in Fidelity mutual
funds: over $386 billion
(solid bullet) Number of shareholder
accounts: over 26 million
(solid bullet) Number of investment
analysts and portfolio
managers: over 225
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION
PLANS allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(solid bullet) 401(K) PROGRAMS allow employees of corporations of all sizes
to contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another Fidelity
fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
These minimums may vary for investments through Fidelity Portfolio Advisory
Services or a Fidelity Payroll Deduction Program account in the fund. Refer
to the program materials for details.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (small solid bullet) Exchange from another (small solid bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(small solid bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
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Mail (mail_graphic) (small solid bullet) Complete and sign the (small solid bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice. account number on
Mail to the address your check and mail to
indicated on the the address printed on
application. your account statement.
(small solid bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
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In Person (hand_graphic) (small solid bullet) Bring your application (small solid bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
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Wire (wire_graphic) (small solid bullet) Call 1-800-544-7777 to (small solid bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (small solid bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(small solid bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.
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Automatically (automatic_graphic) (small solid bullet) Not available. (small solid bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
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<CAPTION>
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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of shares,
(small solid bullet) Your account registration has changed within the last
30 days,
(small solid bullet) The check is being mailed to a different address than
the one on your account (record address),
(small solid bullet) The check is being made payable to someone other than
the account owner, or
(small solid bullet) The redemption proceeds are being transferred to a
Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be redeemed,
and
(small solid bullet) Any other applicable requirements listed in the table
that follows.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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Phone 1-800-544-777 (phone_graphic) All account types (small solid bullet) Maximum check request:
except retirement $100,000.
(small solid bullet) For Money Line transfers to
All account types your bank account; minimum:
$10; maximum: $100,000.
(small solid bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (small solid bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Retirement account names appear on the
account.
(small solid bullet) The account owner should
Trust complete a retirement
distribution form. Call
1-800-544-6666 to request
one.
Business or (small solid bullet) The trustee must sign the
Organization letter indicating capacity as
trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (small solid bullet) At least one person
Conservator, authorized by corporate
Guardian resolution to act on the
account must sign the letter.
(small solid bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(small solid bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (small solid bullet) You must sign up for the wire
except retirement feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(small solid bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
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Check (check_graphic) All account types: (small solid bullet) Minimum check: $500.
(small solid bullet) All account owners must sign
a signature card to receive a
checkbook.
</TABLE>
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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your account
registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more than
one account in the fund. Call 1-800-544-6666 if you need copies of
financial reports, prospectuses, or historical account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account.
FIDELITY MONEY LINE(registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (small solid bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(small solid bullet) For existing accounts, call
1-800-544-6666 for an application.
(small solid bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
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<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (small solid bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(small solid bullet) Changes require a new authorization
form.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (small solid bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (small solid bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE THEIR SHARE PRICES FLUCTUATE, THESE FUNDS MAY NOT BE APPROPRIATE
CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in June and
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and
its investments and these taxes generally will reduce the fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. If quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued by a
method that the Board of Trustees believes accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow reasonable procedures designed to verify the identity of the caller.
Fidelity will request personalized security codes or other information, and
may also record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them. If you do not want the
ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
cancelled and you could be liable for any losses or fees a fund or its
transfer agent has incurred.
(small solid bullet) You begin to earn dividends as of the first business
day following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH AN INVESTMENT PROFESSIONAL,
INCLUDING A BROKER, who may charge you a transaction fee for this service.
If you invest through an investment professional, read your investment
professional's program materials for any additional service features or
fees that may apply. Certain features of the fund, such as the minimum
initial or subsequent investment amounts, may be modified.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when a fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday will
continue to earn dividends until the next business day.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day after
your phone call.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check or Fidelity Money Line
have been collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the amount
of the check is greater than the value of your account, your check will be
returned to you and you may be subject to additional charges.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of $12.00
from accounts with a value of less than $2,500, subject to an annual
maximum charge of $60.00 per shareholder. It is expected that accounts will
be valued on the second Friday in November of each year. Accounts opened
after September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part the
relatively higher costs of servicing smaller accounts. The fee will not be
deducted from retirement accounts (except non-prototype retirement
accounts), accounts using regular investment plans, or if total assets in
Fidelity funds exceed $50,000. Eligibility for the $50,000 waiver is
determined by aggregating Fidelity mutual fund accounts maintained by FSC
or FBSI which are registered under the same social security number or which
list the same social security number for the custodian of a Uniform
Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the percentage-point difference between that fund's sales charge and
any sales charge you have previously paid in connection with the shares you
are exchanging. For example, if you had already paid a sales charge of 2%
on your shares and you exchange them into a fund with a 3% sales charge,
you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund performance
and shareholders, each fund reserves the right to temporarily or
permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(small solid bullet) The exchange limit may be modified for accounts in
certain institutional retirement plans to conform to plan exchange limits
and Department of Labor regulations. See your plan materials for further
information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.
