SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the [x]
Registrant
Filed by a [ ]
Party other than the
Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant
to Sec. 240.14a-11(c) or
Sec. 240.14a-12
(Name of Registrant as Specified In Its Charter)
Fidelity Fixed-Income Trust
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below
per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of
securities to which
transaction applies:
(2) Aggregate number of
securities to which
transaction applies:
(3) Per unit price or other
underlying value of
transaction
computed pursuant to Exchange
Act Rule 0-11:
(4) Proposed maximum aggregate
value of transaction:
(5) Total Fee Paid:
[ ] Fee paid previously with
preliminary materials.
[ ] Check box if any part of the
fee is offset as provided by
Exchange Act Rule 0-11(a) (2)
and identify the filing for
which the offsetting fee was
paid previously. Identify the
previous filing by
registration statement
number, or the Form or
Schedule and the date of
its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or
Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY FIXED-INCOME TRUST:
FIDELITY INVESTMENT GRADE BOND FUND
FIDELITY SHORT-TERM BOND FUND
SPARTAN GOVERNMENT INCOME FUND
FIDELITY HIGH INCOME FUND
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND
TO BE HELD ON APRIL 14, 1999
This Proxy Statement is furnished in connection with a solicitation
of proxies made by, and on behalf of, the Board of Trustees of
Fidelity Fixed-Income Trust (the trust) to be used at the Special
Meeting of Shareholders of Fidelity Investment Grade Bond Fund,
Fidelity Short-Term Bond Fund, Spartan Government Income Fund,
Fidelity High Income Fund, and Spartan Short-Intermediate Government
Fund (the funds) and at any adjournments thereof (the Meeting), to be
held on April 14, 1999 at 9:00 a.m. at 82 Devonshire Street, Boston,
Massachusetts 02109, the principal executive office of the trust and
Fidelity Management & Research Company (FMR), the funds' investment
adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is being made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about February
1 6 , 1999. Supplementary solicitations may be made by mail,
telephone, telegraph, facsimile, electronic means or by personal
interview by representatives of the trust. In addition, Management
Information Services Corp. (MIS) and D.F. King & Co., Inc. may be paid
on a per-call basis to solicit shareholders on behalf of the funds at
an anticipated cost of approximately $ 5,000 (Fidelity
Investment Grade Bond Fund), $ 3,000 (Fidelity Short-Term Bond
Fund), $ 2,000 (Spartan Government Income Fund), $ 3,000
(Fidelity High Income Fund), and $ 2,000 (Spartan
Short-Intermediate Government Fund), respectively. For Fidelity
Investment Grade Bond Fund, the expenses in connection with preparing
this Proxy Statement and its enclosures and of all solicitations will
be paid by the fund. For Fidelity Short-Term Bond Fund, the expenses
in connection with preparing this Proxy Statement and its enclosures
and of all solicitations will be paid by the fund, provided the
expenses do not exceed the fund's existing expense cap of 0.65%.
Expenses exceeding the fund's expense cap will be paid by FMR. For
Spartan Government Income Fund, Fidelity High Income Fund, and Spartan
Short-Intermediate Government Fund, the expenses in connection with
preparing this Proxy Statement and its enclosures and of all
solicitations will be borne by FMR. The funds (FMR for Spartan
Government Income Fund, Fidelity High Income Fund, and Spartan
Short-Intermediate Government Fund) will reimburse brokerage firms and
others for their reasonable expenses in forwarding solicitation
material to the beneficial owners of shares. The principal business
address of Fidelity Distributors Corporation (FDC), the funds'
principal underwriter and distribution agent, and Fidelity Management
& Research (U.K.) Inc. (FMR U.K.) and Fidelity Management & Research
(Far East) Inc. (FMR Far East), subadvisers to Fidelity Investment
Grade Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity High
Income Fund, is 82 Devonshire Street, Boston, Massachusetts 02109. The
principal business address of Fidelity Investments Money Management,
Inc. (FIMM), subadviser to Fidelity Investment Grade Bond Fund,
Fidelity Short-Term Bond Fund, Spartan Government Income Fund, and
Spartan Short-Intermediate Government Fund, is 1 Spartan Way,
Merrimack, New Hampshire 03054.
If the enclosed proxy card is executed and returned, it may
nevertheless 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, by the trust's receipt of a subsequent valid telephonic
vote, 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 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 that are 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.
The funds may also arrange to have votes recorded by telephone. For
Fidelity Investment Grade Bond Fund, the expenses in connection with
telephone voting will be paid by the fund. For Fidelity Short-Term
Bond Fund, the expenses in connection with telephone voting will be
paid by the fund, provided the expenses do not exceed the fund's
existing expense cap of 0.65%. Expenses exceeding the fund's expense
cap will be paid by FMR. For Spartan Government Income Fund, Fidelity
High Income Fund, and Spartan Short-Intermediate Government Fund, the
expenses in connection with telephone voting will be borne by FMR. If
the funds record votes by telephone, they 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 voted by telephone may be revoked at any
time before they are voted in the same manner that proxies voted by
mail may be revoked. D.F. King & Co., Inc. may be paid on a per-call
basis for vote-by-phone solicitations on behalf of the funds at an
anticipated cost of approximately $ 7,000 (Fidelity Investment
Grade Bond Fund), $ 4,000 (Fidelity Short-Term Bond Fund),
$ 3,000 (Spartan Government Income Fund), $ 4,000
(Fidelity High Income Fund), and $ 3,000 (Spartan
Short-Intermediate Government Fund), respectively.
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents 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
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, 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 one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate.
The following table summarizes the proposals applicable to each fund.
<TABLE>
<CAPTION>
<S> <C> <C>
Proposal # Proposal Description Applicable Fund(s)
1. To elect as Trustees the All
twelve nominees presented in
proposal 1.
2. To ratify the selection of All
PricewaterhouseCoopers LLP
as independent accountants
of the funds.
3. To authorize the Trustees to All
adopt an amended and
restated Declaration of Trust.
4. To adopt a new fundamental All
investment policy for each
fund permitting the fund to
invest all of its assets in
another open-end investment
company managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
5. To approve an amended Fidelity Investment Grade
management contract for the Bond Fund
fund that would reduce the Fidelity Short-Term Bond Fund
management fee payable to
FMR by the fund as FMR's
assets under management
increase.
6. To approve an amended Fidelity High Income Fund
management contract,
including a management fee
structure change, for the
fund.
7. To approve an amended Fidelity Investment Grade
sub-advisory agreement with Bond Fund
FMR U.K. to provide Fidelity Short-Term Bond Fund
investment advice and Fidelity High Income Fund
research services or
investment management
services, and to allow FMR,
FMR U.K., and the trust, on
behalf of the fund, to
modify the agreement subject
to the requirements of the
Investment Company Act of
1940.
8. To approve an amended Fidelity Investment Grade
sub-advisory agreement with Bond Fund
FMR Far East to provide Fidelity Short-Term Bond Fund
investment advice and Fidelity High Income Fund
research services or
investment management
services, and to allow FMR,
FMR Far East, and the trust,
on behalf of the fund, to
modify the agreement subject
to the requirements of the
Investment Company Act of
1940.
9. To eliminate certain Fidelity Investment Grade
fundamental investment Bond Fund
policies of the fund.
10. To eliminate certain Fidelity Short-Term Bond Fund
fundamental investment
policies of the fund.
11. To eliminate certain Spartan Government Income Fund
fundamental investment
policies of the fund.
12. To eliminate certain Fidelity High Income Fund
fundamental investment
policies of the fund.
ADOPTION OF STANDARDIZED
INVESTMENT LIMITATIONS
13. REAL ESTATE: To clarify and Spartan Government Income Fund
standardize the language of
the fundamental investment
limitation concerning
purchases and sales of real
estate.
14. DIVERSIFICATION: To amend the All
fundamental diversification
limitation to exclude
"securities of other
investment companies" from
issuer diversification limits.
15. UNDERWRITING: To clarify and Fidelity Short-Term Bond Fund
standardize the language of
the fundamental investment
limitation concerning
underwriting.
16. CONCENTRATION: To clarify and Fidelity Short-Term Bond Fund
standardize the language of Fidelity High Income Fund
the fundamental investment
limitation concerning
industry concentration.
</TABLE>
Shares of each fund of the trust issued and outstanding as of
December 31 , 1998 are indicated in the following table:
Fidelity Investment Grade 296,416,395
Bond Fund
Fidelity Short-Term Bond Fund 96,586,199
Spartan Government Income Fund 236,307,503
Fidelity High Income Fund 59,737,506
Spartan Short-Intermediate 8,020,249
Government Fund
To the knowledge of the trust, substantial (5% or more) record or
beneficial ownership of the funds on December 31 , 1998 was as
follows:
Spartan Government Income Fund: Charitable Gift Fund, Boston, MA
(6.07%).
Spartan Short-Intermediate Government Fund: Frederick W. McCarthy,
West Palm Beach, FL (5.16%).
FMR has advised the trust that for Proposals 1 through 4, 11, 13,
and 14 contained in this Proxy Statement, it will vote its shares at
the Meeting FOR each Proposal.
To the knowledge of the trust, no other shareholder owned of record
or beneficially more than 5% of the outstanding shares of the funds on
that date.
Shareholders of record at the close of business on February
1 6 , 1999 will be entitled to vote at the Meeting. Each such
shareholder will be entitled to one vote for each dollar of net asset
value held on that date.
FOR A FREE COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED APRIL 30, 1998 AND THE SEMIANNUAL REPORT FOR THE FISCAL PERIOD
ENDED OCTOBER 31, 1998 CALL 1-800-544-8888 OR WRITE TO FIDELITY
DISTRIBUTORS CORPORATION AT 82 DEVONSHIRE STREET, BOSTON,
MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS
SUFFICIENT TO APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE
APPROPRIATE FUND CAST AT THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL
2. APPROVAL OF PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" OF THE ENTIRE TRUST. APPROVAL OF
PROPOSALS 4 THROUGH 16 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF
THE OUTSTANDING VOTING SECURITIES" OF THE APPROPRIATE FUND. UNDER THE
INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), THE VOTE OF A "MAJORITY
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.
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the
Trust. Pursuant to the provisions of the Declaration of Trust of
Fidelity Fixed-Income Trust, the Trustees have determined that the
number of Trustees shall be fixed at twelve. It is intended that the
enclosed proxy card will be voted for the election as Trustees of the
twelve nominees listed below, unless such authority has been withheld
in the proxy card.
All nominees named below are currently Trustees of Fidelity
Fixed-Income Trust and have served in that capacity continuously since
originally elected or appointed. Robert M. Gates, William O. McCoy,
Marvin L. Mann, and Robert C. Pozen were selected by the trust's
Nominating and Administration Committee (see page 15 ) and were
appointed to the Board in March 1997, January 1997, October 1993, and
August 1997, respectively. None of the nominees are related to one
another. Those nominees indicated by an asterisk (*) are "interested
persons" of the trust by virtue of, among other things, their
affiliation with either the trust, the funds' investment adviser (FMR,
or the Adviser), or the funds' distribution agent, FDC. The business
address of each nominee who is an "interested person" is 82 Devonshire
Street, Boston, Massachusetts 02109, and the business address of all
other nominees is Fidelity Investments, P.O. Box 9235, Boston,
Massachusetts 02205-9235. Except for Mr. Gates, Mr. McCoy, and Mr.
Pozen, each of the nominees is currently a Trustee of 57
registered investment companies advised by FMR. Mr. Gates and
Mr. McCoy a re currently Trustee s of 54 registered
investment companies advised by FMR. Mr. Pozen is currently a
Trustee of 51 registered investment companies advised by FMR.
In the election of Trustees, those twelve nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is
present, shall be elected.
<TABLE>
<CAPTION>
<S> <C> <C>
Nominee (Age) Principal Occupation** Year of Election or Appointment
Ralph F. Cox President of RABAR 1991
(66) Enterprises (management
consulting-engineering
industry, 1994). Prior to
February 1994, he was
President of Greenhill
Petroleum Corporation
(petroleum exploration and
production). Until March
1990, Mr. Cox was President
and Chief Operating Officer
of Union Pacific Resources
Company (exploration and
production). He is a
Director of USA Waste
Services, Inc.
(non-hazardous waste, 1993),
CH2M Hill Companies
(engineering), Rio Grande,
Inc. (oil and gas
production), and Daniel
Industries (petroleum
measurement equipment
manufacturer). In addition,
he is a member of advisory
boards of Texas A&M
University and the
University of Texas at Austin.
Phyllis Burke Davis Prior to her retirement in 1992
(67) September 1991, Mrs. Davis
was the Senior Vice
President of Corporate
Affairs of Avon Products,
Inc. She is currently a
Director of BellSouth
Corporation
(telecommunications), Eaton
Corporation (manufacturing,
1991), and the TJX
Companies, Inc. (retail
stores), and previously
served as a Director of
Hallmark Cards, Inc.
(1985-1991) and Nabisco
Brands, Inc. In addition,
she is a member of the
President's Advisory Council
of The University of Vermont
School of Business
Administration.
Nominee (Age) Principal Occupation** Year of Election or Appointment
Robert M. Gates Consultant, author, and 1997
(55) lecturer (1993). Mr. Gates
was Director of the Central
Intelligence Agency (CIA)
from 1991-1993. From 1989 to
1991, Mr. Gates served as
Assistant to the President
of the United States and
Deputy National Security
Advisor. Mr. Gates is a
Director of LucasVarity PLC
(automotive components and
diesel engines), Charles
Stark Draper Laboratory
(non-profit), NACCO
Industries, Inc. (mining and
manufacturing), and TRW Inc.
(original equipment and
replacement products). Mr.
Gates also is a Trustee of
the Forum for International
Policy and of the Endowment
Association of the College
of William and Mary. In
addition, he is a member of
the National Executive Board
of the Boy Scouts of America.
*Edward C. Johnson 3d President, is Chairman, Chief 1984
(68) Executive Officer and a
Director of FMR Corp.; a
Director and Chairman of the
Board and of the Executive
Committee of FMR; Chairman
and a Director of Fidelity
Investments Money
Management, Inc. (1998),
Fidelity Management &
Research (U.K.) Inc., and
Fidelity Management &
Research (Far East) Inc.
Nominee (Age) Principal Occupation** Year of Election or Appointment
E. Bradley Jones Prior to his retirement in 1990
(71) 1984, Mr. Jones was Chairman
and Chief Executive Officer
of LTV Steel Company. He is
a Director of TRW Inc.
(original equipment and
replacement products),
Consolidated Rail
Corporation, Birmingham
Steel Corporation, and RPM,
Inc. (manufacturer of
chemical products), and he
previously served as a
Director of NACCO
Industries, Inc. (mining and
manufacturing, 1985-1995),
Hyster-Yale Materials
Handling, Inc. (1985-1995),
and Cleveland-Cliffs Inc.
(mining), and as a Trustee
of First Union Real Estate
Investments. In addition, he
serves as a Trustee of the
Cleveland Clinic Foundation,
where he has also been a
member of the Executive
Committee as well as
Chairman of the Board and
President, a Trustee and
member of the Executive
Committee of University
School (Cleveland), and a
Trustee of Cleveland Clinic
Florida.
Nominee (Age) Principal Occupation** Year of Election or Appointment
Donald J. Kirk Executive-in-Residence (1995) 1987
(66) at Columbia University
Graduate School of Business
and a financial consultant.
From 1987 to January 1995,
Mr. Kirk was a Professor at
Columbia University Graduate
School of Business. Prior to
1987, he was Chairman of the
Financial Accounting
Standards Board. Mr. Kirk is
a Director of General Re
Corporation (reinsurance),
and he previously served as
a Director of Valuation
Research Corp. (appraisals
and valuations, 1993-1995).
In addition, he serves as
Chairman of the Board of
Directors of National Arts
Stabilization Inc., Chairman
of the Board of Trustees of
the Greenwich Hospital
Association, Director of the
Yale-New Haven Health
Services Corp. (1998), a
Member of the Public
Oversight Board of the
American Institute of
Certified Public
Accountants' SEC Practice
Section (1995), and as a
Public Governor of the
National Association of
Securities Dealers, Inc.
(1996).
*Peter S. Lynch Vice Chairman and Director of 1990
(56) FMR. Prior to May 31, 1990,
he was a Director of FMR and
Executive Vice President of
FMR (a position he held
until March 31, 1991); Vice
President of Fidelity
Magellan Fund and FMR Growth
Group Leader; and Managing
Director of FMR Corp. Mr.
Lynch was also Vice
President of Fidelity
Investments Corporate
Services (1991-1992). In
addition, he serves as a
Trustee of Boston College,
Massachusetts Eye & Ear
Infirmary, Historic
Deerfield (1989) and Society
for the Preservation of New
England Antiquities, and as
an Overseer of the Museum of
Fine Arts of Boston.
Nominee (Age) Principal Occupation** Year of Election or Appointment
William O. McCoy Vice President of Finance for 1997
(65) the University of North
Carolina (16-school system,
1995). Prior to his
retirement in December 1994,
Mr. McCoy was Vice Chairman
of the Board of BellSouth
Corporation
(telecommunications, 1984)
and President of BellSouth
Enterprises (1986). He is
currently a Director of
Liberty Corporation (holding
company, 1984), Weeks
Corporation of Atlanta (real
estate, 1994), Carolina
Power and Light Company
(electric utility, 1996) and
the Kenan Transport Co.
(1996). Previously, he was a
Director of First American
Corporation (bank holding
company, 1979-1996). In
addition, Mr. McCoy serves
as a member of the Board of
Visitors for the University
of North Carolina at Chapel
Hill (1994) and for the
Kenan-Flager Business School
(University of North
Carolina at Chapel Hill,
1988).
Gerald C. McDonough Chairman of G.M. Management 1989
(70) Group (strategic advisory
services). Mr. McDonough is
a Director of York
International Corp. (air
conditioning and
refrigeration), Commercial
Intertech Corp. (hydraulic
systems, building systems,
and metal products, 1992),
CUNO, Inc. (liquid and gas
filtration products, 1996),
and Associated Estates
Realty Corporation (a real
estate investment trust,
1993). Mr. McDonough served
as a Director of
ACME-Cleveland Corp. (metal
working, telecommunications,
and electronic products)
from 1987-1996 and
Brush-Wellman Inc. (metal
refining) from 1983-1997.
Nominee (Age) Principal Occupation** Year of Election or Appointment
Marvin L. Mann Chairman of the Board of 1993
(65) Lexmark International, Inc.
(office machines, 1991).
Prior to 1991, he held the
positions of Vice President
of International Business
Machines Corporation ("IBM")
and President and General
Manager of various IBM
divisions and subsidiaries.
Mr. Mann is a Director of
M.A. Hanna Company
(chemicals, 1993) and
Imation Corp. (imaging and
information storage, 1997).
*Robert C. Pozen Senior Vice President, is 1997
(52) also President and a
Director of FMR (1997); and
President and a Director of
Fidelity Investments Money
Management, Inc. (1998),
Fidelity Management &
Research (U.K.) Inc. (1997),
and Fidelity Management &
Research (Far East) Inc.
(1997). Previously, Mr.
Pozen served as General
Counsel, Managing Director,
and Senior Vice President of
FMR Corp.
Thomas R. Williams President of The Wales Group, 1989
(70) Inc. (management and
financial advisory
services). Prior to retiring
in 1987, Mr. Williams served
as Chairman of the Board of
First Wachovia Corporation
(bank holding company), and
Chairman and Chief Executive
Officer of The First
National Bank of Atlanta and
First Atlanta Corporation
(bank holding company). He
is currently a Director of
ConAgra, Inc. (agricultural
products), Georgia Power
Company (electric utility),
National Life Insurance
Company of Vermont, American
Software, Inc., and
AppleSouth, Inc.
(restaurants, 1992).
</TABLE>
** Except as otherwise indicated, each individual has held the office
shown or other offices in the same company for the last five years.
As of December 31, 1998, the nominees, Trustees and officers
of the Trust and each fund owned, in the aggregate, less than
1% of each fund's outstanding shares.
If elected, the Trustees will hold office without limit in time
except that (a) any Trustee may resign; (b) any Trustee may be removed
by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal; (c) any Trustee who requests to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees; and (d) a Trustee may be removed at any Special Meeting of
shareholders by a two-thirds vote of the outstanding voting securities
of the trust. In case a vacancy shall for any reason exist, the
remaining Trustees will fill such vacancy by appointing another
Trustee, so long as, immediately after such appointment, at least
two-thirds of the Trustees have been elected by shareholders. If, at
any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly
call a shareholders' meeting for the purpose of electing a Board of
Trustees. Otherwise, there will normally be no meeting of shareholders
for the purpose of electing Trustees.
The trust's Board, which is currently composed of three interested
and nine non-interested Trustees, met eleven times during the twelve
months ended April 30, 1998. It is expected that the Trustees will
meet at least ten times a year at regularly scheduled meetings.
The trust's Audit Committee is composed entirely of Trustees who are
not interested persons of the trust, FMR or its affiliates and
normally meets four times a year, or as required, prior to meetings of
the Board of Trustees. Currently, Messrs. Kirk (Chairman), Gates and
McCoy, and Mrs. Davis are members of the Committee. The committee
oversees and monitors the trust's internal control structure, its
auditing function and its financial reporting process, including the
resolution of material reporting issues. The committee recommends to
the Board of Trustees the appointment of auditors for the trust. It
reviews audit plans, fees and other material arrangements in respect
of the engagement of auditors, including non-audit services to be
performed. It reviews the qualifications of key personnel involved in
the foregoing activities. The committee plays an oversight role in
respect of the trust's investment compliance procedures and the code
of ethics. During the twelve months ended April 30, 1998, the
committee held four meetings.
The trust's Nominating and Administration Committee is currently
composed of Messrs. McDonough (Chairman), Jones and Williams. The
committee members confer periodically and hold meetings as required.
The committee makes nominations for independent trustees, and for
membership on committees. The committee periodically reviews
procedures and policies of the Board of Trustees and committees. It
acts as the administrative committee under the Retirement Plan for
non-interested trustees who retired prior to December 30, 1996. It
monitors the performance of legal counsel employed by the trust and
the independent trustees. The committee in the first instance monitors
compliance with, and acts as the administrator of the provisions of
the code of ethics applicable to the independent trustees. During the
twelve months ended April 30, 1998, the committee held no meetings.
The Nominating and Administration Committee will consider nominees
recommended by shareholders. Recommendations should be submitted to
the committee in care of the Secretary of the Trust. The trust does
not have a compensation committee; such matters are considered by the
Nominating and Administration Committee.
The following table sets forth information describing the
compensation of each Trustee and Member of the Advisory Board of each
fund for his or her services for the fiscal year ended April 30, 1998,
or calendar year ended December 31, 1998, as applicable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
COMPENSATION TABLE
AGGREGATE COMPENSATION FROM J. Gary Burkhead**,# Ralph F. Cox Phyllis Burke Davis Robert M. Gates Edward C. Johnson
EACH FUND
Investment Grade BondB $ 0 $ 614 $ 614 $ 626 $ 0
Short-Term BondB,C,D 0 348 348 356 0
Government IncomeB 0 105 105 107 0
High IncomeB 0 896 896 912 0
Short-Intermediate GovernmentB 0 28 28 29 0
TOTAL COMPENSATION FROM THE $ 0 $ 223,500 $ 220,500 $ 223,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
AGGREGATE COMPENSATION FROM E. Bradley Jones
EACH FUND
Investment Grade BondB $ 614
Short-Term BondB,C,D 348
Government IncomeB 105
High IncomeB 896
Short-Intermediate GovernmentB 28
TOTAL COMPENSATION FROM THE $ 220,000
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AGGREGATE COMPENSATION FROM Donald J. Kirk Peter S. Lynch** William O. McCoy Gerald C. McDonough Marvin L. Mann
EACH FUND
Investment Grade BondB $ 614 $ 0 $ 626 $ 766 $ 606
Short-Term BondB,C,D 348 0 356 435 344
Government IncomeB 105 0 107 131 104
High IncomeB 896 0 912 1,118 884
Short-Intermediate GovernmentB 28 0 29 35 28
TOTAL COMPENSATION FROM THE $ 226,500 $ 0 $ 223,500 $ 273,500 $ 220,500
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE COMPENSATION FROM Robert C. Pozen** Thomas R. Williams
EACH FUND
Investment Grade BondB $ 0 $ 614
Short-Term BondB,C,D 0 348
Government IncomeB 0 105
High IncomeB 0 896
Short-Intermediate GovernmentB 0 28
TOTAL COMPENSATION FROM THE $ 0 $ 223,500
FUND COMPLEX*,A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
# J. Gary Burkhead served on the Board of Trustees through July 31,
1997. Effective August 1, 1997, Mr. Burkhead serves as a Member of the
Advisory Board of the trust.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; William O. McCoy, $55,039; Marvin L.
Mann, $55,039; and Thomas R. Williams, $63,433.
B Compensation figures include cash and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $164; Phyllis Burke Davis, $164; Robert M. Gates, $166; E.
Bradley Jones, $164; Donald J. Kirk, $164; William O. McCoy, $166;
Gerald C. McDonough, $192; Marvin L. Mann, $164; and Thomas R.
Williams, $164.
D For the fiscal year ended April 30, 1998, certain of the
non-interested Trustees' aggregate compensation from the fund includes
accrued voluntary deferred compensation as follows: Ralph F. Cox,
$138; William O. McCoy, $41; Marvin L. Mann, $138; and Thomas R.
Williams, $138.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds including funds in each major investment discipline and
representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF THE FUNDS.
By a vote of the non-interested Trustees, the firm of
PricewaterhouseCoopers LLP has been selected as independent
accountants for each fund to sign or certify any financial statements
of each fund required by any law or regulation to be certified by an
independent accountant and filed with the Securities and Exchange
Commission (SEC) or any state. Pursuant to the 1940 Act, such
selection requires the ratification of shareholders. In addition, as
required by the 1940 Act, the vote of the Trustees is subject to the
right of each fund, by vote of a majority of its outstanding voting
securities at any meeting called for the purpose of voting on such
action, to terminate such employment without penalty.
PricewaterhouseCoopers LLP has advised each fund that it has no direct
or material indirect ownership interest in each fund.
For the funds' most recently completed fiscal year, the firm of
Coopers & Lybrand L.L.P. acted as each fund's independent accountant.
Effective July 1, 1998, Coopers & Lybrand L.L.P. and Price Waterhouse
LLP combined their businesses and practices and began doing business
as PricewaterhouseCoopers LLP.
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. In
recommending the selection of each fund's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such
services would affect the accountants' independence. Representatives
of PricewaterhouseCoopers LLP are not expected to be present at the
Meeting, but have been given the opportunity to make a statement if
they so desire and will be available should any matter arise requiring
their presence.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST.
The Board of Trustees has approved and recommends that the
shareholders of the trust authorize them to adopt and execute an
Amended and Restated Declaration of Trust for the trust and the funds
of the trust in the form attached to this Proxy Statement as Exhibit 1
(New Declaration of Trust). The attached New Declaration of Trust has
been marked to show changes from the trust's existing Declaration of
Trust (Current Declaration of Trust). The New Declaration of Trust is
a more modern form of trust instrument for a Massachusetts business
trust, and, going forward, will be used as the standard Declaration of
Trust for all new Fidelity Massachusetts business trusts.
The New Declaration of Trust gives the Trustees more flexibility and,
subject to applicable requirements of the 1940 Act and Massachusetts
law, broader authority to act. This increased flexibility may allow
the Trustees to react more quickly to changes in competitive and
regulatory conditions and, as a consequence, may allow the funds to
operate in a more efficient and economical manner. ADOPTION OF THE NEW
DECLARATION OF TRUST WILL NOT ALTER IN ANY WAY THE TRUSTEES' EXISTING
FIDUCIARY OBLIGATIONS TO ACT WITH DUE CARE AND IN THE SHAREHOLDERS'
INTERESTS. BEFORE UTILIZING ANY NEW FLEXIBILITY THAT THE NEW
DECLARATION OF TRUST MAY AFFORD, THE TRUSTEES MUST FIRST CONSIDER THE
SHAREHOLDERS' INTERESTS AND THEN ACT IN ACCORDANCE WITH SUCH
INTERESTS.
Adoption of the New Declaration of Trust will NOT result in any
changes in the funds' Trustees or officers or in the investment
policies and shareholder services described in the funds' current
prospectuses.
Generally, a majority of the Trustees may amend the Current
Declaration of Trust when authorized by a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the trust. On
October 16, 1997, the Trustees approved the form of the New
Declaration of Trust. On December 18, 1997, the Board approved several
additional changes to the form of the New Declaration of Trust, which
changes have been incorporated into the form attached to this Proxy
Statement. On September 17, 1998, the Board authorized the submission
of the New Declaration of Trust to the trust's shareholders for their
authorization at this Meeting.
The New Declaration of Trust amends the Current Declaration of Trust
in a number of significant ways. The following discussion summarizes
some of the more significant amendments to the Current Declaration of
Trust effected by the New Declaration of Trust.
IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER
SUBSTANTIVE AND STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF
TRUST AND THE CURRENT DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE NEW DECLARATION OF TRUST
ITSELF, WHICH IS ATTACHED AS EXHIBIT 1 TO THIS PROXY STATEMENT.
SIGNIFICANT CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
REORGANIZATION OR TERMINATION OF THE TRUST OR ITS SERIES. Unlike the
Current Declaration of Trust, the New Declaration of Trust generally
permits the Trustees, subject to applicable Federal and state law, to
reorganize or terminate the trust or any of its series. The Current
Declaration of Trust requires shareholder approval in order to
reorganize or terminate the trust or any of its series.
Under certain circumstances, it may not be in the shareholders'
interest to require a shareholder meeting to permit the trust or a
fund to reorganize into another entity. For example, in order to
reduce the cost and scope of state regulatory constraints or to take
advantage of a more favorable tax treatment offered by another state,
the Trustees may determine that it would be in the shareholders'
interests to reorganize a fund to domicile it in another state or to
change its legal form. Under the Current Declaration of Trust, the
Trustees cannot effectuate such a potentially beneficial
reorganization without first conducting a shareholder meeting and
incurring the attendant costs and delays. In contrast, the New
Declaration of Trust gives the Trustees the flexibility to reorganize
the trust or any of its series and achieve potential shareholder
benefits without incurring the delay and potential costs of a proxy
solicitation. Such flexibility should help to assure that the trust
and its funds operate under the most appropriate form of organization.
Similarly, under certain circumstances, it may not be in the
shareholders' interest to require a shareholder meeting to permit the
Trustees to terminate a fund. For example, a fund may have
insufficient assets to invest effectively or excessively high expense
levels due to operational needs. Under such circumstances, absent
viable alternatives, the Trustees may determine that terminating the
fund is in the shareholders' interest and the only appropriate course
of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the
fund's liquidation and termination and, in general, will increase the
costs associated with the termination. In such a case, it may be in
the shareholders' interest to permit fund termination without
incurring the costs and delays of a shareholder meeting.
As discussed above, before allowing a trust or fund reorganization or
termination to proceed without shareholder approval, the Trustees have
a fiduciary responsibility to first determine that the proposed
transaction is in the shareholders' interest. Any exercise of the
Trustees' increased authority under the New Declaration of Trust is
also subject to any applicable requirements of the 1940 Act and
Massachusetts law. Of course, in all cases, the New Declaration of
Trust would require that shareholders receive written notification of
any proposed transaction.
The New Declaration of Trust does NOT give the Trustees the authority
to merge a fund with another operating mutual fund or sell all of a
fund's assets to another operating mutual fund without first seeking
shareholder approval. Under the New Declaration of Trust, shareholder
approval is still required for these transactions.
FUTURE AMENDMENTS OF THE DECLARATION OF TRUST. The New Declaration of
Trust permits the Trustees, with certain exceptions, to amend the
Declaration of Trust without shareholder approval. Under the New
Declaration of Trust, shareholders generally have the right to vote on
any amendment affecting their right to vote, on any amendment altering
the maximum number of permitted Trustees, on any amendment affecting
the New Declaration of Trust's amendment provisions, on any amendment
required by law or the trust's registration statement, and on any
matter submitted to shareholders by the Trustees. The Current
Declaration of Trust, on the other hand, generally gives shareholders
the exclusive power to amend the Declaration of Trust. By allowing
amendment of the Declaration of Trust without shareholder approval,
the New Declaration of Trust gives the Trustees the necessary
authority to react quickly to future contingencies. As mentioned
above, such increased authority remains subordinate to the Trustees'
continuing fiduciary obligations to act with due care and in the
shareholders' interest.
MASTER FEEDER AUTHORITY. The New Declaration of Trust clarifies that
the Trustees may authorize the investment of all of a fund's assets in
another open-end investment company (Master Feeder Fund Structure).
The Current Declaration of Trust does not specifically provide the
Trustees the ability to authorize the Master Feeder Fund Structure.
The purpose of a Master Feeder Fund Structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. In order
to implement a Master Feeder Fund Structure, both the Declaration of
Trust and the funds' policies must permit the structure. Currently,
each fund's policies do not allow for such investments. Proposal 4 on
page 23 seeks the approval of each fund's shareholders to adopt
a fundamental investment policy to permit investment in another
open-end investment company with substantially the same investment
objective and policies.
A number of mutual funds have developed so called Master Feeder Fund
Structures under which several "feeder" funds invest all of their
assets in a single pooled investment, or "master" fund. For example,
an institutional equity fund with a high initial minimum investment
amount for large investors might pool its investments with an equity
fund with low minimums designed for retail investors. This structure
allows several feeder funds with substantially the same objective, but
different distribution and servicing features to combine their
investments and manage them as one master fund instead of managing
them separately. The feeder funds combine their investments by
investing all of their assets in one master fund. (Each feeder fund
invested in a single master fund retains its own characteristics, but
is able to achieve operational efficiencies by investing together with
the other feeder funds in the Master Feeder Fund Structure.)
FMR and the Board of Trustees continually review methods of
structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees have determined that
a fund should invest in a master fund, the Trustees believe it could
be in the best interest of each fund to adopt such a structure at a
future date. If approved, the New Declaration of Trust would provide
the Trustees with the power to authorize a fund to invest all of its
assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Master Feeder Fund Structure is
permitted under a fund's investment policies (see Proposal 4), if they
determine that a Master Feeder Fund Structure is in the best interest
of the fund, and if, upon advice of counsel, they determine that the
investment will not have material adverse tax consequences to the fund
or its shareholders. The Trustees will specifically consider the
impact, if any, on fees paid by the fund as a result of adopting a
Master Feeder Fund Structure.
SHAREHOLDER NOTIFICATION OF TRUSTEE APPOINTMENT. The New Declaration
of Trust generally provides that, in the case of a vacancy on the
Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion, see fit, consistent
with the limitations of the 1940 Act. Section 16 of the 1940 Act
states that a vacancy may be filled by the Trustees if, after filling
the vacancy, at least two-thirds of the Trustees then holding office
were elected by the holders of the outstanding voting securities of
the trust. It also states that if at any time less than 50% of the
Trustees were elected by shareholders, a shareholder meeting must be
called within 60 days for the purposes of electing Trustees to fill
the existing vacancies. Trustees may also appoint a Trustee in
anticipation of a current Trustee's retirement or resignation or in
the event of an increase in the number of Trustees. The Current
Declaration of Trust requires that within three months of a Trustee
appointment, notification of such appointment be mailed to each
shareholder of the trust. The New Declaration of Trust eliminates this
notification requirement.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification
to all shareholders of a trust may be costly. If the New Declaration
of Trust is approved, shareholders would normally be notified of
future Trustee appointments in the next financial report for the fund
following the appointment.
OTHER CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
In addition to the significant changes above, the New Declaration of
Trust modifies the Current Declaration of Trust in a number of
important ways, including the following:
1. The New Declaration of Trust modifies the Current Declaration of
Trust to allow FMR and the trust, on behalf of each fund, to amend the
fund's respective Management Contract subject to the provisions of
Section 15 of the 1940 Act, as modified or interpreted by the SEC. In
contrast, the Current Declaration of Trust explicitly requires the
vote of a majority of the outstanding voting securities of a fund to
authorize all such amendments. A corresponding change is also proposed
for certain of the funds' Management Contracts. For more information
on this topic generally, see "Modification of Management Contract
Amendment Provisions" on page s 28 and 32 .
2. The New Declaration of Trust clarifies that the Trustees may
impose other fees (for example, purchase fees) in addition to sales
charges upon investment in a fund and clarifies that deferred sales
charges and other fees (for example, redemption fees) may be imposed
upon redemption of a fund's shares.
3. The New Declaration of Trust confirms and clarifies various
existing Trustee powers. For example, the New Declaration of Trust
clarifies that the Trustees, in addition to banks and trust companies,
may employ as fund custodians companies that are members of a national
securities exchange or other entities permitted under the 1940 Act;
delegate authority to investment advisers and other agents; adopt and
offer dividend reinvestment and related plans; operate and carry on
the business of an investment company; and interpret the investment
policies, practices, and limitations of any fund.
4. The New Declaration of Trust clarifies that no shareholder of a
trust series shall have a claim on the assets of another series and
further clarifies that, by virtue of investing in a fund, a
shareholder is deemed to have assented to and agreed to be bound by
the terms of the New Declaration of Trust.
5. The New Declaration of Trust deletes various technical and/or
antiquated requirements from the Current Declaration of Trust,
including existing requirements that a Trustee vacancy be deemed to
occur when a Trustee is absent from his or her state of residence,
that Trustee vacancies must be filled within six calendar months, and
that portfolio securities be held pursuant to safeguards prescribed by
usual Massachusetts practice.
6. As a general matter, the New Declaration of Trust modifies the
Current Declaration of Trust to incorporate appropriate references to
classes of shares.
7. Lastly, the New Declaration of Trust generally expands various
1940 Act defined terms to encompass SEC modifications and
interpretations. Specific references to discrete sections of the 1940
Act that are contained in the New Declaration of Trust have likewise
been expanded to include SEC modifications and interpretations.
CONCLUSION. The Board of Trustees has concluded that the proposed
adoption of the New Declaration of Trust is in the best interests of
the trust's shareholders. Accordingly, the Trustees unanimously
recommend that the shareholders vote FOR the proposal to authorize
them to adopt and execute the New Declaration of Trust. If the
proposal is not approved, the Current Declaration of Trust will remain
unchanged and in effect.
4. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND
PERMITTING THE FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END
INVESTMENT COMPANY MANAGED BY FMR OR AN AFFILIATE WITH SUBSTANTIALLY
THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders
of each fund approve, the adoption of a new fundamental investment
policy that would permit the fund to invest all of its assets in
another open-end investment company managed by FMR or an affiliate
with substantially the same investment objective and policies.
Adoption of the policy would allow a fund to participate in a
so-called "Master Feeder Fund" organizational format (Master Feeder
Fund Structure).
Participation in a Master Feeder Fund Structure would allow a fund to
combine its assets with other funds having substantially the same
investment objective and policies, but differing distribution or
servicing arrangements. By combining its assets in a central "Master
Fund" with other participating "Feeder Funds," a fund would be able to
maintain its unique distribution and servicing structure while
potentially achieving operational efficiencies through the
consolidation of portfolio management. For example, if FMR managed
three funds all with the same investment objective and policies, a
Master Feeder Fund Structure would allow FMR to manage one combined
fund (rather than three), but still offer three distinct products,
each having different servicing features and pricing (e.g., one
distinct product for retail investors, a second for institutional
investors and a third for foreign investors). The purpose of a Master
Feeder Fund Structure would be to allow FMR to manage only one fund in
each investment discipline (Master Fund), but still be able to offer
that investment discipline with a variety of different servicing
features and pricing (Feeder Funds). The Master Feeder Fund Structure
is explained in more detail below. A diagram comparing a typical
"stand alone" fund structure to a Master Feeder Fund Structure is
attached to this Proxy Statement as Exhibit 2.
If the proposal is approved by shareholders, the Trustees will only
authorize investing a fund's assets in a Master Fund if they determine
that a Master Feeder Fund Structure is in the best interests of the
fund's shareholders, and if, upon advice of counsel, they determine
that the investment will not have material adverse tax consequences to
the fund or its shareholders.
THE MASTER FEEDER FUND STRUCTURE. The term "Master Feeder Fund
Structure" refers to a two-tiered arrangement in which typically one
or more mutual funds with substantially identical investment
objectives (the Feeder Funds) combine their assets by investing in a
single investment company having the same investment objective (the
Master Fund). The Feeder Funds sell their shares to the public and
invest all of their assets in shares of the Master Fund. In turn, the
Master Fund, in accordance with its and the Feeder Funds' common
investment objective, invests its assets in appropriate portfolio
securities (e.g., stocks, bonds, or money market instruments). The
Master Fund is not offered to the public: it sells its shares only to
the Feeder Funds. The individual Feeder Funds are generally sold
through different distribution channels to discrete targeted markets,
such as retail investors, institutional investors or foreign
investors. Administrative and service features will vary among Feeder
Funds depending upon the level of service sought by the fund's
investors. Simply stated, the Master Feeder Fund Structure
consolidates portfolio management and related functions at the Master
Fund (or bottom tier) level and segregates marketing and distribution
to the Feeder Fund (or top tier) level.
The Master Feeder Fund Structure may offer certain advantages over
more traditional "stand alone" funds. For example, participating
Feeder Funds may achieve economies of scale by sharing among a greater
number of investment dollars fixed expenses of portfolio management
and fund administration. Feeder Funds may also be able to achieve
greater diversification by means of a larger portfolio of securities
than could be achieved by individual funds. In short, the Master
Feeder Fund Structure gives participating Feeder Funds the ability to
tailor services and fees for particular market segments while
providing the economies of scale available to a larger fund.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually
review methods of structuring mutual funds to take advantage of
potential efficiencies. While neither the Board nor FMR has determined
that a fund should invest in a Master Fund, the Trustees believe it
could be in the best interests of a fund to adopt such a structure at
a future date.
At present, certain of a fund's fundamental investment policies and
limitations would prevent the fund from investing all of its assets in
a Master Fund and would require a vote of shareholders before the fund
could participate in a Master Feeder Fund Structure. These policies
include a fund's limitations on concentration, diversification, and
underwriting. To avoid the costs associated with a subsequent
shareholder meeting, the Trustees recommend that shareholders approve
the proposal to permit each fund to invest its assets in a single
Master Fund, without a further vote of shareholders. If shareholders
approve this proposal, the above-mentioned restrictive policies would
no longer preclude a fund's investment in a Master Fund.
To allow possible future implementation of a Master Feeder Fund
Structure, an amendment to the Declaration of Trust is also proposed.
Proposal 3 requests approval for the adoption of an amended and
restated Declaration of Trust (New Declaration of Trust) that would
allow the Trustees to authorize each fund's conversion to a Master
Feeder Fund Structure when permitted by its policies. This proposal
would add a fundamental policy for each fund that permits the Master
Feeder Fund Structure.
DISCUSSION. As discussed above, FMR may manage a number of mutual
funds with similar investment objectives, policies, and limitations,
but with different features and services. Were these comparable funds
to combine their assets, operational efficiencies could be achieved,
offering the opportunity to reduce costs. Similarly, FMR anticipates
that a Master Feeder Fund Structure would facilitate the introduction
of new Fidelity mutual funds, increasing the investment options
available to shareholders.
A fund's method of operation and shareholder services would not be
materially affected by its investment in a Master Fund, except that
the assets of the fund would be managed as part of a larger fund. Were
a fund to invest all of its assets in a Master Fund, it would hold
only a single investment security (i.e., shares of the Master Fund).
The Master Fund, in turn, would directly invest in individual
securities pursuant to its investment objective (which would be
identical to the fund's investment objective). The Master Fund would
be managed by FMR or an affiliate, such as Fidelity Investments Money
Management, Inc. in the case of a money market fund.
The Trustees would retain the right to withdraw a fund's investments
from a Master Fund at any time and would do so if the Master Fund's
investment objective and policies were no longer appropriate for the
fund. The fund would then resume investing directly in individual
securities as it does currently.
If, as a Feeder Fund, a fund is asked to vote at a shareholder
meeting of the Master Fund, the fund, if required by applicable law or
its policies, would hold a meeting of its shareholders to vote on the
matters to be considered at the Master Fund shareholder meeting. A
fund would cast its votes at the Master Fund meeting in the same
proportion as the fund's shareholders voted at their meeting.
At present, the Trustees have not considered any specific proposal to
authorize a Master Feeder Fund Structure. As mentioned, the Trustees
will authorize investing a fund's assets in a Master Fund only if they
determine that a Master Feeder Fund Structure is in the best interests
of the fund's shareholders and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to the fund or its shareholders. In determining whether
to invest in a Master Fund, the Trustees will consider, among other
things, the opportunity to reduce costs and to achieve operational
efficiencies. The Trustees will not authorize investment in a Master
Fund if doing so would materially increase costs (including fees) to
shareholders.
FMR may benefit from the use of a Master Feeder Fund Structure if
overall assets under management are increased (since FMR's fees are
based on assets). Also, FMR's expenses of providing investment and
other services to a fund may be reduced. If a fund's investment in a
Master Fund were to reduce FMR's expenses materially, the Trustees
would consider whether a reduction in FMR's management fee would be
appropriate if and when a Master Feeder Fund Structure is implemented.
PROPOSED FUNDAMENTAL POLICY. To allow each fund to invest in a Master
Fund at a future date, the Trustees recommend that each fund adopt the
following fundamental policy:
"The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
If the proposal is adopted, the Trustees intend to adopt a
non-fundamental investment limitation for each fund that states:
"The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund."
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the fundamental
limitation will become effective when disclosure is revised to reflect
the changes. If the proposal is not approved by the shareholders of a
fund, that fund's current fundamental investment policies will remain
unchanged with respect to potential investment in Master Funds.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY INVESTMENT
GRADE BOND FUND AND FIDELITY SHORT-TERM BOND FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of each fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies the management fee that FMR
receives from a fund to provide for lower fees when FMR's assets under
management exceed certain levels. In addition, the Amended Contract
allows FMR and the trust, on behalf of a fund, to modify the
Management Contract subject to the requirements of the 1940 Act. The
existing Management Contract (Present Contract) currently requires the
vote of a majority of a fund's outstanding voting securities to
authorize all amendments. See "Modification of Management Contract
Amendment Provisions" on page 31 for more details. THE AMENDED
CONTRACT WILL RESULT IN A MANAGEMENT FEE THAT IS THE SAME AS, OR LOWER
THAN, THE FEE PAYABLE UNDER THE PRESENT CONTRACT. (For information on
FMR, see the section entitled "Activities and Management of FMR" on
page 42 .)
PROPOSED AMENDMENTS TO THE PRESENT MANAGEMENT CONTRACT. A copy of the
form of Amended Contract, marked to indicate the proposed amendments,
is supplied as Exhibit 3 on page 56 . Except for the
modifications discussed above, it is substantially identical to the
Present Contract. (For a detailed discussion of each fund's Present
Contract, refer to the section entitled "Present Management Contracts
of Fidelity Investment Grade Bond Fund and Fidelity Short-Term Bond
Fund" beginning on page 42 .) If approved by shareholders, the
Amended Contract will take effect on May 1, 1999 (or, if later, the
first day of the first month following approval) and will remain in
effect through June 30, 1999 and thereafter, but only as long as its
continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the
Independent Trustees and (ii) the vote of either a majority of the
Trustees or a majority of the outstanding shares of a fund. If the
Amended Contract is not approved, the Present Contract will continue
in effect through June 30, 1999, and thereafter only as long as its
continuance is approved at least annually as above.
The management fee is an annual percentage of a fund's average net
assets (the management fee rate), calculated and paid monthly. The
management fee rate is the sum of two components: a Group Fee Rate,
which varies according to assets under management by FMR, and a fixed
Individual Fund Fee Rate. The Amended Contract modifies the Group Fee
Rate by providing for lower fee rates if FMR's assets under management
remain above $156 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon
the monthly average of the aggregate net assets of all registered
investment companies having management contracts with FMR (assets
under management by FMR) . T he Group Fee Rate declines as
assets under management by FMR increase . The Amended Contract
would not change the group fee calculation for assets under management
by FMR of $156 billion or less. Above $156 billion in assets under
FMR's management, the Group Fee Rate declines under both the Present
Contract and the Amended Contact, but under the Amended Contract, it
declines faster. Group Fee Rates that are lower than those contained
in a fund's Present Contract have been voluntarily implemented by FMR
on November 1, 1993, August 1, 1994, and January 1, 1996.
The Group Fee Rate is calculated according to a graduated schedule
providing for different rates for different levels of assets under
management by FMR. The rate at which the Group Fee Rate declines is
determined by fee "breakpoints" that provide for lower fee rates when
assets increase. The Amended Contract adds eleven new fee breakpoints
for assets under FMR's management above $156 billion as illustrated in
the following table. (For an explanation of how the Group Fee Rate is
used to calculate the management fee, see the section entitled
"Present Management Contracts of Fidelity Investment Grade Bond Fund
and Fidelity Short-Term Bond Fund" beginning on page 43 .)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
GROUP FEE RATE BREAKPOINTS
Average Group Assets ($ Present Contract* Average Group Assets ($ Amended Contract
billions) billions)
120 - 174 .1450% 120 - 156 .1450%
Over 174 .1400% 156 - 192 .1400%
192 - 228 .1350%
228 - 264 .1300%
264 - 300 .1275%
300 - 336 .1250%
336 - 372 .1225%
372 - 408 .1200%
408 - 444 .1175%
444 - 480 .1150%
480 - 516 .1125%
Over 516 .1100%
</TABLE>
The result at various levels of group net assets is illustrated by
the table below.
EFFECTIVE Annual GROUP FEE RATES
Group Net Assets ($ billions) Present Contract* Amended Contract
150 .1736% .1736%
200 .1658% .1652%
250 .1606% .1587%
300 .1572% .1536%
350 .1547% .1494%
400 .1529% .1459%
450 .1515% .1427%
500 .1503% .1399%
550 .1494% .1372%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
Average assets under FMR's management for December 1998 were
approximately $ 669 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended December
1998, average assets under management by FMR were approximately
$ 669 billion. Each fund's management fee rate under the Amended
Contract for the month ended December 31, 1998, would have been
. 4324 %, compared to . 4477 % under the Present Contract.
The management fee rate remains the same under both the Present
Contract and the Amended Contract until assets under management by FMR
exceed $156 billion, at which point the management fee rate under the
Amended Contract begins to decline relative to the Present Contract.
The following chart compares each fund's management fee as calculated
under the terms of the Present Contract for the fiscal year ended
April 30, 1998, to the management fee each fund would have incurred if
the Amended Contract had been in effect.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Present Contract Management Amended Contract Management Fee Percentage Difference
Fee*
Fidelity Investment Grade $7,275,768 $7,078,821 (2.7%)
Bond Fund
Fidelity Short-Term Bond Fund $3,968,228 $3,862,104 (2.7%)
</TABLE>
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
The following chart compares each fund's management fee under the
terms of the Present Contract for the twelve month period ended
December 31, 1998, to the management fee each fund would have
incurred if the Amended Contract had been in effect.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Present Contract Management Amended Contract Management Fee Percentage Difference
Fee*
Fidelity Investment Grade $8,708,376 $8,435,659 (3.1%)
Bond Fund
Fidelity Short-Term Bond Fund $3,781,368 $3,663,358 (3.1%)
</TABLE>
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the Trust, on behalf of a fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of a fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the Trust,
on behalf of a fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the Trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the Trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of a fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of each fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of each fund, including all of the
Independent Trustees, on September 17, 1998. The Board of Trustees
considered and approved the modifications to the Group Fee Rate
schedule during the two month periods from November to December 1995,
June to July 1994, and September to October 1993. The Board of
Trustees received materials relating to the Amended Contract in
advance of the meeting at which the Amended Contract was considered,
and had the opportunity to ask questions and request further
information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings the Trustees received materials specifically relating
to the Amended Contract. These materials included (i) information on
the investment performance of each fund, a peer group of funds and an
appropriate index or combination of indices, (ii) sales and redemption
data in respect of each fund, (iii) the economic outlook and the
general investment outlook in the markets in which each fund invests,
and (iv) notable changes in each fund's investments. The Board of
Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of each fund's shares, (3)
the procedures employed to determine the value of each fund's assets,
(4) the allocation of each fund's brokerage, if any, including
allocations to brokers affiliated with FMR, (5) FMR's management of
the relationships with each fund's custodian and subcustodians, (6)
the resources devoted to and the record of compliance with each fund's
investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost and character of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the choice of performance indices and benchmarks, (c) the
composition of peer groups of funds, (d) transfer agency and
bookkeeping fees paid to affiliates of FMR, (e) investment
performance, (f) investment management staffing, (g) the potential for
achieving further economies of scale, (h) operating expenses paid to
third parties, and (i) the information furnished to investors,
including each fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether each fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly each fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees review at least annually the background of each
fund's portfolio manager and each fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations and the
senior management of Fidelity's fixed income group. Among other things
they considered the size, education and experience of FMR's investment
staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory
and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the Amended
Contract and under separate agreements covering transfer agency
functions and pricing, bookkeeping and securities lending services, if
any. The Board of Trustees and the Independent Trustees have also
considered the nature and extent of FMR's supervision of third party
service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered each fund's expense ratio and expense ratios of a peer
group of funds. They also considered the amount and nature of fees
paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including each fund. This consideration included
an extensive review of FMR's methodology in allocating its costs to
the management of each fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of each fund and whether the amount of
profit is a fair entrepreneurial profit for the management of each
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to each fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including each fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by each
fund and each fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with each fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee
structure, that is the reduction of the Group Fee Rate schedule and
the proposed modification to the Present Contract's amendment
provisions, are in the best interest of each fund's shareholders. The
Board of Trustees, including the Independent Trustees, voted to
approve the submission of the Amended Contract to shareholders of each
fund and recommends that shareholders of each fund vote FOR the
Amended Contract. If approved, the Amended Contract will take effect
on the first day of the first month following shareholder approval.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT, INCLUDING A MANAGEMENT
FEE STRUCTURE CHANGE, FOR FIDELITY HIGH INCOME FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract changes the fund's current "all
inclusive" management fee arrangement to a "group fee" arrangement
that is standard for other Fidelity bond funds. The change in the
fund's management fee structure is discussed in more detail below. In
addition, the Amended Contract allows FMR and the trust, on behalf of
the fund, to modify the Management Contract subject to the
requirements of the 1940 Act. The existing Management Contract
currently requires the vote of a majority of the fund's outstanding
voting securities to authorize all amendments. See "Modification of
Management Contract Amendment Provisions" on page 38 for more
details.
MODIFICATION OF MANAGEMENT FEE STRUCTURE. The proposed management fee
structure differs significantly from the fund's current management fee
structure. Under the terms of the fund's existing management contract
(Present Contract), the fund pays an all-inclusive management fee to
FMR that covers substantially all fund expenses. Specifically, under
the Present Contract, FMR pays the fund's operating expenses, with
limited exceptions. In contrast, under the terms of the Amended
Contract, the fund would pay its management fee and other expenses
separately. FMR would no longer pay the fund's other expenses.
If approved, the proposed group fee structure will result in a lower
management fee. Under the proposed group fee structure, the fund's
total operating expense ratio may, however, exceed its current rate of
0.80%. If the Amended Contract is approved, FMR has voluntarily agreed
to limit the fund's total operating expense ratio to 0.80% of the
fund's average net assets through December 31, 2000. See "Comparison
of Management Fees and Total Expenses" on page 37 for more
detailed information on the financial effects of changing to the
proposed group fee structure.
The fund's current management fee is an annual percentage of the
fund's average net assets and is calculated and paid monthly. Under
the Present Contract, the fund pays FMR a management fee at an annual
rate of 0.80% of the fund's average daily net assets. Under the terms
of the Present Contract, FMR not only provides the fund with
investment advisory and research services, but also pays all of the
fund's expenses, with the exception of fees and expenses of all
Trustees of the trust who are not "interested persons" of the trust or
FMR; interest on borrowings; taxes; brokerage fees and commissions;
and such non-recurring expenses as may arise, including costs of any
litigation to which the fund may be a party, and any obligation it may
have to indemnify the officers and Trustees with respect to
litigation. The management fee that the fund pays FMR is reduced by an
amount equal to the fees and expenses paid by the fund to the
non-interested Trustees.
The Amended Contract would replace the fund's existing all-inclusive
management fee structure with a group fee structure that is standard
for other Fidelity bond funds. Under the terms of the Amended
Contract, the fund would pay a management fee as well as its other
expenses.
Under the Amended Contract, the fund's management fee would be
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 varies based upon the monthly average of the net assets of
all registered investment companies having management contracts with
FMR (assets under management by FMR). T he Group Fee Rate
declines as assets under management by FMR increase . The
Individual Fund Fee Rate is a fixed rate specific to the fund. Under
the Amended Contract, the fund's Individual Fund Fee Rate would equal
0.45%.
The fund's proposed Group Fee Rate would be calculated according to
the graduated schedule below. The schedule provides for different fee
rates for different levels of assets under management by FMR. As
illustrated in the table, the rate at which the Group Fee Rate
declines is determined by fee "breakpoints" that provide for lower fee
rates when the total assets managed by FMR increase.
GROUP FEE RATE SCHEDULE
Average Group Assets Annualized Rate
0 - $3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
372 - 408 .1200
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
Average assets under management by FMR for December 1998 were
approximately $ 669 billion.
Under the Amended Contract, in addition to the management fee, the
fund will pay all of its other operating expenses, including (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trustees other
than those who are "interested persons" of the trust or FMR; (iv)
legal and audit expenses; (v) custodian, registrar and transfer agent
fees and expenses; (vi) fees and expenses related to the registration
and qualification of the trust and the fund's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders;
(viii) all other expenses incidental to holding meetings of
shareholders, including proxy solicitations; (ix) a pro rata share,
based on relative net assets of the fund and other registered
investment companies having Advisory and Service or Management
Contracts with FMR, of 50% of insurance premiums for fidelity and
other coverage; (x) its proportionate share of association membership
dues; (xi) expenses of typesetting for printing prospectuses and
statements of additional information and supplements thereto; (xii)
expenses of printing and mailing prospectuses and statements of
additional information and supplements thereto sent to existing
shareholders; and (xiii) such non-recurring or extraordinary expenses
as may arise, including those relating to actions, suits or
proceedings to which the fund is a party and the legal obligation
which the fund may have to indemnify the Trustees and officers with
respect thereto.
Lastly, under the fund's current all-inclusive management fee
arrangement, shareholders currently have the right to vote on any
expense increases over 0.80% of average net assets. Under the Amended
Contract, shareholders would also have the right to vote on any
increases in FMR's management fee; however, because the management fee
would not be all-inclusive, shareholders would not have the right to
vote on other expense increases.
COMPARISON OF MANAGEMENT FEES AND TOTAL EXPENSES. As indicated below,
if the Amended Contract is approved, the fund's management fee will
decrease; although the fund's total operating expense ratio may
increase. If the Amended Contract is approved, FMR has voluntarily
agreed to limit the fund's total operating expense ratio to 0.80% of
its average net assets through December 31, 2000 (excluding interest,
taxes, brokerage commissions and extraordinary expenses). After
December 31, 2000, the fund's total operating expense ratio could
increase and could exceed the fund's current 0.80% all-inclusive
management fee. However, at the level of assets under
management by FMR for December 1998 ($ 669 billion),
changing from the fund's current 0.80% all-inclusive management fee
rate to the proposed group fee structure (without any expense
reimbursement) would result in an estimated total operating expense
ratio for the fund of 0. 74 % for the twelve month period
ended December 31, 1998.
The following chart compares the fund's management fee under the
terms of the Present Contract for the fiscal year ended April 30,
1998, to the management fee that the fund would have incurred under
the Amended Contract if it had been in effect during that period.
<TABLE>
<CAPTION>
<S> <C> <C>
Present Contract Management Amended Contract Management Percentage Difference*
Fee* Fee*
$19,310,966 $14,179,595 (26.6%)
</TABLE>
* Under the Present Contract, FMR pays substantially all fund
expenses from the 0.80% management fee it receives from the fund.
Under the Amended Contract, FMR is not responsible for paying the
fund's expenses; the fund pays its operating expenses separately from
the management fee. See "Modification of Management Fee Structure" on
page for more details.
The following chart compares the fund's management fee under the
terms of the Present Contract for the twelve month period ended
December 31 , 1998, to the management fee that the fund would
have incurred under the Amended Contract if it had been in effect
during that period.
<TABLE>
<CAPTION>
<S> <C> <C>
Present Contract Management Amended Contract Management Percentage Difference*
Fee* Fee*
$23,368,077 $17,076,141 (26.9%)
</TABLE>
* Under the Present Contract, FMR pays substantially all fund expenses
from the 0.80% management fee it receives from the fund. Under the
Amended Contract, FMR is not responsible for paying the fund's
expenses; the fund pays its operating expenses separately from the
management fee. See "Modification of Management Fee Structure" on page
for more details.
COMPARATIVE EXPENSE TABLE
The following table provides data concerning the fund's management
fees and expenses as a percentage of average net assets for the fiscal
year ended April 30, 1998 under the Present Contract and if the
Amended Contract had been in effect during the same period.
The following figures are based on historical expenses adjusted to
reflect current fees and are calculated as a percentage of average net
assets.
Present Contract* Amended Contract*
Management Fee 0.80% 0.59%
Rule 12b-1 Fee none none
Other Expenses 0.00% 0.16%
Total Operating Expenses 0.80% 0.75%
* Under the Present Contract, FMR pays substantially all fund expenses
from the 0.80% management fee it receives from the fund. Under the
Amended Contract, FMR is not responsible for paying the fund's
expenses; the fund pays its operating expenses separately from the
management fee. See "Modification of Management Fee Structure" on page
for more details.
Example: The following illustrates the expenses on a $1,000
investment under the fees and expenses stated above, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Present Contract $8 $26 $44 $99
Amended Contract $8 $24 $42 $93
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of
the fund. The example above should not be considered a representation
of past or future expenses of the fund. Actual expenses may vary from
year to year and may be higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
EFFECTIVE DATE OF AMENDED CONTRACT. If approved by shareholders, the
Amended Contract will take effect on May 1, 1999 (or, if later, the
first day of the first month following approval) and will remain in
effect through June 30, 1999 and thereafter, but only as long as its
continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the
Independent Trustees and (ii) the vote of either a majority of the
Trustees or a majority of the outstanding shares of the fund. If the
Amended Contract is not approved, the Present Contract will continue
in effect through June 30, 1999, and thereafter only as long as its
continuance is approved at least annually as above. A copy of the form
of Amended Contract, marked to indicate the proposed amendments, is
supplied as Exhibit 4 on page . Except for the material
modifications discussed in this proposal, the Amended Contract is
substantially the same as the Present Contract. (For a detailed
discussion of the fund's Present Contract, refer to the section
entitled "Present Management Contract of Fidelity High Income Fund"
beginning on page 49 .)
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees, on September 17, 1998. The Board of Trustees
received materials relating to the Amended Contract in advance of the
meeting at which the Amended Contract was considered, and had the
opportunity to ask questions and request further information in
connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings, the Trustees received materials specifically relating
to the Amended Contract. These materials included (i) information on
the investment performance of the fund, a peer group of funds, and an
appropriate index or combination of indices, (ii) sales and redemption
data in respect of the fund, (iii) the economic outlook and the
general investment outlook in the markets in which the fund invests,
and (iv) notable changes in the fund's investments. The Board of
Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of the fund's shares, (3)
the procedures employed to determine the value of the fund's assets,
(4) the allocation of the fund's brokerage, if any, including
allocations to brokers affiliated with FMR, (5) FMR's management of
the relationships with the fund's custodian and subcustodians, (6) the
resources devoted to and the record of compliance with the fund's
investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost and character of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the choice of performance indices and benchmarks, (c) the
composition of peer groups of funds, (d) transfer agency and
bookkeeping fees paid to affiliates of FMR, (e) investment
performance, (f) investment management staffing, (g) the potential for
achieving further economies of scale, (h) operating expenses paid to
third parties, and (i) the information furnished to investors,
including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustee considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees review at least annually the background of the
fund's portfolio manager and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations and the
senior management of Fidelity's fixed-income group. Among other things
they considered the size, education and experience of FMR's investment
staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory
and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the Amended
Contract and under separate agreements covering transfer agency
functions and pricing, bookkeeping and securities lending services, if
any. The Board of Trustees and the Independent Trustees have also
considered the nature and extent of FMR's supervision of third party
service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefited from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
that the proposed modifications to the management fee structure, that
is the implementation of the Group Fee Rate structure and the proposed
modification to the Present Contract's amendment provisions, are in
the best interest of the fund's shareholders. The Board of Trustees,
including the Independent Trustees, voted to approve the submission of
the Amended Contract to shareholders of the fund and recommends that
shareholders of the fund vote FOR the Amended Contract. If approved,
the Amended Contract will take effect on the first day of the first
month following shareholder approval.
7. TO APPROVE AN AMENDED SUB-ADVISORY AGREEMENT WITH FMR U.K. FOR
FIDELITY INVESTMENT GRADE BOND FUND, FIDELITY SHORT-TERM BOND FUND,
AND FIDELITY HIGH INCOME FUND.
In conjunction with its portfolio management responsibilities on
behalf of each fund, FMR has entered into sub-advisory agreements with
affiliates whose offices are geographically dispersed around the
world. To strengthen these relationships, the Board of Trustees
proposes that shareholders of each fund approve an amended
sub-advisory agreement (the Proposed Agreement) between FMR U.K. and
FMR on behalf of each fund to replace FMR's existing agreement with
FMR U.K. The Proposed Agreement would allow FMR not only to receive
investment advice and research services from FMR U.K., but also would
permit FMR to grant FMR U.K. investment management authority if FMR
believes it would be beneficial to each fund and its shareholders. In
addition, the Proposed Agreement would allow FMR, FMR U.K., and the
trust, on behalf of each fund, to modify the Proposed Agreement
subject to the requirements of the 1940 Act. The existing sub-advisory
agreement currently in effect with FMR U.K. requires the vote of a
majority of each fund's outstanding voting securities to authorize all
amendments. Because FMR pays all of FMR U.K.'s fees, the Proposed
Agreement would not affect the fees paid by each fund to FMR.
On September 17, 1998, the Board of Trustees agreed to submit the
Proposed Agreement to shareholders of each fund pursuant to a
unanimous vote of both the full Board of Trustees and those Trustees
who were not "interested persons" of the trust or FMR. FMR provided
substantial information to the Trustees to assist them in their
deliberations. The Trustees determined that allowing FMR to grant
investment management authority to FMR U.K. would provide FMR
increased flexibility in the assignment of portfolio managers and give
each fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders
may benefit from giving FMR, through FMR U.K., the ability to execute
portfolio transactions from points in Europe that are physically
closer to foreign issuers and the primary markets in which their
securities are traded. Increasing FMR's proximity to foreign markets
should enable each fund to participate more readily in full trading
sessions on foreign exchanges, and to react more quickly to changing
market conditions. With regard to the proposed modification to the
existing sub-advisory agreement's amendment provisions, the Trustees
considered the benefit to shareholders of FMR's, FMR U.K.'s, and the
trust's increased flexibility (within 1940 Act constraints) to amend
the agreement without the delays and potential costs of a proxy
solicitation.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR U.K. with respect
to each fund (the Current Agreement). The Current Agreement, dated
November 1, 1989, (Fidelity Investment Grade Bond Fund and Fidelity
Short-Term Bond Fund) and November 1, 1993 (Fidelity High Income Fund)
was approved by each fund's shareholders on October 18, 1989 (Fidelity
Investment Grade Bond Fund and Fidelity Short-Term Bond Fund) and
October 20, 1993 (Fidelity High Income Fund). A copy of the form of
Proposed Agreement is attached to this Proxy Statement as Exhibit 5.
FMR U.K., with its principal office in London, England, is a
wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This
research complements other research on foreign securities produced by
FMR's U.S.-based research analysts and portfolio managers, or obtained
from broker-dealers or other sources.
FMR U.K. may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FMR U.K.'s only
client other than FMR is Fidelity International Limited (FIL), an
affiliate of FMR organized under the laws of Bermuda. FIL provides
investment advisory services to non-U.S. investment companies and
institutional investors investing in securities of issuers throughout
the world. Edward C. Johnson 3d, President and a Trustee of the trust,
is Chairman and a Director of FMR U.K., Chairman and a Director of
FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR U.K., see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page 50 .
Under the Current Agreement, FMR U.K. acts as an investment
consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests
on behalf of each fund. FMR U.K. provides investment advice and
research services with respect to issuers located outside of the
United States, focusing primarily on companies based in Europe. Under
the Current Agreement with FMR U.K., FMR, NOT EACH FUND, pays FMR
U.K.'s fee equal to 110% of its costs incurred in connection with the
agreement.
For the fiscal year ended April 30, 1998, no fees were paid by FMR to
FMR U.K. on behalf of the funds.
Under the Current Agreement, FMR U.K. has no authority to make
investment decisions on behalf of the funds. Under the Proposed
Agreement, FMR would continue to receive investment advice from FMR
U.K., but it could also grant investment management authority to FMR
U.K. with respect to all or a portion of each fund's assets. If FMR
U.K. were to exercise investment management authority on behalf of the
fund, it would be required, subject to the supervision of FMR, to
direct the investments of the fund in accordance with the fund's
investment objective, policies, and limitations as provided in each
fund's Prospectus or other governing instruments and such other
limitations as each fund may impose by notice in writing to FMR or FMR
U.K. If FMR grants investment management authority to FMR U.K. with
respect to all or a portion of the fund's assets, FMR U.K. would be
authorized to buy or sell stocks, bonds, and other securities for the
fund subject to the overall supervision of FMR and the Board of
Trustees. In addition, the Proposed Agreement would authorize FMR to
delegate other investment management services to FMR U.K., including,
but not limited to, currency management services (including buying and
selling currency options and entering into currency forward and
futures contracts on behalf of each fund), other transactions in
futures contracts and options, and borrowing or lending portfolio
securities. If any of these investment management services were
delegated, FMR U.K. would continue to be subject to the control and
direction of FMR and the Board of Trustees and to be bound by the
investment objective, policies, and limitations of each fund.
The Proposed Agreement would also allow FMR, FMR U.K., and the trust,
on behalf of each fund, to amend the Proposed Agreement subject to the
provisions of Section 15 of the 1940 Act, as modified or interpreted
by the Securities and Exchange Commission. In contrast, the Current
Agreement explicitly requires the vote of a majority of the
outstanding voting securities of each fund to authorize all
amendments. Generally, the proposed modification to the Current
Agreement's amendment provisions would allow amendment of the
sub-advisory agreement without shareholder vote ONLY IF THE 1940 ACT
SO PERMITS. In short, the proposed modification gives FMR, FMR U.K.,
and the trust added flexibility to amend the sub-advisory agreement
subject to 1940 Act constraints. Of course, any future amendments to
the sub-advisory agreement would require the approval of the Board of
Trustees.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY
EACH FUND. The fees paid by FMR to FMR U.K. for investment advice as
described above would remain unchanged. However, to the extent that
FMR granted investment management authority to FMR U.K., FMR would pay
FMR U.K. 50% of its monthly management fee with respect to the average
net assets managed on a discretionary basis by FMR U.K. for investment
management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following approval and would
continue in force until June 30, 1999 and from year to year
thereafter, but only as long as its continuance was approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of those Trustees who are not "interested
persons" of the trust or FMR and (ii) the vote of either a majority of
the Trustees or a majority of the outstanding shares of each fund.
The Proposed Agreement could be transferred to a successor of FMR
U.K. without resulting in its termination and without shareholder
approval, as long as the transfer did not constitute an assignment
under applicable securities regulations. The Proposed Agreement would
be terminable on 60 days' written notice by either party to the
agreement and the Proposed Agreement would terminate automatically in
the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. With respect to each fund, if the Proposed
Agreement is approved by shareholders, the Proposed Agreement will
take effect on the first day of the first month following approval.
With respect to each fund, if the Proposed Agreement is not approved,
FMR will continue to manage that fund under its current Management
Contract and the Current Agreement with FMR U.K. will remain in
effect.
8. TO APPROVE AN AMENDED SUB-ADVISORY AGREEMENT WITH FMR FAR EAST FOR
FIDELITY INVESTMENT GRADE BOND FUND, FIDELITY SHORT-TERM BOND FUND,
AND FIDELITY HIGH INCOME FUND.
In conjunction with its portfolio management responsibilities on
behalf of each fund, FMR has entered into sub-advisory agreements with
affiliates whose offices are geographically dispersed around the
world. To strengthen these relationships, the Board of Trustees
proposes that shareholders of each fund approve an amended
sub-advisory agreement (the Proposed Agreement) between FMR Far East
and FMR on behalf of each fund to replace FMR's existing agreement
with FMR Far East. The Proposed Agreement would allow FMR not only to
receive investment advice and research services from FMR Far East, but
also would permit FMR to grant FMR Far East investment management
authority if FMR believes it would be beneficial to each fund and its
shareholders. In addition, the Proposed Agreement would allow FMR, FMR
Far East, and the trust, on behalf of each fund, to modify the
Proposed Agreement subject to the requirements of the 1940 Act. The
existing sub-advisory agreement currently in effect with FMR Far East
requires the vote of a majority of each fund's outstanding voting
securities to authorize all amendments. Because FMR pays all of FMR
Far East's fees, the Proposed Agreement would not affect the fees paid
by each fund to FMR.
On September 17, 1998, the Board of Trustees agreed to submit the
Proposed Agreement to shareholders of each fund pursuant to a
unanimous vote of both the full Board of Trustees and those Trustees
who were not "interested persons" of the trust or FMR. FMR provided
substantial information to the Trustees to assist them in their
deliberations. The Trustees determined that allowing FMR to grant
investment management authority to FMR Far East would provide FMR
increased flexibility in the assignment of portfolio managers and give
each fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders
may benefit from giving FMR, through FMR Far East, the ability to
execute portfolio transactions from points in the Far East that are
physically closer to foreign issuers and the primary markets in which
their securities are traded. Increasing FMR's proximity to foreign
markets should enable each fund to participate more readily in full
trading sessions on foreign exchanges and to react more quickly to
changing market conditions. With regard to the proposed modification
to the existing sub-advisory agreement's amendment provisions, the
Trustees considered the benefit to shareholders of FMR's, FMR Far
East's, and the trust's increased flexibility (within 1940 Act
constraints) to amend the agreement without the delays and potential
costs of a proxy solicitation.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR Far East with
respect to each fund (the Current Agreement). The Current Agreement,
dated November 1, 1989 (Fidelity Investment Grade Bond Fund and
Fidelity Short-Term Bond Fund) and November 1, 1993 (Fidelity High
Income Fund), was approved by each fund's shareholders on October 18,
1989 (Fidelity Investment Grade Bond Fund and Fidelity Short-Term Bond
Fund) and October 20, 1993 (Fidelity High Income Fund). A copy of the
form of Proposed Agreement is attached to this Proxy Statement as
Exhibit 6.
FMR Far East, with its principal office in Tokyo, Japan, is a
wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This
research complements other research on foreign securities produced by
FMR's U.S.-based research analysts and portfolio managers, or obtained
from broker-dealers or other sources.
FMR Far East may also provide investment advisory services to FMR
with respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FMR Far East's
only client other than FMR is Fidelity International Limited (FIL), an
affiliate of FMR organized under the laws of Bermuda. FIL provides
investment advisory services to non-U.S. investment companies and
institutional investors investing in securities of issuers throughout
the world. Edward C. Johnson 3d, President and a Trustee of the trust,
is Chairman and a Director of FMR Far East, Chairman and a Director of
FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR Far East, see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page 52 .
Under the Current Agreement, FMR Far East acts as an investment
consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests
on behalf of each fund. FMR Far East provides investment advice and
research services with respect to issuers located outside of the
United States, focusing primarily on companies based in the Far East.
Under the current Agreement with FMR Far East, FMR, NOT EACH FUND,
pays FMR Far East's fee equal to 105% of its costs incurred in
connection with the agreement.
For the fiscal year ended April 30, 1998, no fees were paid by FMR to
FMR Far East on behalf of the funds.
Under the Current Agreement, FMR Far East has no authority to make
investment decisions on behalf of the funds. Under the Proposed
Agreement, FMR would continue to receive investment advice from FMR
Far East, but it could also grant investment management authority to
FMR Far East with respect to all or a portion of each fund's assets.
If FMR Far East were to exercise investment management authority on
behalf of the fund, it would be required, subject to the supervision
of FMR, to direct the investments of the fund in accordance with the
fund's investment objective, policies, and limitations as provided in
each fund's Prospectus or other governing instruments and such other
limitations as each fund may impose by notice in writing to FMR or FMR
Far East. If FMR grants investment management authority to FMR Far
East with respect to all or a portion of the fund's assets, FMR Far
East would be authorized to buy or sell stocks, bonds, and other
securities for the fund subject to the overall supervision of FMR and
the Board of Trustees. In addition, the Proposed Agreement would
authorize FMR to delegate other investment management services to FMR
Far East, including, but not limited to, currency management services
(including buying and selling currency options and entering into
currency forward and futures contracts on behalf of each fund), other
transactions in futures contracts and options, and borrowing or
lending portfolio securities. If any of these investment management
services were delegated, FMR Far East would continue to be subject to
the control and direction of FMR and the Board of Trustees and to be
bound by the investment objective, policies, and limitations of each
fund.
The Proposed Agreement would also allow FMR, FMR Far East, and the
trust, on behalf of each fund, to amend the Proposed Agreement subject
to the provisions of Section 15 of the 1940 Act, as modified or
interpreted by the Securities and Exchange Commission. In contrast,
the Current Agreement explicitly requires the vote of a majority of
the outstanding voting securities of each fund to authorize all
amendments. Generally, the proposed modification to the Current
Agreement's amendment provisions would allow amendment of the
sub-advisory agreement without shareholder vote ONLY IF THE 1940 ACT
SO PERMITS. In short, the proposed modification gives FMR, FMR Far
East, and the trust added flexibility to amend the sub-advisory
agreement subject to 1940 Act constraints. Of course, any future
amendments to the sub-advisory agreement would require the approval of
the Board of Trustees.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY
EACH FUND. The fees paid by FMR to FMR Far East for investment advice
as described above would remain unchanged. However, to the extent that
FMR granted investment management authority to FMR Far East, FMR would
pay FMR Far East 50% of its monthly management fee with respect to the
average net assets managed on a discretionary basis by FMR Far East
for investment management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following approval and would
continue in force until June 30, 1999 and from year to year
thereafter, but only as long as its continuance was approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of those Trustees who are not "interested
persons" of the trust or FMR and (ii) the vote of either a majority of
the Trustees or a majority of the outstanding shares of each fund.
The Proposed Agreement could be transferred to a successor of FMR Far
East without resulting in its termination and without shareholder
approval, as long as the transfer did not constitute an assignment
under applicable securities regulations. The Proposed Agreement would
be terminable on 60 days' written notice by either party to the
agreement and the Proposed Agreement would terminate automatically in
the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. With respect to each fund, if the Proposed
Agreement is approved by shareholders, the Proposed Agreement will
take effect on the first day of the first month following approval.
With respect to each fund, if the Proposed Agreement is not approved,
FMR will continue to manage that fund under its current Management
Contract and the Current Agreement with FMR Far East will remain in
effect.
9. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF FIDELITY
INVESTMENT GRADE BOND FUND.
The Board of Trustees has approved, and recommends that shareholders
of the fund approve, a proposal that would eliminate certain
fundamental investment policies from the fund's investment objective.
The elimination of these policies will allow the fund to more clearly
communicate its investment objective and strategies in conformity with
the requirements of revised Form N-1A (the form used by open-end
investment companies like the fund to register under the Investment
Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material
e ffect on the investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment
objective, including certain related investment policies describing
investment strategies, currently reads as follows:
"The fund 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."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (additional language is ((underlined))
and deleted language is [bracketed]):
"The fund seeks [to provide] a high [rate] ((level)) of ((current))
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]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective would be eliminated from the objective. The
eliminated policies are currently described elsewhere in the fund's
disclosure. ELIMINATING THE POLICIES FROM THE FUND'S INVESTMENT
OBJECTIVE IS NOT EXPECTED TO MATERIALLY AFFECT THE INVESTMENT
STRATEGIES OR PERFORMANCE OF THE FUND. Eliminating the policies
from the fund's investment objective also will allow the fund
to comply with the requirements of revised Form N-1A for concise,
understandable descriptions of its investment objective and policies,
and will allow the fund to more clearly communicate its investment
objective and strategies to shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will
benefit the fund and its shareholders. The Trustees recommend voting
FOR the proposal. If approved by shareholders, the elimination of the
policies will become effective when disclosure is revised to reflect
the changes. If the proposal is not approved by the fund's
shareholders, the fund's current fundamental investment policies will
remain unchanged.
10. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF SHORT-TERM
BOND FUND.
The Board of Trustees has approved, and recommends that shareholders
of the fund approve, a proposal that would eliminate certain
fundamental investment policies from the fund's investment objective.
The elimination of these policies will allow the fund to more clearly
communicate its investment objective and strategies in conformity with
the requirements of revised Form N-1A (the form used by open-end
investment companies like the fund to register under the Investment
Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material
e ffect on the investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment
objective, including certain related investment policies describing
investment strategies, currently reads as follows:
"The fund 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."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (deleted language is [bracketed]):
"The fund 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]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective (i.e., "by investing primarily in a broad range
of fixed-income securities") would be eliminated from the objective.
The eliminated policies are currently described elsewhere in the
fund's disclosure. ELIMINATING THE POLICIES FROM THE FUND'S
INVESTMENT OBJECTIVE IS NOT EXPECTED TO MATERIALLY AFFECT THE
INVESTMENT STRATEGIES OR PERFORMANCE OF THE FUND. Eliminating the
policies from the fund's investment objective also will allow
the fund to comply with the requirements of revised Form N-1A for
concise, understandable descriptions of its investment objective and
policies, and will allow the fund to more clearly communicate its
investment objective and strategies to shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will
benefit the fund and its shareholders. The Trustees recommend voting
FOR the proposal. If approved by shareholders, the elimination of the
policies will become effective when disclosure is revised to reflect
the changes. If the proposal is not approved by the fund's
shareholders, the fund's current fundamental investment policies will
remain unchanged.
11. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF SPARTAN
GOVERNMENT INCOME FUND.
The Board of Trustees has approved, and recommends that shareholders
of the fund approve, a proposal that would eliminate certain
fundamental investment policies from the fund's investment objective.
The elimination of these policies will allow the fund to more clearly
communicate its investment objective and strategies in conformity with
the requirements of revised Form N-1A (the form used by open-end
investment companies like the fund to register under the Investment
Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material
e ffect on the investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment
objective, including certain related investment policies describing
investment strategies, currently reads as follows:
"The fund seeks a high level of current income by investing
principally in U.S. Government securities (securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities)."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (deleted language is [bracketed]):
"The fund seeks a high level of current income [by investing
principally in U.S. Government securities (securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities)]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective (i.e., "by investing principally in U.S.
Government securities (securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities)") would be eliminated
from the objective. The eliminated policies are currently described
elsewhere in the fund's disclosure. ELIMINATING THE POLICIES FROM
THE FUND'S INVESTMENT OBJECTIVE IS NOT EXPECTED TO MATERIALLY AFFECT
THE INVESTMENT STRATEGIES OR PERFORMANCE OF THE FUND. Eliminating
the policies from the fund's investment objective also will
allow the fund to comply with the requirements of revised Form N-1A
for concise, understandable descriptions of its investment objective
and policies, and will allow the fund to more clearly communicate its
investment objective and strategies to shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will
benefit the fund and its shareholders. The Trustees recommend voting
FOR the proposal. If approved by shareholders, the elimination of the
policies will become effective when disclosure is revised to reflect
the changes. If the proposal is not approved by the fund's
shareholders, the fund's current fundamental investment policies will
remain unchanged.
12. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF FIDELITY
HIGH INCOME FUND.
The Board of Trustees has approved, and recommends that shareholders
of the fund approve, a proposal that would eliminate certain
fundamental investment policies from the fund's investment objective.
The elimination of these policies will allow the fund to more clearly
communicate its investment objective and strategies in conformity with
the requirements of revised Form N-1A (the form used by open-end
investment companies like the fund to register under the Investment
Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material
e ffect on the investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment
objective, including certain related investment policies describing
investment strategies, currently reads as follows:
"The fund seeks a high level of current income by investing primarily
in high-yielding, fixed-income securities. In pursuing this objective,
growth of capital may also be considered when consistent with the
fund's objective of seeking high current income."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (additional language is ((underlined))
and deleted language is [bracketed]):
"The fund seeks a high level of current income((.)) [by investing
primarily in high-yielding, fixed-income securities. In pursuing this
objective,] [g]((G))rowth of capital may also be considered [when
consistent with the fund's objective of seeking high current income]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective (i.e., "by investing primarily in high-yielding,
fixed-income securities" and "when consistent with the fund's
objective of seeking high current income") would be eliminated from
the objective. The eliminated policies are currently described
elsewhere in the fund's disclosure. ELIMINATING THE POLICIES FROM
THE FUND'S INVESTMENT OBJECTIVE IS NOT EXPECTED TO MATERIALLY AFFECT
THE INVESTMENT STRATEGIES OR PERFORMANCE OF THE FUND. Eliminating
the policies from the fund's investment objective also will
allow the fund to comply with the requirements of revised Form N-1A
for concise, understandable descriptions of its investment objective
and policies, and will allow the fund to more clearly communicate its
investment objective - and its secondary objective, growth of
capital - and strategies to shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will
benefit the fund and its shareholders. The Trustees recommend voting
FOR the proposal. If approved by shareholders, the elimination of the
policies will become effective when disclosure is revised to reflect
the changes. If the proposal is not approved by the fund's
shareholders, the fund's current fundamental investment policies will
remain unchanged.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 1 3 through 16 is to revise
several of the funds' investment limitations to conform to limitations
which are standard for similar types of funds managed by FMR. The
Board of Trustees asked FMR to analyze the various fundamental and
non-fundamental investment limitations of the Fidelity funds, and,
where practical and appropriate to a fund's investment objective and
policies, propose to shareholders adoption of standard fundamental
limitations and elimination of certain other fundamental limitations.
Generally, when fundamental limitations are eliminated, Fidelity's
standard non-fundamental limitations replace them. By making these
limitations non-fundamental, the Board of Trustees may amend a
limitation as they deem appropriate, without seeking shareholder
approval. The Board of Trustees would amend the limitations to
respond, for instance, to developments in the marketplace, or changes
in federal or state law. The costs of shareholder meetings called for
these purposes are generally borne by a fund and its shareholders.
It is not anticipated that these proposals will substantially affect
the way a fund is currently managed. However, FMR is presenting them
to you for your approval because FMR believes that increased
standardization will help to promote operational efficiencies and
facilitate monitoring of compliance with fundamental and
non-fundamental investment limitations. Although adoption of a new or
revised limitation is not likely to have any impact on the current
investment techniques employed by a fund, it will contribute to the
overall objectives of standardization.
13. TO AMEND SPARTAN GOVERNMENT INCOME FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING REAL ESTATE.
The fund's fundamental investment limitation concerning real estate
currently states:
"The fund may not purchase or sell real estate unless acquired as a
result of ownership of securities (but this shall not prevent the fund
from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate
business)."
The Trustees recommend that shareholders of the fund vote to replace
this fundamental investment limitation with the following fundamental
investment limitation governing purchases and sales of real estate
(additional language is ((underlined))):
"The fund may not purchase or sell real estate unless acquired as a
result of ownership of securities ((or other instruments)) (but this
shall not prevent the fund from investing in securities or other
instruments backed by real estate or securities of companies engaged
in the real estate business)."
The primary purpose of the proposed amendment is to clarify the types
of securities in which the fund is authorized to invest and to conform
the fund's fundamental real estate limitation to a limitation that is
expected to become standard for all funds managed by FMR. (See
"Adoption of Standardized Investment Limitations" on page .) If
the proposal is approved, the new fundamental real estate limitation
may not be changed without the approval of shareholders.
Adoption of the proposed limitation concerning real estate is not
expected to significantly affect the way in which the fund is managed,
the investment performance of the fund, or the securities or
instruments in which the fund invests. However, to the extent that the
fund invests to a greater extent in real estate related securities, it
will be subject to the risks of the real estate market. This industry
is sensitive to factors such as changes in real estate values and
property taxes, overbuilding, variations in rental income, and
interest rates. Performance could also be affected by the structure,
cash flow, and management skill of real estate companies.
The fund does not expect to acquire real estate. However, the
proposed limitation would clarify several points. First, the proposed
limitation would make explicit that the fund may acquire a security or
other instrument that is secured by a mortgage or other right to
foreclose on real estate, in the event of a default. Any investments
in these securities or other instruments are, of course, subject to
the fund's investment objective and policies and to other limitations
regarding diversification and concentration in particular industries.
Also, the proposed limitation specifically permits the fund to sell
real estate acquired as a result of ownership of securities or other
instruments. However, in light of the types of securities in which the
fund regularly invests, FMR considers this to be a remote possibility.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the amended
fundamental limitation will become effective when disclosure is
revised to reflect the changes. If the proposal is not approved by the
shareholders of the fund, the fund's current limitation will remain
unchanged.
14. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION TO EXCLUDE "SECURITIES OF OTHER INVESTMENT COMPANIES"
FROM THE LIMITATION FOR EACH FUND.
Fidelity Investment Grade Bond Fund's, Fidelity Short-Term Bond
Fund's, and Spartan Short-Intermediate Government Fund's current
fundamental investment limitation concerning diversification is as
follows:
"The fund may not with respect to 75% of the fund's total assets,
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, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer."
The Trustees recommend that shareholders of Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, and Spartan
Short-Intermediate Government Fund vote to replace each fund's current
fundamental investment limitation with the following amended
fundamental investment limitation governing diversification
(additional language is ((underlined)) and deleted language is
[bracketed]):
"The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. [g]((G))overnment or any of its agencies or
instrumentalities((, or securities of other investment companies)))
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer."
Spartan Government Income Fund's and Fidelity High Income Fund's
current fundamental investment limitation concerning diversification
is as follows:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United
States or its agencies or instrumentalities) if, as a result, (a) more
than 25% of the value of its total assets would be invested in the
securities of a single issuer, or (b) with respect to 75% of its total
assets, more than 5% of the value of its total assets would be
invested in the securities of a single issuer."
The Trustees recommend that shareholders of Spartan Government Income
Fund and Fidelity High Income Fund vote to replace each fund's current
fundamental investment limitation with the following amended
fundamental investment limitation governing diversification
(additional language is ((underlined)) and deleted language is
[bracketed]):
"The fund may not ((with respect to 75% of the fund's total assets,))
purchase the securities of any issuer (other than [obligations]
((securities)) issued or guaranteed by the [government of the United
States] ((U.S. Government)) or ((any of)) its agencies or
instrumentalities((, or securities of other investment companies)))
if, as a result, (a) more than [25%] ((5%)) of the [value of its]
((fund's)) total assets would be invested in the securities of [a
single] ((that)) issuer, or (b) [with respect to 75% of its total
assets, more than 5% of the value of its total assets would be
invested in] the ((fund would hold more than 10% of the outstanding
voting)) securities of [a single] ((that)) issuer."
The percentage limits in the proposed fundamental limitation
concerning diversification are the percentage limitations imposed by
the 1940 Act for diversified investment companies.
For Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond
Fund, Spartan Short-Intermediate Government Fund, Spartan Government
Income Fund, and Fidelity High Income Fund, the amended fundamental
diversification limitation makes the following change from the current
limitation: subject to applicable 1940 Act requirements, it would
permit each fund to invest without limit in the securities of other
investment companies. Pursuant to an order of exemption granted by the
SEC, each fund may invest up to 25% of total assets in non-publicly
offered money market or short-term bond funds (the Central Funds)
managed by FMR or an affiliate of FMR. The Central Funds do not
currently pay investment advisory, management, or transfer agent fees,
but do pay minimal fees for services, such as custodian, auditor, and
Independent Trustees fees. FMR anticipates that making use of the
Central Funds will benefit each fund by enhancing the efficiency of
cash management and by providing increased short-term investment
opportunities. If the proposal is approved, the Central Funds are
expected to serve as a principal option for cash investment for each
fund.
In addition, for Spartan Government Income Fund and Fidelity High
Income Fund, the amended fundamental diversification limitation makes
the following change from the current limitation: it would allow each
fund, with respect to 25% of its total assets, to hold more than 10%
of the voting securities of any issuer. Each fund will continue to be
required to invest 75% of its total assets so that no more than 5% of
total assets are invested in any one issuer and will now be required
to invest 75% of its total assets so that it owns no more than 10% of
the voting securities of any such issuer. FMR does not expect that
approval of this proposal will materially affect the way in which a
fund is managed with regard to the fund's holding more than 10% of the
voting securities of an issuer. Currently, each fund has a
non-fundamental investment limitation that requires it to invest 75%
of its total assets so that it owns no more than 10% of the voting
securities of any one issuer.
If this proposal is approved, the amended fundamental diversification
limitation cannot be changed without the approval of the shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit each fund and its shareholders. The Trustees
recommend voting FOR the proposal. The amended fundamental
diversification limitation, upon shareholder approval, will become
effective when disclosure is revised to reflect the changes. If the
proposal is not approved by the shareholders of a fund, that fund's
current fundamental diversification limitation will remain unchanged.
15. TO AMEND FIDELITY SHORT-TERM BOND FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING UNDERWRITING.
The fund's current fundamental investment limitation concerning
underwriting states:
"The fund may not underwrite securities issued by others, except to
the extent that the sale of restricted securities or the purchase of
bonds in accordance with the fund's investment objective, policies,
and limitations, either directly from the issuer, or from an
underwriter for an issuer, may be deemed to be underwriting."
The trustees recommend that shareholders of the fund vote to replace
this limitation with the following fundamental limitation governing
underwriting (additional language is ((underlined)) and deleted
language is [bracketed]):
"The fund may not underwrite securities issued by others, except to
the extent that the [sale of restricted securities or the purchase of
bonds in accordance with the fund's investment objective, policies,
and limitations, either directly from the issuer, or from an
underwriter for an issuer, may be deemed to be underwriting] ((fund
may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities."))
The primary purpose of the proposed amendment is to clarify the
fund's fundamental policy with respect to underwriting. The proposal
also serves to conform the fund's fundamental investment limitation
concerning underwriting to a limitation which is expected to become
standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page .) If the proposal is approved,
the new limitation may not be changed without the approval of
shareholders.
Adoption of the proposed limitation concerning underwriting is
not expected to affect the way in which the fund is managed, the
investment performance of the fund, or the securities or instruments
in which the fund invests.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the amended
fundamental limitation will become effective when disclosure is
revised to reflect the changes. If the proposal is not approved by the
shareholders of the fund, the fund's current limitation will remain
unchanged.
16. TO AMEND EACH OF FIDELITY SHORT-TERM BOND FUND'S AND FIDELITY HIGH
INCOME FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING THE
CONCENTRATION OF ITS INVESTMENTS IN A SINGLE INDUSTRY.
Fidelity Short-Term Bond Fund's current fundamental investment
limitation concerning the concentration of its investments within a
single industry states:
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or its agencies
or instrumentalities) if, as a result, more than 25% of the value of
its total assets would be invested in securities of companies having
their principal business activities in the same industry."
The Trustees recommend that shareholders of Fidelity Short-Term Bond
Fund vote to replace this fundamental investment limitation with the
following amended fundamental investment limitation governing
concentration (additional language is ((underlined)) and deleted
language is [bracketed]):
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. [g]((G))overnment or ((any
of)) its agencies or instrumentalities) if, as a result, more than 25%
of the [value of its] ((fund's)) total assets would be invested in
((the)) securities of companies [having their] ((whose)) principal
business activities ((are)) in the same industry."
Fidelity High Income Fund's current fundamental investment limitation
concerning the concentration of its investments within a single
industry states:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United
States or its agencies or instrumentalities) if, as a result, more
than 25% of the fund's total assets (taken at current value) would be
invested in the securities of issuers having their principal business
activities in the same industry."
The Trustees recommend that shareholders of Fidelity High Income Fund
vote to replace this fundamental investment limitation with the
following amended fundamental investment limitation governing
concentration (additional language is ((underlined)) and deleted
language is [bracketed]):
"The fund may not purchase the securities of any issuer (other than
[obligations] ((securities)) issued or guaranteed by the [government
of the United States] ((U.S. Government)) or ((any of)) its agencies
or instrumentalities) if, as a result, more than 25% of the fund's
total assets [(taken at current value)] would be invested in the
securities of [issuers having their] ((companies whose)) principal
business activities ((are)) in the same industry."
The primary purpose of the proposal is to revise each fund's
fundamental concentration limitation to conform to a limitation which
is expected to become standard for all funds managed by FMR. (See
"Adoption of Standardized Investment Limitations" on page .) If
the proposal is approved, the new fundamental concentration limitation
could not be changed without the approval of shareholders.
Adoption of the proposed amended limitation on concentration is not
expected to affect the way each fund is managed, the investment
performance of each fund, or the securities or instruments in which
each fund invests.
The proposed amended limitation is not substantially different from
the current policy and is not likely to have any impact on the
investment techniques employed by each fund.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund And its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the amended
fundamental limitation will become effective when disclosure is
revised to reflect the changes. If the proposal is not approved by the
shareholders of a fund, that fund's current limitation will remain
unchanged.
OTHER BUSINESS
In addition to Proposals 1, 2, 3, 4 and 14 included in this Proxy
Statement, shareholders of Spartan Short-Intermediate Government Fund
will be asked at the Meeting to vote on an additional item: the
proposed merger of Spartan Short-Intermediate Government Fund into
Fidelity Intermediate Government Income Fund (the Reorganization). The
Reorganization is explained in detail in a separate proxy
statement/prospectus (the Proxy/Prospectus) mailed with this Proxy
Statement to Spartan Short-Intermediate Government Fund shareholders.
If Spartan Short-Intermediate Government Fund shareholders approve the
Reorganization, the fund would cease to exist on the Closing Date
(defined below) and shareholders of Spartan Short-Intermediate
Government Fund would become shareholders of Fidelity Intermediate
Government Income Fund. If the Reorganization is not approved, Spartan
Short-Intermediate Government Fund will continue as a series of
Fidelity Fixed-Income Trust and will be subject to any changes
resulting from the approval of Proposals 1, 2, 3, 4 and 14.
The following paragraphs summarize certain information contained in
the Proxy/Prospectus.
THE PROPOSED REORGANIZATION. Shareholders of Spartan
Short-Intermediate Government Fund will be asked at the Meeting to
vote upon and approve the Reorganization and the Agreement and
Plan of Reorganization, which provides for the acquisition by Fidelity
Intermediate Government Income Fund of all of the assets of Spartan
Short-Intermediate Government Fund in exchange solely for shares of
Fidelity Intermediate Government Income Fund and the assumption by
Fidelity Intermediate Government Income Fund of the liabilities of
Spartan Short-Intermediate Government Fund. Spartan Short-Intermediate
Government Fund will then distribute the shares of Fidelity
Intermediate Government Income Fund to its shareholders, so that each
shareholder will receive the number of full and fractional shares of
Fidelity Intermediate Government Income Fund equal in value to the
aggregate net asset value of the shareholder's shares of Spartan
Short-Intermediate Government Fund on the Closing Date (defined
below). The exchange of Spartan Short-Intermediate Government Fund's
assets for Fidelity Intermediate Government Income Fund's shares will
occur as of the close of business of the New York Stock Exchange
(NYSE) on April 22, 1999, or such other time and date as the parties
may agree (the Closing Date). Spartan Short-Intermediate Government
Fund will then be liquidated as soon as practicable thereafter.
Spartan Short-Intermediate Government Fund has received an opinion of
counsel that the Reorganization will not result in any gain or loss
for federal income tax purposes to Spartan Short-Intermediate
Government Fund or to its shareholders. The rights and privileges of
the former shareholders of Spartan Short-Intermediate Government Fund
will be effectively unchanged by the Reorganization, except as
described under the heading "Forms of Organization" in the Proxy
/Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. Spartan Short-Intermediate
Government Fund and Fidelity Intermediate Government Income Fund have
substantially similar investment objectives: to seek a high level of
current income as is consistent with the preservation of capital. The
funds invest only in U.S. Government securities, repurchase agreements
and other instruments related to U.S. Government securities under
normal conditions. FMR, the funds' investment adviser, normally
invests at least 65% of each fund's total assets in U.S. Government
securities and in repurchase agreements for U.S. Government
securities.
The main differences between the funds are their average maturity and
their interest rate risk. Spartan Short-Intermediate Government Fund
seeks to maintain an average maturity between two and five years and
is managed to have similar overall interest rate risk to an index of
U.S. Government bonds with maturities between one and five years.
Fidelity Intermediate Government Income Fund, by contrast, seeks to
maintain an average maturity between three and ten years, and is
managed to have similar overall interest rate risk to an index of U.S.
Government bonds with maturities between one and ten years. Fidelity
Intermediate Government Income Fund, therefore, has a longer average
maturity and greater interest rate risk than Spartan
Short-Intermediate Government Fund.
EXPENSE STRUCTURES. Spartan Short-Intermediate Government Fund and
Fidelity Intermediate Government Income Fund have similar contractual
expense structures. Both funds pay a monthly management fee to FMR.
Spartan Short-Intermediate Government Fund and Fidelity Intermediate
Government Income Fund each pays an all-inclusive management fee to
FMR (at an annual rate of 0.65% of average net assets) which covers
substantially all of each fund's expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses). If the
Reorganization is approved, FMR has agreed to limit the combined
fund's total operating expenses to 0.63% of its average net assets
through June 30, 2001 (excluding interest, taxes, brokerage
commissions and extraordinary expenses). After that date, the combined
fund's expenses could increase.
In sum, the proposed merger would provide Spartan
Short-Intermediate Government Fund shareholders with the opportunity
to participate in a larger, similar fund with greater interest rate
risk and expenses guaranteed to be lower than Spartan
Short-Intermediate Government Fund's for more than two years. Greater
interest rate risk would likely result in better relative performance
during periods of falling interest rates and worse relative
performance during periods of rising interest rates. Fidelity
Intermediate Government Income Fund has had better historical
performance and greater interest rate risk than Spartan
Short-Intermediate Government Fund.
If any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to
the contrary will be voted on such matters in accordance with the
judgment of the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to
a number of investment companies. Information concerning the advisory
fees, net assets, and total expenses of funds with investment
objectives similar to Fidelity Investment Grade Bond Fund, Fidelity
Short-Term Bond Fund, and Fidelity High Income Fund and advised by FMR
is contained in the Table of Average Net Assets and Expense Ratios in
Exhibit 7 beginning on page 87 .
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions that have occurred to date have included mortgages
and personal and general business loans. In the judgment of FMR, the
terms and conditions of those transactions were not influenced by
existing or potential custodial or other fund relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter
S. Lynch, Vice Chairman. Each of the Directors is also a Trustee of
the trust. Messrs. Johnson 3d, Pozen, J. Gary Burkhead, John H.
Costello, Eric D. Roiter, Richard A. Silver, Leonard M. Rush, Fred L.
Henning, Jr., Dwight D. Churchill, Bart A. Grenier, Kevin E. Grant,
Andrew J. Dudley, Curt Hollingsworth, and Thomas T. Soviero are
currently officers of the trust and officers or employees of FMR or
FMR Corp. With the exception of Mr. Costello, Mr. Silver, and Mr.
Dudley , all of these persons hold or have options to acquire stock
of FMR Corp. The principal business address of each of the Directors
of FMR is 82 Devonshire Street, Boston, Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore,
under the 1940 Act may be deemed to form a controlling group with
respect to FMR Corp.
During the period May 1, 1997 through December 31, 1998, no
transactions were entered into by Trustees and nominees as Trustee of
the trust involving more than 1% of the voting common, non-voting
common and equivalent stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FIMM
FIMM (the successor to FMR Texas Inc.) is a wholly owned
subsidiary of FMR formed in 1997 to provide portfolio management
services to certain Fidelity funds and investment advice with
respect to fixed-income instruments.
Funds with investment objectives similar to Fidelity Investment Grade
Bond Fund and Fidelity Short-Term Bond Fund for which FMR has entered
into a sub-advisory agreement with FIMM, and the net assets of each of
these funds, are indicated in the Table of Average Net Assets and
Expense Ratios in Exhibit 7 beginning on page 88 .
The Directors of FIMM are Edward C. Johnson 3d, Chairman, and Robert
C. Pozen, President. Mr. Johnson 3d also is President and a Trustee of
the trust and of other funds advised by FMR; Chairman, Chief Executive
Officer, President, and a Director of FMR Corp.; a Director and
Chairman of the Board and of the Executive Committee of FMR; and
Chairman and a Director of FMR U.K. and FMR Far East. In addition, Mr.
Pozen is Senior Vice President and a Trustee of the trust and of other
funds advised by FMR; a Director of FMR Corp.; President and a
Director of FMR; and President and a Director of FMR U.K. and FMR Far
East. Each of the Directors is a stockholder of FMR Corp. The
principal business address of the Directors is 82 Devonshire Street,
Boston, Massachusetts 02109.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed
in 1986 to provide research and investment advice with respect to
companies based outside the United States for certain funds for which
FMR acts as investment adviser. FMR may also grant the sub-advisers
investment management authority as well as authority to buy and sell
securities for certain of the funds for which it acts as investment
adviser, if FMR believes it would be beneficial to a fund.
Funds with investment objectives similar to Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity High Income
Fund managed by FMR with respect to which FMR currently has
sub-advisory agreements with either FMR U.K. or FMR Far East, and the
net assets of each of these funds, are indicated in the Table of
Average Net Assets and Expense Ratios in Exhibit 7 beginning on page
88.
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is
President and a Trustee of the trust and of other funds advised by
FMR; Chairman and a Director of FIMM; Chairman, Chief Executive
Officer, President, and a Director of FMR Corp., and a Director and
Chairman of the Board and of the Executive Committee of FMR. In
addition, Mr. Pozen is Senior Vice President and a Trustee of the
trust and of other funds advised by FMR; President and a Director of
FMR; and President and a Director of FIMM. Each of the Directors is a
stockholder of FMR Corp. The principal business address of the
Directors is 82 Devonshire Street, Boston, Massachusetts 02109.
PRESENT MANAGEMENT CONTRACTS OF FIDELITY INVESTMENT GRADE BOND FUND
AND FIDELITY SHORT-TERM BOND FUND
Each fund employs FMR to furnish investment advisory and other
services. Under its management contract with each fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of each fund in accordance with its
investment objective, policies, and limitations. FMR also provides
each fund with all necessary office facilities and personnel for
servicing each fund's investments, compensates all officers of each
fund and all Trustees who are "interested persons" of the trust or of
FMR, and all personnel of each fund or FMR performing services
relating to research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal and state laws;
developing management and shareholder services for each fund; and
furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees. Services provided by affiliates of FMR will continue
under the proposed management contract described in Proposal 5.
In addition to the management fee payable to FMR, each fund pays
transfer agent and pricing and bookkeeping fees to Fidelity Service
Company, Inc. (FSC), an affiliate of FMR, its transfer, dividend
disbursing, and shareholder servicing agent. Although each fund's
current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders, the
trust, on behalf of each fund has entered into a revised transfer
agent agreement with FSC, pursuant to which FSC bears the costs of
providing these services to existing shareholders. Other expenses paid
by each fund include interest, taxes, brokerage commissions, and each
fund's proportionate share of insurance premiums and Investment
Company Institute dues. Each fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation
to which each fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including
reimbursement for out-of-pocket expenses, paid to FSC by Fidelity
Investment Grade Bond Fund and Fidelity Short-Term Bond Fund for the
fiscal year ended April 30, 1998 amounted to $4,205,000 and
$2,168,000, respectively.
Each fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. Each
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
FMR is each fund's manager pursuant to a management contract dated
November 1, 1993, which was approved by shareholders on October 20,
1993. For Fidelity Investment Grade Bond Fund, shareholder approval
had been requested to increase the individual fund fee rate from 0.20%
to 0.30%. For Fidelity Short-Term Bond Fund, shareholder approval had
been requested to modify the group fee portion of the management fee
to provide for lower fee rates if FMR's assets under management remain
above $120 billion.
For the services of FMR under each management contract, each fund
pays FMR a monthly management fee which has two components: a group
fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown below on the left. The schedule
below on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $626 billion of group net assets - the approximate level for
April 1998 - was 0.1339%, which is the weighted average of the
respective fee rates for each level of group net assets up to $626
billion.
On January 1, 1996, August 1, 1994, and November 1, 1993, FMR
voluntarily modified the breakpoints in the group fee rate schedule.
The revised group fee rate schedule, depicted below, provides for
lower management fee rates as FMR's assets under management increase.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .3700% $0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350 425 .1443
228 - 264 .1300 450 .1427
264 - 300 .1275 475 .1413
300 - 336 .1250 500 .1399
336 - 372 .1225 525 .1385
372 - 408 .1200 550 .1372
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
</TABLE>
Each fund's individual fund fee rate is 0.30%. Based on the average
group net assets of the funds advised by FMR for April 1998, each
fund's annual management fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
Fidelity Investment Grade 0.1339% + 0.30% = 0.4339%
Bond Fund
Fidelity Short-Term Bond Fund 0.1339% + 0.30% = 0.4339%
</TABLE>
One-twelfth of this annual management fee rate is applied to each
fund's net assets averaged for the most recent month, giving a dollar
amount, which is the fee for that month.
During the fiscal year ended April 30, 1998, FMR received
$ 7,078,821 , and 3,862,104 for its services as investment
adviser to Fidelity Investment Grade Bond Fund and Fidelity Short-Term
Bond Fund, respectively. This fee was equivalent to 0.44 % of
the average net assets of each fund .
FMR may, from time to time, agree to reimburse all or a portion of
each fund's total operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
FMR has voluntarily agreed, subject to revision or termination, to
reimburse Fidelity Short-Term Bond Fund to the extent that its total
operating expenses, as a percentage of its average net assets ,
exceed 0.65%.
PRESENT MANAGEMENT CONTRACT OF FIDELITY HIGH INCOME FUND
The fund employs FMR to furnish investment advisory and other
services. Under its management contract with the fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of the fund in accordance with its
investment objective, policies, and limitations. FMR also provides the
fund with all necessary office facilities and personnel for servicing
the fund's investments, compensates all officers of the fund and all
Trustees who are "interested persons" of the trust or of FMR, and all
personnel of the fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include
providing facilities for maintaining the fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with the fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and registration
of the fund's shares under federal and state laws; developing
management and shareholder services for the fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees. Services provided by affiliates of FMR will continue under
the proposed management contract described in Proposal 6.
FMR is responsible for the payment of all operating expenses of the
fund with certain exceptions. Specific expenses payable by FMR include
expenses for typesetting, printing, and mailing proxy materials to
shareholders; legal expenses, fees of the custodian, auditor, and
interested Trustees; the fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal securities laws and making necessary
filings under state securities laws. The fund's management contract
further provides that FMR will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices
and reports to shareholders; however, under the terms of the fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. FMR also pays all
fees associated with transfer agency, dividend disbursing, and
shareholder services, pricing and bookkeeping services, and
administration of the fund's securities lending program.
FMR pays all other expenses of the fund with the following
exceptions: fees and expenses of all Trustees of the trust who are not
"interested persons" of the trust or FMR (the non-interested
Trustees), interest, taxes, brokerage commissions (if any), and such
nonrecurring expenses as may arise, including costs of any litigation
to which the fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated
November 1, 1993, which was approved by shareholders on October 20,
1993. Shareholder approval had been requested to increase the
management fee rate from 0.70% to 0.80%. The management fee paid to
FMR is reduced by an amount equal to the fees and expenses paid by the
fund to the non-interested Trustees.
For the services of FMR under the management contract, the fund pays
FMR a monthly management fee at the annual rate of 0.80% of its
average net assets throughout the month. Fees received by FMR, after
reduction of fees and expenses paid by the fund to the non-interested
trustees, for the fiscal year ended April 30, 1998 from the fund were
$19,31 0,966 .
FMR may, from time to time, agree to reimburse all or a portion of
the fund's total operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
The fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. The
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
SUB-ADVISORY AGREEMENTS FOR FIDELITY INVESTMENT GRADE BOND FUND,
FIDELITY SHORT-TERM BOND FUND, AND FIDELITY HIGH INCOME FUND
On behalf of Fidelity Investment Grade Bond Fund and Fidelity
Short-Term Bond Fund, FMR has entered into a sub-advisory agreement
with FIMM pursuant to which FIMM has primary responsibility for
providing portfolio investment management services to each fund. Under
the sub-advisory agreements, dated January 1, 1999, FMR pays FIMM fees
equal to 50% of the management fee payable to FMR under its management
contract with each fund. The fees paid to FIMM are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect
from time to time.
On behalf of Fidelity Investment Grade Bond Fund, Fidelity Short-Term
Bond Fund, and Fidelity High Income Fund, FMR has entered into
sub-advisory agreements with FMR U.K. and FMR Far East. Pursuant to
the sub-advisory agreements, FMR may receive investment advice and
research services outside the United States from the sub-advisers.
Fidelity Investment Grade Bond Fund's and Fidelity Short-Term Bond
Fund's sub-advisory agreements, dated November 1, 1989, were approved
by shareholders of each fund on October 18, 1989. Fidelity High Income
Fund's sub-advisory agreements, dated November 1, 1993, were approved
by shareholders of the fund on October 20, 1993.
Currently, FMR U.K. and FMR Far East each focus on issuers in
countries other than the United States such as those in Europe, Asia,
and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. Under the sub-advisory agreements FMR pays
the fees of FMR U.K. and FMR Far East. For providing non-discretionary
investment advice and research services, FMR pays FMR U.K. and FMR Far
East fees equal to 110% and 105%, respectively, of FMR U.K.'s and FMR
Far East's costs incurred in connection with providing investment
advice and research services.
For the fiscal year ended April 30, 1998, no fees were paid by FMR to
FMR U.K. or FMR Far East on behalf of the funds.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by FMR pursuant to authority contained
in the fund's management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (Japan), LLC
(FBSJ), indirect subsidiaries of FMR Corp., if the commissions are
fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. Prior
to December 9, 1997, FMR used research services provided by and placed
agency transactions with Fidelity Brokerage Services (FBS), an
indirect subsidiary of FMR Corp.
For the fiscal year ended April 30, 1998, Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, Spartan Government Income
Fund, and Spartan Short-Intermediate Government Fund paid no brokerage
commissions to affiliated brokers. During the fiscal year ended April
30, 1998, Fidelity High Income Fund paid brokerage commissions of
$21,000 to NFSC. During the fiscal year ended April 30, 1998, this
amounted to approximately 7.1% of the aggregate brokerage commissions
paid by the fund.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to
the Secretary of the Trust, 82 Devonshire Street, Boston,
Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Service Company,
Inc., P.O. Box 789, Boston, Massachusetts 02102 , whether other
persons are beneficial owners of shares for which proxies are being
solicited and, if so, the number of copies of the Proxy Statement and
Annual Reports you wish to receive in order to supply copies to the
beneficial owners of the respective shares.
FIX-pxs-0299 CUSIP#316146109/FUND#026
1.713848.100 CUSIP#316146208/FUND#450
CUSIP#316146307/FUND#453
CUSIP#316146406/FUND#455
CUSIP#316146505/FUND#474
EXHIBIT 1
FORM OF
AMENDED AND RESTATED DECLARATION OF TRUST
[DATED MARCH 17, 1994]
The language to be added to the current Declaration of Trust is
((underlined,)) and the language to be deleted is set forth in
[brackets]. Headings that were underlined in the trust's current
Declaration of Trust remain underlined in this Exhibit.
AMENDED AND RESTATED DECLARATION OF TRUST, made [March 17,
1994]___________, ((1999)) by each of the trustees whose signature is
affixed hereto (the "trustees").
WHEREAS, the Trustees desire to amend and restate this Declaration of
Trust for the sole purpose of supplementing the Declaration ((of
Trust)) to incorporate amendments duly adopted; and
WHEREAS, this Trust was initially made on September 5, 1984 by Edward
C. Johnson 3d, Caleb Loring, Jr., and Frank Nesvet in order to
establish a trust fund for the investment and reinvestment of funds
contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in
[T]((t))rust under this ((Amended and Restated)) Declaration of Trust
as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
SECTION 1. This Trust shall be known as "Fidelity Fixed-Income
Trust."
DEFINITIONS
SECTION 2. Wherever used herein, unless otherwise required by the
context or specifically provided:
(a) The [T]((t))erms "Affiliated Person," "Assignment,"
"Commission," "Interested Person," "Majority Shareholder Vote" (the
67% or 50% requirement of the third sentence of Section 2(a)(42) of
the 1940 Act, whichever may be applicable), and "Principal
Underwriter" shall have the meanings given them in the 1940 Act [as
amended from time to time], ((as modified by or interpreted by any
applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission
thereunder;))
(b)(("Bylaws" shall mean the bylaws of the Trust, if any, as amended
from time to time;))
(c)(( "Class" refers to the class of Shares of a Series of the Trust
established in accordance with the provisions of Article III;))
(d)(("Declaration of Trust" means this Amended and Restated
Declaration of Trust, as further amended or restated, from time to
time;))
[(c)](((e)))"Net Asset Value" means the net asset value of each
Series of the Trust ((or Class thereof)) determined in the manner
provided in Article X, Section 3;
[(d)](((f)))"Shareholder" means a record owner of Shares of the
Trust;
[(f)](((g)))"Shares" means the equal proportionate transferable
units of interest into which the beneficial interest of ((the Trust
or)) each Series shall be divided from time to time, [and includes
fractions of shares] ((including such Class or Classes of Shares as
the Trustees may from time to time create and establish and including
fractions of Shares)) as well as whole [s]((S))hares ((as)) consistent
with the requirements of Federal and/or [other] ((state)) securities
laws; [and]
(h) "Series" refers to ((any)) series of Shares of the Trust
established in accordance with the provisions of Article III((;)) [.]
[(b)](((i)))The "Trust" refers to Fidelity Fixed-Income Trust and
reference to the Trust, when applicable to one or more Series of the
Trust, shall refer to any such Series;
[(e)](((j)))The "Trustees" refer to the individual trustees in their
capacity as trustees hereunder of the Trust and their successor or
successors for the time being in office as such trustee or trustees;
and
[(g)](((k)))The "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The [P]((p))urpose of this Trust is to provide investors a continuous
source of managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
SECTION 1. The beneficial interest in the Trust shall be divided into
such transferable Shares of one or more separate and distinct Series
((or Classes of Series)) as the Trustees shall((,)) from time to
time((,)) create and establish. The number of ((authorized)) Shares
((of each Series, and Class thereof,)) is unlimited [and each]((.
Each)) Share shall be without par value and shall be fully paid and
nonassessable. The Trustees shall have full power and authority, in
their sole discretion((,)) and without obtaining any prior
authorization or vote of the Shareholders of ((any Series or Class
of)) the Trust (((a))) to create and establish (and to change in any
manner) Shares ((or any Series or Classes thereof)) with such
preferences, voting powers, rights((,)) and privileges as the Trustees
may((,)) from time to time((,)) determine((;)) (((b))) to divide or
combine the Shares ((or any Series or Classes thereof)) into a greater
or lesser number((; (c))) to classify or reclassify any issued Shares
into one or more Series ((or Classes)) of Shares((; (d))) to abolish
any one or more Series ((or Classes)) of Shares((;)) and (((e))) to
take such other action with respect to the Shares as the Trustees may
deem desirable.
ESTABLISHMENT OF SERIES AND CLASSES
SECTION 2. The establishment of any Series ((or Class thereof)) shall
be effective upon the adoption of a resolution by a majority of the
then Trustees setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series ((or
Class)). At any time that there are no Shares outstanding of any
particular Series ((or Class)) previously established and designated,
the Trustees may by a majority vote abolish [that] ((such)) Series
((or Class)) and the establishment and designation thereof.
OWNERSHIP OF SHARES
SECTION 3. The ownership of Shares shall be recorded in the books of
the Trust ((or a transfer or similar agent)). The Trustees may make
such rules as they consider appropriate for the transfer of Shares and
similar matters. The record books of the Trust ((as kept by the Trust
or by any transfer or similar agent, as the case may be,)) shall be
conclusive as to who are the holders of Shares and as to the number of
Shares held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
SECTION 4. The Trustees shall accept investments in the Trust from
such persons and on such terms as they may((,)) from time to time((,))
authorize. Such investments may be in the form of cash, [or]
securities, ((or other property)) in which the appropriate Series is
authorized to invest, valued as provided in Article X, Section 3.
After the date of the initial contribution of capital, the number of
Shares to represent the initial contribution may in the Trustees'
discretion be considered as outstanding((,)) and the amount received
by the Trustees on account of the contribution shall be treated as an
asset of the Trust. Subsequent investments in the Trust shall be
credited to each Shareholder's account in the form of full Shares at
the Net Asset Value per Share next determined after the investment is
received; provided, however, that the Trustees may, in their sole
discretion (a) impose a sales charge ((or other fee)) upon investments
in the Trust ((or Series or any Classes thereof,)) and (b) issue
fractional Shares.
ASSETS AND LIABILITIES OF SERIES AND CLASSES
SECTION 5. All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange, or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be referred to as "assets
belonging to" that Series. In addition((,)) any assets, income,
earnings, profits, and proceeds thereof, funds, or payments [which]
((that)) are not readily identifiable as belonging to any particular
Series ((or Class)), shall be allocated by the Trustees between and
among one or more of the Series ((or Classes)) in such manner as they,
in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of
all Series ((or Classes)) for all purposes and shall be referred to as
assets belonging to that Series ((or Class)). The assets belonging to
a particular Series shall be so recorded upon the books of the
Trust[,] ((or of its agent or agents)) and shall be held by the
Trustees in trust for the benefit of the holders of Shares of that
Series.
The assets belonging to each particular Series shall be charged with
the liabilities of that Series and all expenses, costs, charges, and
reserves attributable to that Series, ((except that liabilities and
expenses may, in the Trustees' discretion, be allocated solely to a
particular Class and, in which case, shall be borne by that Class.))
Any general liabilities, expenses, costs, charges, or reserves of the
Trust that are not readily identifiable as belonging to any particular
Series ((or Class)) shall be allocated and charged by the Trustees
between or among any one or more of the Series ((or Classes)) in such
manner as the Trustee((s)), in their sole discretion((,)) deem fair
and equitable ((and shall be referred to as "liabilities belonging to"
that Series or Class.)) Each such allocation shall be conclusive and
binding upon the Shareholders of all Series or Classes for all
purposes. Any creditor of any Series may look only to the assets of
that Series to satisfy such creditor's debt. [In case any holder of
record of Shares of a particular Series desires to dispose of his
Shares, he may deposit at the office of the transfer agent or other
authorized agent of that Series a written request or such other form
of request as the Trustees may from time to time authorize, requesting
that the Series purchase the Shares in accordance with this Section 2;
and the Shareholder so requesting shall be entitled to require the
Series to purchase, and the Series or principal underwriter of the
Series shall purchase his said Shares, but only at the Net asset Value
thereof (as described in Section 3 thereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series
to the Shareholder of record within seven (7) days after the date upon
which the request is effective.] ((No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any
assets allocated or belonging to any other Series.))
NO PREEMPTIVE RIGHTS
SECTION 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the
Trust or the Trustees.
((STATUS OF SHARES AND)) LIMITATION OF PERSONAL LIABILITY
SECTION 7. ((Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every shareholder by
virtue of having become a shareholder shall be held to have expressly
assented and agreed to be bound by the terms hereof. No Shareholder of
the Trust and of each Series shall be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or by or on behalf of
any Series.)) The Trustees shall have no power to bind any Shareholder
personally or to call upon any [s]((S))hareholder for the payment of
any sum of money or assessment whatsoever other than such as the
Shareholder may((,)) at any time((,)) personally agree to pay by way
of subscription for any Shares or otherwise. Every note, bond,
contract, or other undertaking issued by or on behalf of the Trust or
the Trustees relating to the Trust ((or to a Series ))shall include a
recitation limiting the obligation represented thereby to the Trust
((or to one or more Series)) and its ((or their)) assets (but the
omission of such a recitation shall not operate to bind any
Shareholder ((or Trustee))).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
SECTION 1. The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable
to carry out that responsibility.
[ELECTION: ]INITIAL TRUSTEES; ELECTION
SECTION 2. ((The initial Trustees shall be at least three individuals
who shall affix their signatures hereto.)) On a date fixed by the
Trustees, the Shareholders shall elect not less than three Trustees. A
Trustee shall not be required to be a Shareholder of the Trust. [The
initial Trustees shall be Edward C. Johnson 3rd, Caleb Loring, Jr. and
Frank Nesvet and such other individuals as the Board of Trustees shall
appoint pursuant to Section 4 of the Article IV.]
TERM OF OFFICE OF TRUSTEES
SECTION 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a)
that any Trustee may resign his trust by written instrument signed by
him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds (((2/3))) of the number of Trustees
prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) a Trustee may
be removed at any [S]((s))pecial [M]((m))eeting of the Trust by a vote
of two-thirds (((2/3))) of the outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
SECTION 4. In case of the declination, death, resignation,
retirement, ((or)) removal [, incapacity, or inability] of any of the
Trustees, ((or)) in case a vacancy shall, by reason of an increase in
number ((of the Trustees,)) or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the
limitations under the [Investment Company Act of] 1940 ((Act.)) Such
appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by recording in the records of
the Trust, whereupon the appointment shall take effect. [Within three
months of such appointment the Trustees shall cause notice of such
appointment to be mailed to each Shareholder at his address as
recorded on the books of the Trust.] An appointment of a Trustee may
be made by the Trustees then in office [and notice thereof mailed to
Shareholders as aforesaid] in anticipation of a vacancy to occur by
reason of retirement, resignation, or increase in number of Trustees
effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement,
resignation((,)) or increase in number of Trustees. As soon as any
Trustee so appointed shall have accepted this [t]((T))rust, the
[t]((T))rust estate shall vest in the new Trustee or Trustees,
together with the continuing Trustees, without any further act or
conveyance, and he shall be deemed a Trustee hereunder. The
((foregoing)) power of appointment is subject to the provisions of
Section 16(a) of the 1940 Act((, as modified by or interpreted by any
applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission.))
TEMPORARY ABSENCE OF TRUSTEES
SECTION 5. Any Trustee may, by power of attorney, delegate his power
for a period not exceeding six (((6))) months at any one time to any
other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as
herein otherwise expressly provided.
NUMBER OF TRUSTEES
SECTION 6. The number of Trustees, not less than three (3) nor more
than twelve (12), serving hereunder at any time shall be determined by
the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is [absent from the
Commonwealth of Massachusetts or, if not a domiciliary of
Massachusetts, is absent from his state of domicile, or is] physically
or mentally incapacitated by reason of disease or otherwise, the other
Trustees shall have all the powers hereunder and the certificate of
the other Trustees of such vacancy [, absence] or incapacity shall be
conclusive [, provided, however, that no vacancy shall remain
unfulfilled for a period longer than six calendar months].
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
SECTION 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 8. The assets of the Trust shall be held separate and apart
from any assets now or hereafter held in any capacity other than as
Trustee hereunder by the Trustees or any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in
the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
SECTION 1. The Trustees((,)) in all instances((,)) shall act as
principals and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and
instruments that they may consider necessary or appropriate in
connection with the management of the Trust. ((Except as otherwise
provided herein or in the 1940 Act,)) [T]((t))he Trustees shall not in
any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power
to make any and all investments [which] ((that)) they, in their
[uncontrolled] discretion, shall deem proper to accomplish the purpose
of this Trust. Subject to any applicable limitation in [the]((this))
Declaration of Trust or the Bylaws of the Trust, ((if any,)) the
Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested[,]without((,)) in any event((,)) being
bound or limited by any present or future law or custom in regard to
investments by Trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on((,)) and lease any or all of
the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to
the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ [a bank or trust company as custodian] ((one or more
banks, trust companies, companies that are members of a national
securities exchange, or other entities permitted under the 1940 Act,
as modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted or interpretative
releases of the Commission thereunder, as custodians)) of any assets
of the Trust subject to any conditions set forth in this Declaration
of Trust or in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or
both.
(f) To provide for the distribution of interests of the Trust either
through a [p]((P))rincipal [u]((U))nderwriter in the manner
hereinafter provided for or by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any
officers of the Trust and to any [agent, custodian or underwriter]
((investment adviser, manager, custodian, underwriter, or other agent
or independent contractor.))
(i) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XII, Section 4[b] hereof.
(j) To vote or give assent[,] or exercise any rights of ownership[,]
with respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered((,)) or other negotiable form;
or either in its own name or in the name of a custodian or a nominee
or nominees [, subject in either case to proper safeguards according
to the usual practice of Massachusetts trust companies or investment
companies].
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III ((and to establish
Classes of such Series having relative rights, powers, and duties as
the Trustees may provide consistent with applicable laws.))
(n) To allocate assets, liabilities((,)) and expenses of the Trust to
a particular Series ((or Class, as appropriate,)) or to apportion the
same between or among two or more Series ((or Classes, as
appropriate,)) provided that any liabilities or expenses incurred by a
particular Series ((or Class)) shall be payable solely out of the
assets belonging to that Series as provided for in Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation((,)) or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract,
lease, mortgage, purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any
security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy((,)) including, but
not limited to, claims for taxes.
(q) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for.
(r) To borrow money [for temporary or emergency purposes and not for
investment purposes], and to pledge, mortgage((,)) or hypothecate the
assets of the Trust, subject to the applicable requirements of the
1940 Act.
(s) To establish, from time to time, a minimum total investment for
Shareholders[,] and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving
notice to such Shareholder.
(( (t) To operate as and carry on the business of an investment
company and to exercise all the powers necessary and appropriate to
the conduct of such operations.
(u) To interpret the investment policies, practices or limitations of
any Series.
(v) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects or powers.
(w) Notwithstanding any other provision hereof, to invest all of the
assets of any Series in a single open-end investment company,
including investment by means of transfer of such assets in exchange
for an interest or interests in such investment company.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees.
Any action by one or more of the Trustees in their capacity as such
hereunder shall be deemed an action on behalf of the Trust or the
applicable Series and not an action in an individual capacity.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust or any Series or
Class thereof.))
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see
to the application of any payments made or property transferred to the
Trustees or upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
SECTION 2. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may issue and sell
or cause to be issued and sold Shares to and buy such Shares from any
such person of any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and
purchase of such Shares; and all subject to any restrictions which may
be contained in the Bylaws, ((if any.))
ACTION BY THE TRUSTEES
SECTION 3. [The] ((Except as otherwise provided herein or in the 1940
Act, the)) Trustees shall act by majority vote at a meeting duly
called or by unanimous written consent without a meeting or by
telephone consent provided a quorum of Trustees participate in any
such telephonic meeting, unless the 1940 Act requires that a
particular action be taken only at a meeting [of] ((at which the))
Trustees ((are present in person.)) At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman of the
Trustees or by any two other Trustees. Notice of the time, date, and
[P]((p))lace of all meetings of the Trustees shall be given by the
party calling the meeting to each Trustee by telephone, [or telegram]
((telefax, telegram, or other electro-mechanical means ))sent to his
home or business address at least twenty-four (((24) ))hours in
advance of the meeting or by written notice mailed to his home or
business address at least seventy-two (((72) ))hours in advance of the
meeting. Notice need not be given to any Trustee who attends the
meeting without objecting to the lack of notice or who executes a
written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may
delegate to any one of their number their authority to approve
particular matters or take particular actions on behalf of the Trust.
((Written consents or waivers of Trustees may be executed in one or
more counterparts. Execution of a written consent or waiver and
delivery thereof to the Trust may be accomplished by telefax or other
electro-mechanical means.))
CHAIRMAN OF THE TRUSTEES
SECTION 4. The Trustees may appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all
meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the
Trust, and may be the chief executive, financial and accounting
officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
SECTION 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets
belonging to the appropriate Series for their expenses and
disbursements, including, without limitation, fees and expenses of
Trustees who are not Interested Persons of the Trust[,]((;)) interest
expense, taxes, fees and commissions of every kind[,]((;)) expenses of
pricing Trust portfolio securities; expenses of issue, repurchase and
redemption of shares including expenses attributable to a program of
periodic repurchases or redemptions, expenses of registering and
qualifying the Trust and its Shares under Federal and [S]((s))tate
laws and regulations[,]((;)) charges of custodians, transfer agents,
and registrars[,]((;)) expenses of preparing and setting up in type
[P]((p))rospectuses and [S]((s))tatements of [A]((a))dditional
[I]((i))nformation[,]((;)) expenses of printing and distributing
prospectuses sent to existing Shareholders[,]((;)) auditing and legal
expenses[,]((;)) reports to Shareholders[,]((;)) expenses of meetings
of Shareholders and proxy solicitations therefor[,]((;)) insurance
expense[,]((;)) association membership dues; and for such
non-recurring items as may arise, including litigation to which the
Trust is a party[,]((;)) and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such
expenses, disbursements, losses, and liabilities the Trustees shall
have a lien on the assets belonging to the appropriate Series prior to
any rights or interests of the Shareholders thereto. This section
shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL[,]UNDERWRITER, AND TRANSFER AGENT
INVESTMENT ADVISER
SECTION 1. Subject to a Majority Shareholder Vote, the Trustees
may((,)) in their discretion and from time to time((,)) enter into an
investment advisory or management contract(s) with respect to the
Trust or any Series thereof whereby the other party(ies) to such
contract(s) shall undertake to furnish the Trustees such management,
investment advisory, statistical, and research facilities and services
and such other facilities and services, if any, and all upon such
terms and conditions, as the Trustees may((,)) in their
discretion((,)) determine. Notwithstanding any provisions of this
Declaration of Trust, the Trustees may authorize the investment
adviser(s) (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales or
exchanges of portfolio securities and other investment instruments of
the Trust on behalf of the Trustees or may authorize any officer,
agent, or Trustee to effect such purchases, sales, or exchanges
pursuant to recommendations of the investment adviser (and all without
further action by the Trustees). Any such purchases, sales((,)) and
exchanges shall be deemed to have been authorized by all of the
Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
((as modified by or interpreted by any applicable order or orders of
the Commission or any rules or regulations adopted or interpretative
releases of the Commission thereunder,)) including those relating to
Shareholder approval, authorize the investment adviser to employ one
or more sub-advisers from time to time to perform such of the acts and
services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and
sub-adviser.
PRINCIPAL UNDERWRITER
SECTION 2. The Trustees may in their discretion from time to time
enter into [(a) contract(s)] ((an exclusive or non-exclusive
contract(s) on behalf of the Trust or any Series or Class thereof))
providing for the sale of the Shares, whereby the Trust may either
agree to sell the Shares to the other party to the contract or appoint
such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as may be prescribed in
the Bylaws, if any, and such further terms and conditions as the
Trustees may, in their discretion((,)) determine not inconsistent with
the provisions of this Article VII or of the Bylaws, if any[; and
such]((. Such)) contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust.
TRANSFER AGENT
SECTION 3. The Trustees may((,)) in their discretion and from time to
time((,)) enter into [a] ((one or more)) transfer agency and
Shareholder service contract((s)) whereby the other party shall
undertake to furnish the Trustees with transfer agency and Shareholder
services. [The contract] ((Such contracts)) shall be on such terms and
conditions as the Trustees may((,)) in their discretion((,)) determine
not inconsistent with the provisions of this Declaration of Trust or
of the Bylaws, if any. Such services may be provided by one or more
entities.
PARTIES TO CONTRACT
SECTION 4. Any contract of the character described in Sections 1, 2
and 3 of this Article VII or in Article IX hereof may be entered into
with any corporation, firm, partnership, trust or association,
although one or more of the Trustees or officers of the Trust may be
an officer, director, trustee, shareholder, or member of such other
party to the contract, and no such contract shall be invalidated or
rendered voidable by reason of the existence of any relationship, nor
shall any person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when
entered into was reasonable and fair and not inconsistent with the
provisions of this Article VII or the Bylaws, if any. The same person
(including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections
1, 2 and 3 above or Article IX, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any
or all of the contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
SECTION 5. Any contract entered into pursuant to Sections 1 and 2 of
this Article VII shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act [(including any amendments
thereof or other applicable Act of Congress hereafter enacted)], ((as
modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted or interpretative
releases of the Commission (or other applicable Act of Congress
hereafter enacted),)) with respect to its continuance in effect, ((its
amendment,)) its termination, and the method of authorization and
approval of such contract or renewal thereof [, and no amendment to
any contract, entered into pursuant to Section 1 shall be effective
unless assented to by a Majority Shareholder Vote].
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. The Shareholders shall have power to vote [(i)] (((a)))
for the election of Trustees as provided in Article IV, Section
2[,]((;)) [(ii)] (((b))) for the removal of Trustees as provided in
Article IV, Section 3(d) [,(iii)]((; (c))) with respect to any
investment advisory or management contract as provided in Article VII,
Section((s)) 1 ((and 5)) [, (iv)]((; (d) with respect to any
termination, merger, consolidation, reorganization, or sale of assets
of the Trust or any of its Series or Classes as provided in Article
XII, Section 4; (e))) with respect to the amendment of this
Declaration of Trust as provided in Article XII, Section 7[,(v)]((;
(f))) to the same extent as the shareholders of a Massachusetts
business corporation, as to whether or not a court action, proceeding
or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, provided, however,
that a Shareholder of a particular Series shall not be entitled to
bring any derivative or class action on behalf of any other Series of
the Trust[, and (vi)]; ((and (g))) with respect to such additional
matters relating to the Trust as may be required or authorized by law,
by this Declaration of Trust, or the Bylaws of the Trust, if any, or
any registration of the Trust with the [Securities and Exchange
Commission (the "Commission")] ((Commission)) or any [S]((s))tate, as
the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all
[s]((S))hares shall be voted by individual Series, ((except as
provided in the following sentence and ))except [(i)] (((a))) when
required by the 1940 Act, Shares shall be voted in the aggregate and
not by individual Series((;)) and [(ii)] (((b))) when the Trustees
have determined that the matter affects only the interests of one or
more Series, then only the Shareholders of such Series shall be
entitled to vote thereon. ((The Trustees may also determine that a
matter affects only the interests of one or more Classes of a Series,
in which case, any such matter shall be voted on by such Class or
Classes.)) A Shareholder of each [s]((S))eries ((or Class thereof))
shall be entitled to one vote for each dollar of net asset value
(number of Shares owned times net asset value per share) of such
[series,]((Series or Class thereof ))on any matter on which such
[s]((S))hareholder is entitled to vote((,)) and each fractional dollar
amount shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may
be voted in person or by proxy. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action
required or permitted by law, this Declaration of Trust or any Bylaws
of ((the)) Trust((, if any,)) to be taken by Shareholders.
MEETINGS
SECTION 2. The first Shareholders' meeting shall be held as specified
in Section 2 of Article IV at the principal office of the Trust or
such other place as the Trustees may designate. Special meetings of
the Shareholders of any Series may be called by the Trustees and shall
be called by the Trustees upon the written request of Shareholders
owning at least one-tenth (((1/10))) of the outstanding Shares
entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the 1940 Act, [as the
same may be amended from time to time,] ((as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretative releases of the
Commission,)) seek the opportunity of furnishing materials to the
other Shareholders with a view to obtaining signatures on such a
request for a meeting, the Trustees shall comply with the provisions
of said Section 16(c) with respect to providing such Shareholders
access to the list of the Shareholders of record of the Trust or the
mailing of such materials to such Shareholders of record. Shareholders
shall be entitled to at least fifteen (((15))) days' notice of any
meeting.
QUORUM AND REQUIRED VOTE
SECTION 3. A majority of Shares entitled to vote in person or by
proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of
this Declaration of Trust permits or requires that holders of any
Series ((or Class)) shall vote as a Series [,] ((or Class)) then a
majority of the aggregate number of Shares of that Series ((or Class))
entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series ((or Class.)) Any lesser number
shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except
when a larger vote is required ((by applicable law or)) by any
provision of this Declaration of Trust or the Bylaws, ((if any,)) a
majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Declaration of Trust permits or
requires that the holders of any Series ((or Class)) shall vote as a
Series ((or Class,)) then a majority of the Shares of that Series ((or
Class)) voted on the matter shall decide that matter insofar as that
Series ((or Class)) is concerned. ((Shareholders may act by unanimous
written consent. Actions taken by a Series or Class may be consented
to unanimously in writing by Shareholders of that Series or Class.))
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
SECTION 1. The Trustees shall at all times employ a bank [or], ((a
company that is a member of a national securities exchange,)) trust
company, ((or other entity permitted under the 1940 Act, as modified
by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted or interpretative releases of the
Commission thereunder,)) having capital, surplus((,)) and undivided
profits of at least two million dollars ($2,000,000), or such other
amount [or such other entity] as shall be allowed by the Commission or
by the 1940 Act, as custodian with authority as its agent, but subject
to such restrictions, limitations and other requirements, if any, as
may be contained in the Bylaws of the Trust((, if any:))
(1) to hold the securities owned by the Trust and deliver the same
upon written order or oral order, if confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust
and the custodian, if such procedures have been authorized in writing
by the Trust;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(2) to compute, if authorized to do so [by the Trustees], the Net
Asset Value of any Series ((or Class thereof)) in accordance with the
provisions hereof; all upon such basis of compensation as may be
agreed upon between the Trustees and the custodian. [If so directed by
a Majority Shareholder Vote, the custodian shall deliver and pay over
all the property of the Trust held by it as specified in such vote.]
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and
services of the custodian, and upon such terms and conditions, as may
be agreed upon between the custodian[s] and such sub-custodian and
approved by the Trustees, provided that in every case such
sub-custodian shall be a bank((, a company that is a member of a
national securities exchange,)) [or] trust company [organized under
the laws of the United States or one of the States thereof and], ((or
other entity permitted under the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretative releases of the
Commission thereunder,)) having capital((,)) [and] surplus((,)) and
undivided profits of at least two million dollars ($2,000,000), or
such other [person] ((amount)) as [may] ((shall)) be [permitted]
((allowed)) by the Commission [, or otherwise in accordance with the
1940 Act as from time to time amended] ((or by the 1940 Act.))
CENTRAL [CERTIFICATE] DEPOSITORY SYSTEM
SECTION 2. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit
all or any part of the securities owned by the Trust in a system for
the central handling of securities established by a national
securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934[,] or
such other person as may be permitted by the Commission[,] or
otherwise in accordance with the 1940 Act [as from time to time
amended], pursuant to which system all securities of any particular
class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such securities[,] provided that all such
deposits shall be subject to withdrawal only upon the order of the
Trust ((or its custodian, subcustodians, or other authorized agents.))
ARTICLE X
DISTRIBUTIONS, [AND] REDEMPTIONS AND DETERMINATION OF
NET ASSET VALUE
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in
the discretion of the Trustees.
(b) The Trustees shall have ((the)) power, to the fullest extent
permitted by the laws of Massachusetts, at any time to declare and
cause to be paid dividends on Shares of a particular Series, from the
assets belonging to that Series, which dividends, at the election of
the Trustees, may be paid daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, and may be payable in Shares of that
Series, ((or Classes thereof,)) at the election of each Shareholder of
that Series.
(( The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or related plans as
the Trustees shall deem appropriate.))
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute ((a stock dividend))
pro rata among the Shareholders of a particular Series, ((or Class
thereof,)) as of the record date of that Series ((or Class)) fixed as
provided in ((Article XII,)) Section 3 [hereof a "stock divided"].
REDEMPTIONS
SECTION 2. In case any holder of record of Shares of a particular
Series ((or Class of a Series)) desires to dispose of his Shares, he
may deposit at the office of the transfer agent or other authorized
agent of that Series a written request or such other form of request
as the Trustees may((,)) from time to time((,)) authorize, requesting
that the Series purchase the Shares in accordance with this Section 2;
and the Shareholder so requesting shall be entitled to require the
Series to purchase, and the Series or the principal underwriter of the
Series shall purchase his said Shares, but only at the Net Asset Value
thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series((,)) and payment for such
Shares ((less any applicable deferred sales charges and/or fees))
shall be made by the Series or the principal underwriter of the Series
to the Shareholder of record within seven (7) days after the date upon
which the request is effective.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
SECTION 3. The term "Net Asset Value" of any Series ((or Class))
shall mean that amount by which the assets of that Series[,] ((or
Class)) exceed its liabilities, all as determined by or under the
direction of the Trustees. Such value per Share shall be determined
separately for each Series ((or Class)) of Shares and shall be
determined on such days and at such times as the Trustees may
determine. Such determination shall be made with respect to securities
for which market quotations are readily available, at the market value
of such securities; and with respect to other securities and assets,
at the fair value as determined in good faith by the Trustees,
provided, however, that the Trustees, without Shareholder approval,
may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the rules, regulations((,)) and
interpretations thereof promulgated or issued by the Commission or
insofar as permitted by any [O]((o))rder of the Commission applicable
to the Series. The Trustees may delegate any of its powers and duties
under this Section 3 with respect to appraisal of assets and
liabilities. At any time, the Trustees may cause the value
[par]((per)) Share last determined to be determined again in a similar
manner and may fix[,] the time when such redetermined value shall
become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
SECTION 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940
Act. Such suspension shall take effect at such time as the Trustees
shall specify((,)) but not later than the close of business on the
business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment until the
Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the
Net Asset Value per Share existing after the termination of the
suspension. ((In the event that any Series is divided into Classes,
the provisions of this Section, to the extent applicable as determined
in the discretion of the Trustees and consistent with applicable law,
may be equally applied to each such Class.))
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
((LIMITATION OF LIABILITY))
SECTION 1. Provided they have exercised reasonable care and have
acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees shall not be responsible for or
liable in any event for neglect or wrongdoing of them or any officer,
agent, employee, or investment adviser of the Trust, but nothing
contained herein shall protect any Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence((,)) or reckless disregard of the duties
involved in the conduct of his office.
INDEMNIFICATION OF COVERED PERSONS
SECTION 2.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent permitted
by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit((,)) or
proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer and against
amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expense((s))" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office((;)) or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence((,)) or reckless disregard of
the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
[i]((I))nterested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be such Trustee or officer((,)) and shall inure to
the benefit of the heirs, executors((,)) and administrators of such a
person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise
under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit((,)) or proceeding of the character
described in [p]((P))aragraph (a) of this Section 2 may be paid by the
applicable Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the applicable Series if
it is ultimately determined that he is not entitled to indemnification
under this Section 2; provided, however, that either [a](((i))) such
Covered Person shall have provided appropriate security for such
undertaking[,]((;)) [(b)](((ii))) the Trust is insured against losses
arising out of any such advance payments[,]((;)) or [(c)](((iii)))
either a majority of the Trustees who are neither interested persons
of the Trust nor parties to the matter, or independent legal counsel
in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section 2.
INDEMNIFICATION OF SHAREHOLDERS
SECTION 3. In case any Shareholder or former Shareholder of any
Series of the Trust shall be held to be personally liable solely by
reason of his being or having been a Shareholder and not because of
his acts or omissions or for some other reason, the Shareholder or
former Shareholder (or his heirs, executors, administrators((,)) or
other legal representatives or((,)) in the case of a corporation or
other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense
arising from such liability. The Series shall, upon request by the
Shareholder, assume the defense of any claim made against the
Shareholder for any act or obligation of the Series and satisfy any
judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP, ETC.
SECTION 1. It is hereby expressly declared that a trust [and not a
partnership] is created hereby ((and not a partnership, joint stock
association, corporation, bailment, or any form of a legal
relationship other than a trust.)) No Trustee hereunder shall have any
power to [bind] personally ((bind)) either the Trust's officers or any
Shareholder. All persons extending credit to, contracting with((,)) or
having any claim against the Trust or the Trustees shall look only to
the assets of the appropriate Series for payment under such credit,
contract((,)) or claim; and neither the Shareholders nor the Trustees,
nor any of their agents, whether past, present((,)) or future, shall
be personally liable therefor. Nothing in this Declaration of Trust
shall protect a Trustee against any liability to which the Trustee
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence((,)) or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 2. The exercise by the Trustees of their powers and
discretions hereunder in good faith and with reasonable care under the
circumstances then prevailing, shall be binding upon everyone
interested. Subject to the provisions of Section 1 of this Article XII
and to Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1
of this Article XII and to Article XI, shall be under no liability for
any act or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
SECTION 3. The Trustees may close the stock transfer books of the
Trust for a period not exceeding sixty (60) days preceding the date of
any meeting of Shareholders, or the date for the payment of any
dividends, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect;
or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for
payment of any dividends((,)) or the date for the allotment of rights,
or the date when any change or conversion or exchange of Shares shall
go into effect, as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting,
or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of
record on the date so fixed shall be entitled to such notice of, and
to vote at, such meeting, or to receive payment of such dividend, or
to receive such allotment or rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any Shares on the
books of the Trust after any such record date fixed or aforesaid.
((DURATION; ))TERMINATION OF TRUST, ((A SERIES OR A CLASS; MERGERS,
ETC.))
[Section 4] [(a)] ((SECTION 4.1. DURATION.)) The Trust shall continue
without limitation of time((,)) but subject to the provisions [of
subsection (b)] of this [Section 4] ((Article XII.))
[(b)](( SECTION 4.2. TERMINATION OF THE TRUST, A SERIES OR A CLASS.))
[Subject to a Majority Shareholder Vote of each Series affected by the
matter or, if applicable, to a Majority Shareholder Vote of the Trust,
the Trustees may
(i) sell and convey the assets of the Trust or any affected Series
to another trust, partnership, association or corporation organized
under the laws of any state which is a diversified open-end management
investment company as defined in the 1940 Act, for adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of
beneficial interest or stock of such trust, partnership, association
or corporation; or
(ii) at any time sell and convert into money all of the Assets of
the Trust or any affected Series.
Upon making provision for the payment of all liabilities in either
(i) or (ii), by such assumption or otherwise, the Trustees shall
distribute the remaining proceeds or assets (as the case may be)
ratably among the holders of the Shares of the Trust or any affected
Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in sub-section (b), the Trust or any
affected Series shall terminate and the Trustees shall be discharged
of any and all further liabilities and duties hereunder and the right,
title and interest of all parties shall be cancelled and discharged.]
(( (a) Subject to applicable Federal and state law, the Trust or any
Series or Class thereof may be terminated (i) by Majority Shareholder
Vote of the Trust, each Series affected, or each Class affected, as
the case may be; or (ii) without the vote or consent of Shareholders
by a majority of the Trustees either at a meeting or by written
consent. The Trustees shall provide written notice to the affected
Shareholders of a termination effected under clause (ii) above. Upon
the termination of the Trust or the Series or Class,))
(( (i) the Trust or the Series or Class shall carry on no business
except for the purpose of winding up its affairs;))
(( (ii) the Trustees shall proceed to wind up the affairs of the
Trust or the Series or Class, and all of the powers of the Trustees
under this Declaration of Trust shall continue until the affairs of
the Trust shall have been wound up, including the power to fulfill or
discharge the contracts of the Trust or the Series or Class thereof;
collect its assets; sell, convey, assign, exchange, transfer, or
otherwise dispose of all or any part of the remaining Trust property
or Trust property allocated or belonging to such Series or Class to
one or more persons at public or private sale for consideration that
may consist in whole or in part of cash, securities, or other property
of any kind; discharge or pay its liabilities; and do all other acts
appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer, or other disposition of
all or substantially all the Trust property or Trust property
allocated or belonging to such Series or Class (other than as provided
in (iii) below) shall require Shareholder approval in accordance with
Section 4.3 below; and))
(( (iii) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust property or the remaining
property of the terminated Series or Class, in cash or in kind or
partly each, among the Shareholders of the Trust or the Series or
Class according to their respective rights; and))
(( (b) after termination of the Trust or the Series or Class and
distribution to the Shareholders as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust and
file with the Secretary of The Commonwealth of Massachusetts, as
appropriate, an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties with respect to the Trust or the
terminated Series or Class, and the rights and interests of all
Shareholders of the Trust or the terminated Series or Class shall
thereupon cease.))
(( SECTION 4.3. MERGER, CONSOLIDATION, AND SALE OF ASSETS. Subject to
applicable Federal and state law and except as otherwise provided in
Section 4.4 below, the Trust or any Series thereof may merge or
consolidate with any other corporation, association, trust, or other
organization or may sell, lease, or exchange all or substantially all
of the Trust property or Trust property allocated or belonging to such
Series, including its good will, upon such terms and conditions and
for such consideration when and as authorized at any meeting of
Shareholders called for such purpose by a Majority Shareholder Vote of
the Trust or affected Series, as the case may be. Any such merger,
consolidation, sale, lease, or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to Massachusetts
law.))
(( SECTION 4.4. INCORPORATION; REORGANIZATION. Subject to applicable
Federal and state law, the Trustees may without the vote or consent of
Shareholders cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any
other trust, partnership, limited liability company, association, or
other organization to take over all of the Trust property or the Trust
property allocated or belonging to such Series or to carry on any
business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust property or the
Trust property allocated or belonging to such Series to any such
corporation, trust, limited liability company, partnership,
association, or organization in exchange for the shares or securities
thereof or otherwise, and to lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such
corporation, trust, partnership, limited liability company,
association, or organization, or any corporation, partnership, limited
liability company, trust, association, or organization in which the
Trust or such Series holds or is about to acquire shares or any other
interest. Subject to applicable Federal and state law, the Trustees
may also cause a merger or consolidation between the Trust or any
successor thereto and any such corporation, trust, partnership,
limited liability company, association, or other organization. Nothing
contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one
or more corporations, trusts, partnerships, limited liability
companies, associations, or other organizations and selling,
conveying, or transferring the Trust property or a portion of the
Trust property to such organization or entities; provided, however,
that the Trustees shall provide written notice to the affected
Shareholders of any transaction whereby, pursuant to this Section 4.4,
the Trust or any Series thereof sells, conveys, or transfers
substantially all of its assets to another entity or merges or
consolidates with another entity.))
FILING OF COPIES, REFERENCES, AND HEADINGS
SECTION 5. The original or a copy of this instrument and of each
[declaration of trust]((Declaration of Trust)) supplemental hereto
shall be kept at the office of the Trust where it may be inspected by
any Shareholder. A copy of this instrument and of each supplemental
[declaration of trust]((Declaration of Trust)) shall be filed by the
Trustees with the Secretary of The Commonwealth of Massachusetts and
the Boston City Clerk, as well as any other governmental office where
such filing may from time to time be required. Anyone dealing with the
Trust may rely on a certificate by an officer or Trustee of the Trust
as to whether or not any such supplemental [declarations of
trust]((Declarations of Trust)) have been made and as to any matters
in connection with the Trust hereunder, and with the same effect as if
it were the original, may rely on a copy certified by an officer or
Trustee of the Trust to be a copy of this instrument or of any such
supplemental [declaration of trust]((Declaration of Trust.)) In this
instrument or in any such supplemental [declaration of
trust]((Declaration of Trust,)) references to this instrument and all
expressions like "herein," "hereof" and "hereunder," shall be deemed
to refer to this instrument as amended or affected by any such
supplemental [declaration of trust]((Declaration of Trust.)) Headings
are placed herein for convenience of reference only and in case of any
conflict, the text of this instrument, rather than the headings, shall
control. This instrument may be executed in any number of counterparts
each of which shall be deemed an original.
APPLICABLE LAW
SECTION 6. The [t]((T))rust set forth in this instrument is made in
[t]((T))he Commonwealth of Massachusetts, and it is created under and
is to be governed by and construed and administered according to the
laws of said Commonwealth. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust((, and the absence of a specific
reference herein to any such power, privilege, or action shall not
imply that the Trust may not exercise such power or privilege or take
such actions.))
AMENDMENTS
[Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by
applicable law or this Declaration of Trust in any particular case,
the Trustees shall amend or otherwise supplement this instrument, by
making a declaration of trust supplemental hereto, which thereafter
shall form a part hereof, except that an amendment which shall affect
the Shareholders of one or more Series but not the Shareholders of all
outstanding Series shall be authorized by vote of the Shareholders
holding a majority of the Shares entitled to vote of each Series
affected and no vote of Shareholders of a Series not affected shall be
required. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder vote.
Copies of the supplemental declaration of trust shall be filed as
specified in Section 5 of this Article XII.] ((SECTION 7. Except as
specifically provided herein, the Trustees may, without shareholder
vote, amend or otherwise supplement this Declaration of Trust by
making an amendment, a Declaration of Trust supplemental hereto or an
amended and restated Declaration of Trust. Shareholders shall have the
right to vote (a) on any amendment that would affect their right to
vote granted in Section 1 of Article VIII; (b) on any amendment that
would alter the maximum number of Trustees permitted under Section 6
of Article IV; (c) on any amendment to this Section 7; (d) on any
amendment as may be required by law or by the Trust's registration
statement filed with the Commission; and (e) on any amendment
submitted to them by the Trustees. Any amendment required or permitted
to be submitted to Shareholders that, as the Trustees determine, shall
affect the Shareholders of one or more Series or Classes shall be
authorized by vote of the Shareholders of each Series or Class
affected and no vote of shareholders of a Series or Class not affected
shall be required. Notwithstanding anything else herein, any amendment
to Article XI shall not limit the rights to indemnification or
insurance provided therein with respect to action or omission of
Covered Persons prior to such amendment.))
FISCAL YEAR
SECTION 8. The fiscal year of the Trust shall end on a specified date
as set forth in the Bylaws, ((if any,)) provided, however, that the
Trustees may, without Shareholder approval, change the fiscal year of
the Trust.
USE OF THE WORD "FIDELITY"
SECTION 9. Fidelity Management & Research Company ("FMR") has
consented to the use by any Series of the Trust of the identifying
word "Fidelity" in the name of any Series of the Trust at some future
date. Such consent is conditioned upon the employment of FMR ((or a
subsidiary or affiliate thereof)) as investment adviser of each Series
of the Trust. As between the Trust and itself, FMR controls the use of
the name of the Trust insofar as such name contains the identifying
word "Fidelity[".]((.")) FMR may from time to time use the identifying
word "Fidelity" in other connections and for other purposes,
including, without limitation, in the names of other investment
companies, corporations, or businesses [which]((that)) it may manage,
advise, sponsor or own or in which it may have a financial interest.
FMR may require the Trust or any Series thereof to cease using the
identifying word "Fidelity" in the name of the Trust or any Series
thereof if the Trust or any Series thereof ceases to employ FMR or a
subsidiary or affiliate thereof as investment adviser.
((PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS))
(( SECTION 10. (a) The provisions of this Declaration of Trust are
severable, and, if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue
Code or with other applicable laws and regulations, the conflicting
provision shall be deemed never to have constituted a part of this
Declaration of Trust; provided, however, that such determination shall
not affect any of the remaining provisions of this Declaration of
Trust or render invalid or improper any action taken or omitted prior
to such determination.
(b) If any provision of this Declaration Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any
other jurisdiction or any other provision of this Declaration of Trust
in any jurisdiction.))
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument [this 17th day of March,
1994]((as of the date set forth above. ))
[SIGNATURE LINES OMITTED]
EXHIBIT 2
COMPARISON OF STAND ALONE FUNCTION STRUCTURE
TO
MASTER FEEDER FUND STRUCTURE
STAND ALONE FUND STRUCTURE
The "Stand Alone Fund Structure" diagram contains three circles
labeled "Individual Fund A-1 (Managed by FMR)," "Individual Fund A-2
(Managed by FMR)," and "Individual Fund A-3 (Managed by FMR),"
respectively. Above each circle attached by a line is a single
rectangular box. The three rectangular boxes are labeled "Retail
Investors," "Institutional Investors," and "Retirement Investors,"
respectively.
MASTER FEEDER FUND STRUCTURE
The "Master Feeder Fund Structure" diagram contains a single circle
labeled "Master Fund (Managed by FMR)." Surrounding the circle
attached by lines are three square boxes labeled "Feeder Fund A-1,"
"Feeder Fund A-2," and "Feeder Fund A-3," respectively. Attached to
each square box a line is a single rectangular box. The three
rectangular boxes are labeled "Retail Investors," "Institutional
Investors," and Retirement Investors," respectively.
EXHIBIT 3
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY FIXED-INCOME TRUST:
{NAME OF EACH PORTFOLIO OMITTED}
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[Modification] ((AMENDMENT)) made this [1st] __ day of [November
1993] __________ ((1999,)) by and between Fidelity Fixed-Income Trust,
a Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Fund"), on
behalf of {NAME OF EACH PORTFOLIO OMITTED} (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser") ((as set
forth in its entirety below.))
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract [dated November 1, 1989/modified September 1,
1992] ((dated November 1, 1993,)) to a modification of said Contract
in the manner set forth below. The [Modified] ((Amended)) Management
Contract shall, when executed by duly authorized officers of the Fund
and the Adviser, take effect on [the later of November 1, 1993 or the
first day of the month following approval:] ((________, 1999.))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to ((the)) control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser [, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Group [fee
rate] ((Fee)) and an Individual Fund [fee rate] ((Fee.))
(a) Group Fee Rate. The Group [f]((Fee)) [r]((R))ate shall be based
upon the monthly average of the net assets of the registered
investment companies having Advisory and Service or Management
Contracts with the Adviser (computed in the manner set forth in the
[charter of each investment company] ((Fund's Declaration of Trust or
other organizational document))) determined as of the close of
business on each business day throughout the month. The Group
[f]((F))ee [r]((R))ate shall be determined on a cumulative basis
pursuant to the following schedule[.]((:))
Average Net Assets Annualized Fee Rate (for each
level)
0 - $ 3 billion .370((0))%
3 - 6 .340((0))
6 - 9 .310((0))
9 - 12 .280((0))
12 - 15 .250((0))
15 - 18 .220((0))
18 - 21 .200((0))
21 - 24 .190((0))
24 - 30 .180((0))
30 - 36 .175((0))
36 - 42 .170((0))
42 - 48 .165((0))
48 - 66 .160((0))
66 - 84 .155((0))
84 - 120 .150((0))
[120 - 174] [.145%]
[Over 174] [.140%]
120 - 156 ((.1450))
156 - 192 ((.1400))
192 - 228 ((.1350))
228 - 264 ((.1300))
264 - 300 ((.1275))
300 - 336 ((.1250))
336 - 372 ((.1225))
372 - 408 ((.1200))
408 - 444 ((.1175))
444 - 480 ((.1150))
480 - 516 ((.1125))
Over 516 ((.1100))
(b) Individual Fund Fee Rate. The Individual Fund [f]((F))ee
[r]((R))ate shall be .30%.
The sum of the Group [f]((F))ee [r]((R))ate, calculated as described
above to the nearest millionth, and the Individual Fund [f]((F))ee
[r]((R))ate shall constitute the [a]((A))nnual [m]((M))anagement
[f]((F))ee [r]((R))ate. One-twelfth of the [a]((A))nnual
[m]((M))anagement [f]((F))ee ((Rate)) shall be applied to the average
of the net assets of the Portfolio (computed in the manner set forth
in the ((Fund's)) Declaration of Trust ((or other organizational
document))) determined as of the close of business on each business
day throughout the month.
(( (c))) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect, and the fee
computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses,
[other than those expressly stated to be payable by the Adviser
hereunder,] which expenses payable by the Portfolio shall [,] include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
[relating] ((related)) to the registration and qualification of the
Fund and the Portfolio's shares for distribution under state and
federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the
Portfolio; (viii) all other expenses incidental to holding meetings of
the Portfolio's shareholders, including proxy solicitations therefor;
(ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service
or Management Contracts with the Adviser, of 50% of insurance premiums
for fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument.))
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until June
30, [1994] ((1999)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract((,)) without
payment of any penalty, by action of its Trustees or Board of
Directors, as the case may be, or with respect to the Portfolio by
vote of a majority of the outstanding voting securities of the
Portfolio. This Contract shall terminate automatically in the event of
its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
((or other organizational document)) and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust ((or other organizational document)) are separate
and distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts((, without giving
effect to the choice of laws provisions thereof.))
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 4
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY FIXED-INCOME TRUST:
[SPARTAN] ((FIDELITY)) HIGH INCOME FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[AGREEMENT] ((AMENDMENT)) made this [1st] __ day of [November 1993]
__________ ((1999,)) by and between Fidelity Fixed-Income Trust, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Fund"), on
behalf of [Spartan] ((Fidelity)) High Income Fund (hereinafter called
the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser") ((as set
forth in its entirety below.))
Required authorization and approval by shareholders and Trustees
having been obtained, the Trust, on behalf of the Portfolio, and the
[Advisor] ((Adviser)) hereby consent, pursuant to Paragraph 6 of the
existing Management Contract dated [July 19, 1989] ((November 1,
1993,)) to a modification of said Contract in the manner set forth
below. The [Modified] ((Amended)) Management Contract shall((,)) when
executed by duly authorized officers of the Fund and the [Advisor]
((Adviser,)) take effect on [the later of November 1, 1993 or the
first day of the month following approval] ((________, 1999.))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) [The Adviser undertakes to pay all expenses involved in the
operation of the Portfolio, except the following, which shall be paid
by the Portfolio: (i) taxes; (ii) the fees and expenses of all
Trustees of the Fund who are not "interested persons" of the Fund or
of the Adviser; (iii) brokerage fees and commissions; (iv) interest
expenses with respect to borrowings by the Portfolio; and (v) such
non-recurring and extraordinary expenses as may arise, including
actions, suits or proceedings to which the Portfolio is or is threaten
to be a part and the legal obligation that the Portfolio may have to
indemnify the Fund's Trustees and officers with respect thereto. It is
understood that service charges billed directly to shareholders of the
Portfolio, including charges for exchanges, redemptions, or other
services, shall not be payable by the Adviser, but may be received and
retained by the Adviser or its affiliates.] [(d)]The Adviser [, at its
own expense,] shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts to
seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other
accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. [For the services and facilities to be furnished hereunder, the
Adviser shall receive a monthly management fee, payable monthly as
soon as practicable after the last day of each month, at the annual
rate of .80% of the average net assets of the Portfolio (computed in
the manner set forth in the Fund's Declaration of Trust) determined as
of the close of business on each day throughout the month; provided
that the fee, so computed, shall be reduced by the compensation,
including reimbursement of expenses, paid by the Portfolio to those
Trustees who are not "interested persons" of the Fund or the Adviser.]
((The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Advisor shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Group Fee
and an Individual Fund Fee.))
(( (a) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the Fund's Declaration of
Trust or other organizational document) determined as of the close of
business on each business day throughout the month. The Group Fee Rate
shall be determined on a cumulative basis pursuant to the following
schedule:))
((Average Net Assets Annualized Fee Rate (for each
level)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
372 - 408 .1200
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100))
(( (b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
0.45%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute
the Annual Management Fee Rate. One-twelfth of the Annual Management
Fee Rate shall be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration
of Trust or other organizational document) determined as of the close
of business on each business day throughout the month.))
(( (c) ))In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect, and the fee
computed upon the average net assets for the business days it is so in
effect for that month.
(( 4. It is understood that the Portfolio will pay all its expenses,
which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and
other costs in connection with the purchase or sale of securities and
other investment instruments; (iii) fees and expenses of the Fund's
Trustees other than those who are "interested persons" of the Fund or
the Adviser; (iv) legal and audit expenses; (v) custodian, registrar
and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Fund and the Portfolio's
shares for distribution under state and federal securities laws; (vii)
expenses of printing and mailing reports and notices and proxy
material to shareholders of the Portfolio; (viii) all other expenses
incidental to holding meetings of the Portfolio's shareholders,
including proxy solicitations therefor; (ix) a pro rata share, based
on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management
Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.))
[4.]((5.)) The services of the Adviser to the Portfolio are not to be
deemed exclusive, the Adviser being free to render services to others
and engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument.))
[5.]((6.)) (a) Subject to prior termination as provided in
sub-paragraph (d) of this paragraph [5]((6,)) this Contract shall
continue in force until [July 31, 1994,] ((June 30, 1999)) and
indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of
the Trustees of the Fund or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph [5]((6,)) the terms of any continuance or modification
of this Contract must have been approved by the vote of a majority of
those Trustees of the Fund who are not parties to the Contract or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
[6.]((7.)) The Adviser is hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Fund's
Declaration of Trust ((or other organizational document)) and agrees
that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other
Portfolios of the Fund. In addition, the Adviser shall not seek
satisfaction of any such obligations from the Trustees or any
individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust ((or other
organizational document)) are separate and distinct from those of any
and all other Portfolios.
(( 8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.))
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 5
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
((AND
FIDELITY FIXED-INCOME TRUST ON BEHALF OF
{NAME OF EACH PORTFOLIO OMITTED} ))
[AGREEMENT] ((AMENDMENT)) made this [1st] ___ day of [November,
1989/1993]_________, ((1999,)) by and between Fidelity Management &
Research [(U.K.) Inc.]((Company,)) a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
[(hereinafter called the "Sub-Adviser")](((hereinafter called the
"Advisor"))) [and]((;)) Fidelity Management & Research
[Company](((U.K.) Inc.))[, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter
called the "Adviser")](((hereinafter called the "Sub-Advisor"); and
Fidelity Fixed-Income Trust, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Trust") on behalf of {NAME OF EACH PORTFOLIO OMITTED}
(hereinafter called the "Portfolio").))
(( Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, the
Advisor and the Sub-Advisor hereby consent, pursuant to Paragraph 6 of
the existing Sub-Advisory Agreement dated November 1, 1989/1993, to a
modification of said Agreement in the manner set forth below. The
Amended Sub-Advisory Agreement shall, when executed by duly authorized
officers of the Fund, the Advisor and the Sub-Advisor, take effect on
________, 1999.))
WHEREAS the [Adviser has]((Trust and the Advisor have)) entered into
a Management Contract [with Fidelity Fixed-Income Trust, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Fund"),]on
behalf of [{name of each portfolio omitted} (hereinafter called the
"Portfolio"),]((the Portfolio,)) pursuant to which the
[Adviser]((Advisor)) is to act as investment [adviser to]((manager
of)) the Portfolio[,]((;)) and
WHEREAS the [Sub-Adviser has personnel in Western Europe and was
formed]((Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part)) for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries((,)) and ((securities of)) issuers located [outside
of North America, principally in Western Europe.]((in such countries,
and providing investment advisory services in connection therewith;))
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the [Adviser and the
Sub-Adviser]((Trust, the Advisor and the Sub-Advisor)) agree as
follows:
1. ((Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.))
(( (a) INVESTMENT ADVICE:)) [The Sub-Adviser]((If and to the extent
requested by the Advisor, the Sub-Advisor ))shall [act as
an]((provide)) investment [consultant]((advice)) to ((the Portfolio
and)) the [Adviser]((Advisor with respect to all or a portion of the
investments of the Portfolio,)) and ((in connection with such advice))
shall furnish ((the Portfolio and)) the [Adviser]((Advisor such))
factual information, research reports and investment recommendations
[relating to non-U.S. issuers of securities located in, and the
economies of, various countries outside the U.S., all] as the
[Adviser]((Advisor)) may reasonably require. Such information may
include written and oral reports and analyses.
(( (b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.))
(( (c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any
or all of the services contemplated by this Agreement directly or
through such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.))
(( 2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable. ))
(( 3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.))
(( 4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.))
[(2)] (((a) INVESTMENT ADVISORY FEE:)) [The Sub-Adviser will be
compensated by the Adviser on the following basis for the services to
be furnished hereunder:]((For services provided under subparagraph (a)
of paragraph 1 of this Agreement,)) the [Adviser]((Advisor)) agrees to
pay the [Sub-Adviser]((Sub-Advisor)) a monthly [fee] ((Sub-Advisory
Fee. The Sub-Advisory Fee shall be)) equal to 110% of the
[Sub-Adviser]((Sub-Advisor))'s costs incurred in connection with [the
A/agreement, said costs to be determined in relation to the assets of
the Portfolio that benefits from the services of the
S/sub-Adviser.]((rendering the services referred to in subparagraph
(a) of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not
be reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.))
(( (b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.))
(( (c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.))
(( 5. Expenses: It is understood that the Portfolio will pay all of
its expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.))
[3.]((6. Interested Persons: ))It is understood that Trustees,
officers, and shareholders of the [Fund]((Trust)) are or may be or
become interested in the [Adviser]((Advisor)) [and]((or)) the
[Sub-Adviser]((Sub-Advisor)) as directors, officers or otherwise and
that directors, officers and stockholders of the [Adviser]((Advisor))
[and]((or)) the [Sub-Adviser]((Sub-Advisor ))are or may be or become
similarly interested in the [Fund]((Trust, ))and that the [Adviser]((
Advisor)) or the [Sub-Adviser]((Sub-Advisor)) may be or become
interested in the [Fund]((Trust ))as a shareholder or otherwise.
[5.]((7. Services to Other Companies or Accounts: ))The
[S]((s))ervices of the [Sub-Adviser]((Sub-Advisor)) to the
[Adviser]((Advisor ))are not to be deemed to be exclusive, the
[Sub-Adviser]((Sub-Advisor ))being free to render services to others
and engage in other activities, provided, however, that such other
services and activities do not, during the term of this Agreement,
interfere, in a material manner, with the
[Sub-Adviser]((Sub-Advisor))'s ability to meet all of its obligations
[with respect to rendering investment advice] hereunder. [4.]The
[Sub-Adviser]((Sub-Advisor ))shall for all purposes be an independent
contractor and not an agent or employee of the [Adviser]((Advisor ))or
the [Fund]((Trust.)) [The Sub-Adviser shall have no authority to act
for, represent, bind or obligate the Adviser or the Fund, and shall in
no event have discretion to invest or reinvest assets held by the
Portfolio.]
(( 8. Standard of Care: ))In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the [Sub-Adviser]((Sub-Advisor, ))the
[Sub-Adviser]((Sub-Advisor ))shall not be subject to liability to the
[Adviser]((Advisor,)) the [Fund]((Trust)) or to any shareholder of the
Portfolio for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained
in the purchase, holding or sale of any security.
[6.]((9. Duration and Termination of Agreement; Amendments: ))
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph [6]((9,)) this Agreement shall continue in force until
[May 31, 1990/July 31, 1994]((June 30, 1999 ))and indefinitely
thereafter, but only so long as the continuance after such period
shall be specifically approved at least annually by vote of the
[Fund's]((Trust's)) Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser]((Advisor,)) the [Sub-Adviser]((Sub-Advisor)) and the
Portfolio[, such consent on the part of the Portfolio to be authorized
by vote of a majority of the outstanding voting securities of the
Portfolio.]((subject to the provisions of Section 15 of the 1940 Act,
as modified by or interpreted by any applicable order or orders of the
Securities and Exchange Commission (the "Commission") or any rules or
regulations adopted by, or interpretative releases of, the
Commission.))
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph [6]((9,)) the terms of any continuance or modification
of [the]((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund]((Trust ))who are not parties
to [such]((this)) Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either the [Adviser]((Advisor,)) the [Sub-Adviser]((Sub-Advisor
))or the Portfolio may, at any time on sixty (60) days' prior written
notice to the other parties, terminate this Agreement, without payment
of any penalty, by action of its Board of Trustees or Directors, or
((with respect to the Portfolio)) by vote of a majority of its
outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
[7.]((10. Limitation of Liability:)) The [Sub-Adviser]((Sub-Advisor))
is hereby expressly put on notice of the limitation of shareholder
liability as set forth in the Declaration of Trust [of the Fund
and]((or other organizational document of the Trust and)) agrees that
any obligations of the [Fund]((Trust ))or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the [Sub-Adviser]((Sub-Advisor)) shall
not seek satisfaction of any such obligation from the shareholders or
any shareholder of the Portfolio. Nor shall the
[Sub-Adviser]((Sub-Advisor)) seek satisfaction of any such obligation
from the Trustees or any individual Trustee.
(( 11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.))
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the [Investment Company Act of ] 1940 ((Act)) as now in
effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 6
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
((AND
FIDELITY FIXED-INCOME TRUST ON BEHALF OF
{NAME OF EACH PORTFOLIO OMITTED}))
[AGREEMENT] ((AMENDMENT)) made this [1st] ___ day of [November,
1989/1993]_________, ((1999,)) by and between Fidelity Management &
Research [(Far East) Inc.]((Company,)) a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
[(hereinafter called the "Sub-Adviser")](((hereinafter called the
"Advisor"))) [and]((;)) Fidelity Management & Research [Company](((Far
East) Inc.))[, a Massachusetts corporation with principal offices at
82 Devonshire Street, Boston, Massachusetts (hereinafter called the
"Adviser")](((hereinafter called the "Sub-Advisor"); and Fidelity
Fixed-Income Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of {NAME OF EACH PORTFOLIO OMITTED}
(hereinafter called the "Portfolio").))
(( Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, the
Advisor and the Sub-Advisor hereby consent, pursuant to Paragraph 6 of
the existing Sub-Advisory Agreement dated November 1, 1989/1993, to a
modification of said Agreement in the manner set forth below. The
Amended Sub-Advisory Agreement shall, when executed by duly authorized
officers of the Fund, the Advisor and the Sub-Advisor, take effect on
________, 1999.))
WHEREAS the [Adviser has]((Trust and the Advisor have)) entered into
a Management Contract [with Fidelity Fixed-Income Trust, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Fund"),]on
behalf of [{name of each portfolio omitted} (hereinafter called the
"Portfolio"),]((the Portfolio,)) pursuant to which the
[Adviser]((Advisor)) is to act as investment [adviser to]((manager
of)) the Portfolio[,]((;)) and
WHEREAS the [Sub-Adviser has personnel in Asia and the Pacific Basin
and was formed] ((Sub-Advisor and its subsidiaries and other
affiliated persons have personnel in various locations throughout the
world and have been formed in part)) for the purpose of researching
and compiling information and recommendations with respect to the
economies of various countries((,)) and ((securities of)) issuers
located [outside of North America, principally in Asia and the Pacific
Basin.] ((in such countries, and providing investment advisory
services in connection therewith;))
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the [Adviser and Sub-Adviser] ((Trust,
the Advisor and the Sub-Advisor)) agree as follows:
(( 1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.))
(( (a) INVESTMENT ADVICE: ))[The Sub-Adviser]((If and to the extent
requested by the Advisor, the Sub-Advisor ))shall [act as an]((provide
))investment [consultant]((advice)) to ((the Portfolio and)) the
[Adviser]((Advisor with respect to all or a portion of the investments
of the Portfolio,)) and ((in connection with such advice)) shall
furnish ((the Portfolio and)) the [Adviser]((Advisor such)) factual
information, research reports and investment recommendations [relating
to non-U.S. issuers of securities located in, and the economies of,
various countries outside the U.S., all] as the [Adviser]((Advisor))
may reasonably require. Such information may include written and oral
reports and analyses.
(( (b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.))
(( (c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any
or all of the services contemplated by this Agreement directly or
through such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.))
(( 2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable. ))
(( 3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.))
(( 4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.))
[(2)] (((a) INVESTMENT ADVISORY FEE:)) [The Sub-Adviser will be
compensated by the Adviser on the following basis for the services to
be furnished hereunder:]((For services provided under subparagraph (a)
of paragraph 1 of this Agreement, ))the [Adviser]((Advisor)) agrees to
pay the [Sub-Adviser]((Sub-Advisor)) a monthly [fee] ((Sub-Advisory
Fee. The Sub-Advisory Fee shall be)) equal to 105% of the
[Sub-Adviser]((Sub-Advisor))'s costs incurred in connection with [the
A/agreement, said costs to be determined in relation to the assets of
the Portfolio that benefit from the services of the
S/sub-A/adviser.]((rendering the services referred to in subparagraph
(a) of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not
be reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.))
(( (b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.))
(( (c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.))
(( 5. Expenses: It is understood that the Portfolio will pay all of
its expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.))
[3.]((6. Interested Persons: ))It is understood that Trustees,
officers, and shareholders of the [Fund]((Trust)) are or may be or
become interested in the [Adviser]((Advisor)) [and]((or)) the
[Sub-Adviser]((Sub-Advisor)) as directors, officers or otherwise and
that directors, officers and stockholders of the [Adviser]((Advisor))
[and]((or)) the [Sub-Adviser]((Sub-Advisor ))are or may be or become
similarly interested in the [Fund]((Trust, ))and that the [Adviser]((
Advisor)) or the [Sub-Adviser]((Sub-Advisor)) may be or become
interested in the [Fund]((Trust ))as a shareholder or otherwise.
[5.]((7. Services to Other Companies or Accounts: ))The
[S]((s))ervices of the [Sub-Adviser]((Sub-Advisor)) to the
[Adviser]((Advisor ))are not to be deemed to be exclusive, the
[Sub-Adviser]((Sub-Advisor )) being free to render services to others
and engage in other activities, provided, however, that such other
services and activities do not, during the term of this Agreement,
interfere, in a material manner, with the
[Sub-Adviser]((Sub-Advisor))'s ability to meet all of its obligations
[with respect to rendering investment advice] hereunder. [4.]The
[Sub-Adviser]((Sub-Advisor)) shall for all purposes be an independent
contractor and not an agent or employee of the [Adviser]((Advisor ))or
the [Fund]((Trust.)) [The Sub-Adviser shall have no authority to act
for, represent, bind or obligate the Adviser or the Fund, and shall in
no event have discretion to invest or reinvest assets held by the
Portfolio.]
(( 8. Standard of Care: ))In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the [Sub-Adviser]((Sub-Advisor, ))the
[Sub-Adviser]((Sub-Advisor ))shall not be subject to liability to the
[Adviser]((Advisor,)) the [Fund]((Trust)) or to any shareholder of the
Portfolio for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained
in the purchase, holding or sale of any security.
[6.]((9. Duration and Termination of Agreement; Amendments: ))
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph [6]((9,)) this Agreement shall continue in force until
[May 31, 1990/July 31, 1994]((June 30, 1999 ))and indefinitely
thereafter, but only so long as the continuance after such period
shall be specifically approved at least annually by vote of the
[Fund's]((Trust's)) Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser]((Advisor,)) the [Sub-Adviser]((Sub-Advisor)) and the
Portfolio[, such consent on the part of the Portfolio to be authorized
by vote of a majority of the outstanding voting securities of the
Portfolio.]((subject to the provisions of Section 15 of the 1940 Act,
as modified by or interpreted by any applicable order or orders of the
Securities and Exchange Commission (the "Commission") or any rules or
regulations adopted by, or interpretative releases of, the
Commission.))
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph [6]((9,)) the terms of any continuance or modification
of [the]((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund]((Trust)) who are not parties
to [such]((this)) Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either the [Adviser]((Advisor,)) the [Sub-Adviser]((Sub-Advisor
))or the Portfolio may, at any time on sixty (60) days' prior written
notice to the other parties, terminate this Agreement, without payment
of any penalty, by action of its Board of Trustees or Directors, or
((with respect to the Portfolio)) by vote of a majority of its
outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
[7.]((10. Limitation of Liability:)) The [Sub-Adviser]((Sub-Advisor))
is hereby expressly put on notice of the limitation of shareholder
liability as set forth in the Declaration of Trust [of the Fund
and]((or other organizational document of the Trust and)) agrees that
any obligations of the [Fund]((Trust ))or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the [Sub-Adviser]((Sub-Advisor)) shall
not seek satisfaction of any such obligation from the shareholders or
any shareholder of the Portfolio. Nor shall the
[Sub-Adviser]((Sub-Advisor)) seek satisfaction of any such obligation
from the Trustees or any individual Trustee.
(( 11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.))
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the [Investment Company Act of ] 1940 ((Act)) as now in
effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
FIDELITY(registered trademark) INVESTMENT GRADE BOND FUND
FIDELITY SHORT-TERM BOND FUND
SPARTAN(registered trademark) GOVERNMENT INCOME FUND
FIDELITY HIGH INCOME FUND
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND
FUNDS OF
FIDELITY FIXED-INCOME TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Investment Grade Bond Fund, Fidelity Short-Term
Bond Fund, Spartan Government Income Fund, Fidelity High Income Fund,
and Spartan Short-Intermediate Government Fund (the funds) will be
held at the office of Fidelity Fixed-Income Trust (the trust), 82
Devonshire Street, Boston, Massachusetts 02109 on April 14, 1999, at
9:00 a.m. The purpose of the Meeting is to consider and act upon the
following proposals, and to transact such other business as may
properly come before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an amended and restated
Declaration of Trust.
4. To adopt a new fundamental investment policy for each fund
permitting the fund to invest all of its assets in another open-end
investment company managed by FMR or an affiliate with substantially
the same investment objective and policies.
5. To approve an amended management contract for Fidelity Investment
Grade Bond Fund and Fidelity Short-Term Bond Fund.
6. To approve an amended management contract, including a management
fee structure change, for Fidelity High Income Fund.
7. To approve an amended sub-advisory agreement with Fidelity
Management & Research (U.K.) Inc. for Fidelity Investment Grade Bond
Fund, Fidelity Short-Term Bond Fund, and Fidelity High Income Fund.
8. To approve an amended sub-advisory agreement with Fidelity
Management & Research (Far East) Inc. for Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity High Income
Fund.
9. To eliminate certain fundamental investment policies of Fidelity
Investment Grade Bond Fund.
10. To eliminate certain fundamental investment policies of Fidelity
Short-Term Bond Fund.
11. To eliminate certain fundamental investment policies of Spartan
Government Income Fund.
12. To eliminate certain fundamental investment policies of Fidelity
High Income Fund.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
13. To amend the fundamental investment limitation concerning real
estate for Spartan Government Income Fund.
14. To amend the fundamental investment limitation concerning
diversification to exclude "securities of other investment companies"
from the limitation for each fund.
15. To amend the fundamental investment limitation concerning
underwriting for Fidelity Short-Term Bond Fund.
16. To amend the fundamental investment limitation concerning
concentration of investments in a single industry for Fidelity
Short-Term Bond Fund and Fidelity High Income Fund.
The Board of Trustees has fixed the close of business on February
1 6 , 1999 as the record date for the determination of the
shareholders of each of the funds entitled to notice of, and to vote
at, such Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
February 1 6 , 1999
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 avoid the time and expense 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
EXHIBIT 7
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INVESTMENT
OBJECTIVE AND FUND FISCAL YEAR END(A) AVERAGE NET ASSETS RATIO OF NET
ADVISORY FEES
(MILLIONS)(B) TO AVERAGE NET
ASSETS PAID
TO FMR (C)
TAXABLE BOND
Advisor Intermediate Bond:
((pound))(#)((hollow diamond))
Class A 11/30/97 $2.1 0.44%
Class B 11/30/97 19.6 0.44
Class T 11/30/97 262.1 0.44
Class C ((sunburst)) 11/30/97 0.0 0.44
Institutional Class 11/30/97 192.5 0.44
Institutional 11/30/97 342.8 0.45
Short-Intermediate Government
Real Estate High Income 11/30/97 46.1 0.74
Advisor Emerging Markets
Income: ((epslon))(#)
Class A 12/31/97 1.3 0.69
Class B 12/31/97 22.3 0.69
Class T 12/31/97 92.2 0.69
Class C ((sunburst)) 12/31/97 0.0 0.69
Institutional Class 12/31/97 3.6 0.69
Advisor Strategic Income:
((pound))(#)((hollow diamond))
Class A 12/31/97 1.7 0.59
Class B 12/31/97 45.5 0.59
Class T 12/31/97 110.6 0.59
Class C 12/31/97 0.3 0.59
Institutional Class 12/31/97 6.2 0.59
Global Bond ((epslon)) 12/31/97 92.5 0.69
New Markets Income ((rex-all)) 12/31/97 386.4 0.69
Real Estate High Income II 12/31/97 73.9 0.74
Variable Insurance Products:
High Income ((pound))
Initial Class 12/31/97 1,936.9 0.59
Service Class ((sunburst)) 12/31/97 0.0 0.59
Variable Insurance Products
II:
Investment Grade Bond 12/31/97 262.9 0.44
U.S. Bond Index 2/28/98 632.8 0.32*
Capital & Income ((pound)) 4/30/98 2,144.9 0.59
Fidelity High Income ((pound)) 4/30/98 2,412.2 0.80
INVESTMENT OBJECTIVE AND FUND FISCAL YEAR END (A) AVERAGE NET ASSETS RATIO OF NET ADVISORY FEES
(MILLIONS)(B) TO AVERAGE NET ASSETS PAID
TO FMR (C)
Intermediate Bond ((pound)) 4/30/98 $ 3,139.1 0.44%
Investment Grade Bond 4/30/98 1,617.5 0.44
((pound))
Short-Term Bond ((pound)) 4/30/98 883.0 0.44
Spartan Government Income 4/30/98 275.9 0.60*
Spartan Short-Intermediate 4/30/98 72.8 0.65
Government
The North Carolina Capital
Management Trust:
Term Portfolio 6/30/98 71.0 0.35
Ginnie Mae ((pound)) 7/31/98 863.5 0.42*
Government Income 7/31/98 1,191.0 0.44
Intermediate Government 7/31/98 735.8 0.38*
Income ((pound))
Target Timeline Funds:
((pound))
1999 7/31/98 13.1 0.00*
2001 7/31/98 11.7 0.00*
2003 7/31/98 16.4 0.00*
Spartan Ginnie Mae 8/31/98 614.3 0.38*
Short-Intermediate Government 9/30/98 126.3 0.44
Spartan Investment Grade Bond 9/30/98 820.2 0.38*
((pound))
Spartan Short-Term Bond 9/30/98 316.3 0.38*
((pound))
Advisor Mortgage Securities:
((pound))(#)((hollow diamond))
Class A 10/31/98 0.8 0.44
Class B 10/31/98 4.0 0.44
Class T 10/31/98 14.6 0.44
Institutional Class 10/31/98 21.3 0.44
Initial Class 10/31/98 471.0 0.44
Advisor Government
Investment:
((pound))((hollow diamond))
Class A 10/31/98 3.1 0.43
Class B 10/31/98 29.1 0.43
Class T 10/31/98 161.2 0.43
Class C 10/31/98 3.7 0.43
Institutional Class 10/31/98 24.7 0.43
Advisor High Yield: ((pound))
Class A 10/31/98 $ 87.2 0.58%
Class B 10/31/98 823.9 0.58
Class T 10/31/98 2,481.8 0.58
Class C 10/31/98 71.0 0.58
Institutional Class 10/31/98 117.4 0.58
Advisor Short Fixed-Income:
((pound))((hollow diamond))
Class A 10/31/98 6.5 0.44
Class T 10/31/98 336.8 0.44
Class C 10/31/98 2.0 0.44
Institutional Class 10/31/98 6.5 0.44
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart
or as of October 31, 1998.
(b) Average net assets are computed on the basis of average net
assets of each fund at the close of business on each business day
throughout its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or
due from FMR pursuant to voluntary or state expense limitations. Funds
so affected are indicated by an (*). For multiple class funds, the
ratio of net advisory fees to average net assets is presented gross of
reductions for certain classes, for presentation purposes. Funds so
affected are indicated by (#).
((sunburst)) Average net assets for the period shown were less than
$100,000
((rex-all)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management &
Research (Far East) Inc. (FMR Far East), Fidelity Investments Japan
Ltd. (FIJ), Fidelity International Investment Advisors (FIIA), and
Fidelity International Investment Advisors (U.K.) Limited (FIIA (U.K.)
L), with respect to the fund.
((epslon)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: FMR U.K., FMR
Far East, FIIA, and FIIA (U.K.) L, with respect to the fund.
((pound)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect
to the fund.
((hollow diamond)) Fidelity Management & Research Company has
entered into a sub-advisory agreement with Fidelity Investments Money
Management, Inc., with respect to the fund.
Vote this proxy card TODAY! Your prompt response will
save 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 FIXED-INCOME TRUST: FIDELITY INVESTMENT GRADE BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, William O. McCoy, and Eric D. Roiter, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of FIDELITY FIXED-INCOME TRUST as indicated above 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 April 14, 1999 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 _____________, 1999
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(026, 450, 453, 455 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL S .
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING:
PLEASE DETACH AT PERFORATION BEFORE MAILING.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To elect the twelve nominees FOR all nominees listed WITHHOLD authority to vote 1.
specified below as Trustees: (except as marked to the for all nominees
(01) Ralph F. Cox, (02) contrary at left) [ ]
Phyllis Burke Davis, (03) [ ]
Robert M. Gates, (04) Edward
C. Johnson 3d, (05) E.
Bradley Jones, (06) Donald
J. Kirk, (07) Peter S.
Lynch, (08) William O.
McCoy, (09) Gerald C.
McDonough, (10) Marvin L.
Mann, (11) Robert C. Pozen,
and (12) Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
- -----------------------------------------------------------------
2. To ratify the selection of FOR AGAINST ABSTAIN 2.
PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent accountants
of the fund.
3. To authorize the Trustees to [ ] [ ] [ ] 3.
adopt an Amended and
Restated Declaration of Trust.
4. To adopt a new fundamental [ ] [ ] [ ] 4.
investment policy for the
fund permitting the fund to
invest all of its assets in
another open-end investment
company managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
5. To approve an amended [ ] [ ] [ ] 5.
management contract for the
fund.
7. To approve an amended [ ] [ ] [ ] 7.
sub-advisory agreement with
Fidelity Management &
Research (U.K.) Inc. for the
fund.
8. To approve an amended [ ] [ ] [ ] 8.
sub-advisory agreement with
Fidelity Management &
Research (Far East) Inc. for
the fund.
9. To eliminate certain [ ] [ ] [ ] 9.
fundamental investment
policies of the fund.
14. To amend the fundamental [ ] [ ] [ ] 14.
investment limitation
concerning diversification
to exclude "securities of
other investment companies"
from the limitation for the
fund.
IGB -PXC-0299 cusip # 316146109/fund# 026
Vote this proxy card TODAY! Your prompt response will
save 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 FIXED-INCOME TRUST: FIDELITY SHORT-TERM BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, William O. McCoy, and Eric D. Roiter, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of FIDELITY FIXED-INCOME TRUST as indicated above 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 April 14, 1999 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 _____________, 1999
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(026, 450, 453, 455 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL S .
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING:
PLEASE DETACH AT PERFORATION BEFORE MAILING.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To elect the twelve nominees FOR all nominees listed WITHHOLD authority to vote 1.
specified below as Trustees: (except as marked to the for all nominees
(01) Ralph F. Cox, (02) contrary at left) [ ]
Phyllis Burke Davis, (03) [ ]
Robert M. Gates, (04) Edward
C. Johnson 3d, (05) E.
Bradley Jones, (06) Donald
J. Kirk, (07) Peter S.
Lynch, (08) William O.
McCoy, (09) Gerald C.
McDonough, (10) Marvin L.
Mann, (11) Robert C. Pozen,
and (12) Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
- -----------------------------------------------------------------
2. To ratify the selection of FOR AGAINST ABSTAIN 2.
PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent accountants
of the fund.
3. To authorize the Trustees to [ ] [ ] [ ] 3.
adopt an Amended and
Restated Declaration of Trust.
4. To adopt a new fundamental [ ] [ ] [ ] 4.
investment policy for the
fund permitting the fund to
invest all of its assets in
another open-end investment
company managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
5. To approve an amended [ ] [ ] [ ] 5.
management contract for the
fund.
7. To approve an amended [ ] [ ] [ ] 7.
sub-advisory agreement with
Fidelity Management &
Research (U.K.) Inc. for the
fund.
8. To approve an amended [ ] [ ] [ ] 8.
sub-advisory agreement with
Fidelity Management &
Research (Far East) Inc. for
the fund.
10. To eliminate certain [ ] [ ] [ ] 10.
fundamental investment
policies of the fund.
14. To amend the fundamental [ ] [ ] [ ] 14.
investment limitation
concerning diversification
to exclude "securities of
other investment companies"
from the limitation for the
fund.
15. To amend the fundamental [ ] [ ] [ ] 15.
investment limitation
concerning underwriting for
the fund.
16. To amend the fundamental [ ] [ ] [ ] 16.
investment limitation
concerning concentration of
investments in a single
industry for the fund.
STP -PXC-0299 cusip # 316146208 /fund# 450
Vote this proxy card TODAY! Your prompt response will
save 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 FIXED-INCOME TRUST: SPARTAN GOVERNMENT INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, William O. McCoy, and Eric D. Roiter, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of FIDELITY FIXED-INCOME TRUST as indicated above 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 April 14, 1999 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 _____________, 1999
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(026, 450, 453, 455 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL S .
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING:
PLEASE DETACH AT PERFORATION BEFORE MAILING.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To elect the twelve nominees FOR all nominees listed WITHHOLD authority to vote 1.
specified below as Trustees: (except as marked to the for all nominees
(01) Ralph F. Cox, (02) contrary at left) [ ]
Phyllis Burke Davis, (03) [ ]
Robert M. Gates, (04) Edward
C. Johnson 3d, (05) E.
Bradley Jones, (06) Donald
J. Kirk, (07) Peter S.
Lynch, (08) William O.
McCoy, (09) Gerald C.
McDonough, (10) Marvin L.
Mann, (11) Robert C. Pozen,
and (12) Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
- -----------------------------------------------------------------
2. To ratify the selection of FOR AGAINST ABSTAIN 2.
PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent accountants
of the fund.
3. To authorize the Trustees to [ ] [ ] [ ] 3.
adopt an Amended and
Restated Declaration of Trust.
4. To adopt a new fundamental [ ] [ ] [ ] 4.
investment policy for the
fund permitting the fund to
invest all of its assets in
another open-end investment
company managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
11. To eliminate certain [ ] [ ] [ ] 11.
fundamental investment
policies of the fund.
13. To amend the fundamental [ ] [ ] [ ] 13.
investment limitation
concerning real estate for
the fund.
14. To amend the fundamental [ ] [ ] [ ] 14.
investment limitation
concerning diversification
to exclude "securities of
other investment companies"
from the limitation for the
fund.
SPG -PXC-0299 cusip # 316146307 /fund# 453
Vote this proxy card TODAY! Your prompt response will
save 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 FIXED-INCOME TRUST: FIDELITY HIGH INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, William O. McCoy, and Eric D. Roiter, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of FIDELITY FIXED-INCOME TRUST as indicated above 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 April 14, 1999 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 _____________, 1999
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(026, 450, 453, 455 HH)
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL S .
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING:
PLEASE DETACH AT PERFORATION BEFORE MAILING.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To elect the twelve nominees FOR all nominees listed WITHHOLD authority to vote 1.
specified below as Trustees: (except as marked to the for all nominees
(01) Ralph F. Cox, (02) contrary at left) [ ]
Phyllis Burke Davis, (03) [ ]
Robert M. Gates, (04) Edward
C. Johnson 3d, (05) E.
Bradley Jones, (06) Donald
J. Kirk, (07) Peter S.
Lynch, (08) William O.
McCoy, (09) Gerald C.
McDonough, (10) Marvin L.
Mann, (11) Robert C. Pozen,
and (12) Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
- -----------------------------------------------------------------
2. To ratify the selection of FOR AGAINST ABSTAIN 2.
PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent accountants
of the fund.
3. To authorize the Trustees to [ ] [ ] [ ] 3.
adopt an Amended and
Restated Declaration of Trust.
4. To adopt a new fundamental [ ] [ ] [ ] 4.
investment policy for the
fund permitting the fund to
invest all of its assets in
another open-end investment
company managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
6. To approve an amended [ ] [ ] [ ] 6.
management contract,
including a management fee
structure change, for the
fund.
7. To approve an amended [ ] [ ] [ ] 7.
sub-advisory agreement with
Fidelity Management &
Research (U.K.) Inc. for the
fund.
8. To approve an amended [ ] [ ] [ ] 8.
sub-advisory agreement with
Fidelity Management &
Research (Far East) Inc. for
the fund.
12. To eliminate certain [ ] [ ] [ ] 12.
fundamental investment
policies of the fund.
14. To amend the fundamental [ ] [ ] [ ] 14.
investment limitation
concerning diversification
to exclude "securities of
other investment companies"
from the limitation for the
fund.
16. To amend the fundamental [ ] [ ] [ ] 16.
investment limitation
concerning concentration of
investments in a single
industry for the fund.
SPH -PXC-0299 cusip # 316146406 /fund# 455
Vote this proxy card TODAY! Your prompt response will
save 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 FIXED-INCOME TRUST: SPARTAN (Registered trademark)
SHORT-INTERMEDIATE GOVERNMENT FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric D. Roiter, and William O. McCoy , or any one
or more of them, attorneys, with full power of substitution, to vote
all shares of Fidelity Fixed-Income Trust: Spartan Short-Intermediate
Government 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 April 14, 1999
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/Prospectus and in the Proxy Statement as specified on the
reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement/Prospectus and 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 _____________, 1999
__________________________________________
__________________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip #316146505/fund #474
Please refer to the Proxy Statement/Prospectus discussion for matter
A. Please refer to the Proxy Statement discussion for matters 1, 2,
3, 4, and 14.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL S .
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING:
Please detach at perforation before mailing.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
PROXY STATEMENT/PROSPECTUS PROPOSAL
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A. To approve an Agreement and FOR [ ] AGAINST [ ] ABSTAIN [ ] A.
Plan of Reorganization
between Spartan
Short-Intermediate
Government Fund and Fidelity
Income Fund: Fidelity
Intermediate Government
Income Fund, providing for
the transfer of all of the
assets of Spartan
Short-Intermediate
Government Fund to Fidelity
Intermediate Government
Income Fund in exchange
solely for shares of
beneficial interest in
Fidelity Intermediate
Government Income Fund and
the assumption by Fidelity
Intermediate Government
Income Fund of Spartan
Short-Intermediate
Government Fund's
liabilities, followed by the
distribution of Fidelity
Intermediate Government
Income Fund shares to
shareholders of Spartan
Short-Intermediate
Government Fund in
liquidation of Spartan
Short-Intermediate
Government Fund.
</TABLE>
PROXY STATEMENT PROPOSALS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To elect the twelve nominees FOR all nominees listed WITHHOLD authority to vote 1.
specified below as Trustees: (except as marked to the for all nominees
(01)Ralph F. Cox, contrary at left) [ ]
(02)Phyllis Burke Davis, [ ]
(03)Robert M. Gates,
(04)Edward C. Johnson 3d,
(05)E. Bradley Jones,
(06)Donald J. Kirk,
(07)Peter S. Lynch,
(08)William O. McCoy,
(09)Gerald C. McDonough,
(10)Marvin L. Mann,
(11)Robert C. Pozen, and
(12)Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE
NOMINEE(S) ON THE LINE
BELOW.)
</TABLE>
- -----------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the selection of [ ] [ ] [ ] 2.
PricewaterhouseCoopers LLP
as independent accountants
of the fund.
3. To authorize the Trustees to [ ] [ ] [ ] 3.
adopt an amended and
restated Declaration of Trust.
4. To adopt a new fundamental [ ] [ ] [ ] 4.
investment policy for the
fund permitting the fund to
invest all of its assets in
another open-end investment
company managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
14. To amend the fundamental [ ] [ ] [ ] 14.
investment limitation
concerning diversification
to exclude "securities of
other investment companies"
from the limitation for the
fund.
<TABLE>
<CAPTION>
<S> <C> <C>
SSG-PXC-0299 (PLEASE SIGN ON REVERSE SIDE) cusip #316146505/fund #474
</TABLE>
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
FIDELITY INVESTMENT GRADE BOND FUND
FIDELITY SHORT-TERM BOND FUND
SPARTAN(Registered trademark) GOVERNMENT INCOME FUND
FIDELITY HIGH INCOME FUND
Dear Shareholder:
I am writing to let you know that a special meeting of shareholders of
the Fidelity funds mentioned above will be held on April 14, 1999.
The purpose of the meeting is to vote on several important proposals
that affect the funds and your investment in them. As a shareholder,
you have the opportunity to voice your opinion on the matters that
affect your fund(s). This package contains information about the
proposals and the materials to use when voting by mail.
Please read the enclosed materials and cast your vote on the proxy
card(s). PLEASE VOTE AND RETURN YOUR CARD(S) PROMPTLY. YOUR VOTE IS
EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE.
All of the proposals have been carefully reviewed by the Board of
Trustees. The Trustees, most of whom are not affiliated with
Fidelity, are responsible for protecting your interests as a
shareholder. The Trustees believe these proposals are in the best
interest of shareholders. They recommend that you vote for each
proposal.
The following Q&A is provided to assist you in understanding the
proposals. Each of the proposals is described in greater detail in
the enclosed proxy statement.
VOTING IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED. To cast
your vote, simply complete the proxy card(s) enclosed in this package.
Be sure to sign the card(s) before mailing it in the postage-paid
envelope.
If you have any questions before you vote, please call Fidelity 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.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposals
Please read the full text of the enclosed proxy statement. Below is a
brief overview of the proposals to be voted upon. Your vote is
important. We appreciate you placing your trust in Fidelity and look
forward to helping you achieve your financial goals.
WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
You may be asked to vote on the following proposals:
1. To elect a Board of Trustees.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an amended and restated
Declaration of Trust.
4. To adopt a new fundamental investment policy for each fund
permitting the fund to invest all of its assets in another open-end
investment company managed by FMR or an affiliate with substantially
the same investment objective and policies.
5. To approve an amended management contract for Fidelity Investment
Grade Bond Fund and Fidelity Short-Term Bond Fund.
6. To approve an amended management contract, including a management
fee structure change, for Fidelity High Income Fund.
7. To approve an amended sub-advisory agreement with Fidelity
Management & Research (U.K.) Inc. for Fidelity Investment Grade Bond
Fund, Fidelity Short-Term Bond Fund, and Fidelity High Income Fund.
8. To approve an amended sub-advisory agreement with Fidelity
Management & Research (Far East) Inc. for Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity High Income
Fund.
9. To eliminate certain fundamental investment policies of Fidelity
Investment Grade Bond Fund.
10. To eliminate certain fundamental investment policies of Fidelity
Short-Term Bond Fund.
11. To eliminate certain fundamental investment policies of Spartan
Government Income Fund.
12. To eliminate certain fundamental investment policies of Fidelity
High Income Fund.
13. To amend the fundamental investment limitation concerning real
estate for Spartan Government Income Fund.
14. To amend the fundamental investment limitation concerning
diversification to exclude "securities of other investment companies"
from the limitation for each fund.
15. To amend the fundamental investment limitation concerning
underwriting for Fidelity Short-Term Bond Fund.
16. To amend the fundamental investment limitation concerning
concentration of investments in a single industry for Fidelity
Short-Term Bond Fund and Fidelity High Income Fund.
WHAT ROLE DOES THE BOARD PLAY? (PROPOSAL 1)
The Trustees oversee the investment policies of each fund. Members of
the Board are fiduciaries and have an obligation to serve the best
interests of shareholders, including approving policy changes such as
those proposed in the proxy statement. In addition, the Trustees
review fund performance, oversee fund activities, and review
contractual arrangements with companies that provide services to the
funds.
WHAT IS THE ROLE OF THE INDEPENDENT ACCOUNTANTS? (PROPOSAL 2)
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. They also
sign or certify any financial statements of the funds that are
required by law to be independently certified and filed with the
Securities and Exchange Commission (SEC).
WHY ARE THE FUNDS PROPOSING TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST? (PROPOSAL 3)
The new Declaration of Trust is a more modern form of trust instrument
for a Massachusetts business trust. It gives the Trustees more
flexibility, and, subject to the applicable requirements of federal
and state law, broader authority to act. This increased flexibility
may allow the Trustees to react more quickly to changes in competitive
and regulatory conditions.
Adoption of the new Declaration of Trust will not alter the Trustees'
existing fiduciary obligations to act in the best interests of the
funds' shareholders. Before utilizing any new flexibility that the
new Declaration of Trust may afford, the Trustees must first consider
the shareholders' interests and act in accordance with such interests.
The new Declaration of Trust amends the current Declaration of Trust
in a number of significant ways. Please review the proxy statement
for specific details.
WHAT ARE THE BENEFITS OF PERMITTING EACH FUND TO INVEST ITS ASSETS IN
ANOTHER OPEN-END INVESTMENT COMPANY MANAGED BY FIDELITY MANAGEMENT &
RESEARCH COMPANY (FMR) OR AN AFFILIATE WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE AND POLICIES? (PROPOSALS 3 AND 4)
FMR and the Board of Trustees continually review methods of
structuring mutual funds to take maximum advantage of potential
efficiencies. A number of mutual fund companies have developed
"master-feeder" fund structures under which several "feeder" funds
invest all of their assets in a single pooled investment, or "master"
fund. The purpose of the master-feeder fund structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. An
example would be funds with the same investment objective but
different minimum investments due to the servicing of individual
shareholders versus institutional clients.
These proposals would enable each fund to invest all of its assets in
another open-end investment company, managed by FMR or an affiliate,
with substantially the same investment objective and policies. In
order to implement the master-feeder structure, both the Declaration
of Trust and the funds' policies must permit the structure. Proposal
3 would amend the Declaration of Trust to permit the structure and
Proposal 4 would amend the policy at the fund level.
The master-feeder fund structure could generate operational
efficiencies and the opportunity to reduce costs. However, no such
plans are being contemplated at this time and the Trustees would only
allow it in the future if they determined that it would be in the best
interest of the funds and their shareholders.
WHY ARE FIDELITY INVESTMENT GRADE BOND FUND AND FIDELITY SHORT-TERM
BOND FUND PROPOSING AMENDED MANAGEMENT CONTRACTS? (PROPOSAL 5)
The amended management contracts provide for lower management fees to
be paid to FMR when FMR's assets under management exceed certain
levels. Each fund's amended management contract also allows FMR and
the trust, on behalf of the fund, to modify the fund's management
contract subject to the requirements of the Investment Company Act of
1940 (1940 Act).
The amended management contracts will result in a management fee that
is the same as or lower than the fee payable under each fund's present
contract. Please refer to the proxy statement for specific details of
each fund's amended management contract proposal.
WHY IS FIDELITY HIGH INCOME FUND PROPOSING AN AMENDED MANAGEMENT
CONTRACT, INCLUDING A MANAGEMENT FEE STRUCTURE CHANGE? (PROPOSAL 6)
The amended management contract for the fund changes the fund's
current "all-inclusive" management fee arrangement to a "group fee"
arrangement that is standard for other Fidelity taxable bond funds.
The fund's amended management contract also allows FMR and the trust,
on behalf of the fund, to modify the fund's management contract
subject to the requirements of the 1940 Act.
Under the present management contract, the fund pays FMR an
all-inclusive management fee which covers substantially all fund
expenses; FMR pays the fund's operating expenses, with limited
exceptions. Under the proposed amended management contract, the fund
would pay its management fee and other expenses separately. FMR would
no longer pay the fund's other expenses. The group fee rate varies
according to the monthly average net assets of all funds having
management contracts with FMR, and provides for lower management fees
to be paid to FMR when FMR's assets under management exceed certain
levels. If approved, the proposed group fee structure will result in
a lower management fee, but the fund's total operating expense ratio
may or may not exceed the current rate.
Please refer to the proxy statement for specific details of the fund's
amended management contract proposal.
WHAT IS A SUB-ADVISORY AGREEMENT AND HOW WILL THE PROPOSED AMENDED
SUB-ADVISORY AGREEMENTS AFFECT FIDELITY INVESTMENT GRADE BOND FUND,
FIDELITY SHORT-TERM BOND FUND, AND FIDELITY HIGH INCOME FUND?
(PROPOSALS 7 AND 8)
The amended sub-advisory agreements not only allow FMR to receive
investment advice and research services from FMR U.K. and FMR Far
East, but also permit FMR to grant FMR U.K. and/or FMR Far East
investment management authority if FMR believes it would be beneficial
to the funds and their shareholders. FMR U.K., with its principal
office in London, England, and FMR Far East, with its principal office
in Tokyo, Japan, are wholly owned subsidiaries of FMR. Each fund's
amended sub-advisory agreements also allow FMR, FMR U.K., FMR Far
East, and the trust, on behalf of the fund, to modify the fund's
sub-advisory agreements subject to the requirements of the 1940 Act.
The sub-advisory agreements allow FMR increased access to more
specialized investment expertise in foreign markets. The proposed
agreements would not increase the fees paid to FMR by each fund.
WHY ARE THE FUNDS PROPOSING TO ELIMINATE CERTAIN FUNDAMENTAL POLICIES?
(PROPOSALS 9, 10, 11 AND 12)
The primary purpose of these proposals is to eliminate certain
fundamental investment policies from each fund's investment objective.
Eliminating these policies is not expected to have any material effect
on the investment strategies or performance of the funds. Eliminating
the policies will allow the funds to more clearly communicate their
investment objectives and strategies in conformity with the
requirements of revised Form N-1A (the form used by open-end
investment companies, like the funds, to register under the 1940 Act
and the Securities Act of 1933). Form N-1A requires concise,
understandable descriptions of a fund's investment objective and
policies. Eliminating the policies also will allow the funds to more
clearly communicate their investment objectives and strategies to
shareholders.
WHY IS SPARTAN GOVERNMENT INCOME FUND PROPOSING TO AMEND ITS
FUNDAMENTAL INVESTMENT LIMITATION CONCERNING REAL ESTATE? (PROPOSAL
13)
The primary purpose of the proposed amendment is to clarify the types
of securities in which the fund is authorized to invest, and to
conform the fund's fundamental real estate limitation to a limitation
that is expected to become standard for all funds managed by FMR.
The fund does not expect to acquire real estate, and adoption of the
proposed limitation is not expected to significantly affect the way in
which the fund is managed, the investment performance of the fund, or
the securities in which the fund invests.
WHAT IS THE BENEFIT OF AMENDING THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING DIVERSIFICATION TO EXCLUDE SECURITIES OF OTHER INVESTMENT
COMPANIES FROM THE LIMITATION FOR THE FUNDS? (PROPOSAL 14)
This proposal would permit the funds, subject to the requirements of
the 1940 Act, to invest without limit in the securities of other
investment companies. As a result of an exemption granted by the SEC,
each fund may invest up to 25% of its total assets in non-publicly
offered money market and short-term bond funds (the Central Funds)
managed by FMR or an affiliate of FMR. FMR anticipates that making
use of the Central Funds will benefit each fund by enhancing the
efficiency of cash management and by providing increased short-term
investment opportunities.
WHY ARE FIDELITY SHORT-TERM BOND FUND AND FIDELITY HIGH INCOME FUND
PROPOSING TO AMEND CERTAIN FUNDAMENTAL INVESTMENT LIMITATIONS?
(PROPOSALS 15 AND 16)
The primary purpose of these proposals is to revise each fund's
investment limitations to conform to limitations that are expected to
become standard for all funds managed by FMR. The Board of Trustees
has concluded that these proposals will benefit the funds and their
shareholders, and adoption of these proposals is not expected to
affect the way each fund is managed, the investment performance of
each fund, or the securities or instruments in which each fund
invests.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED EACH PROPOSAL?
Yes. The Board of Trustees has unanimously approved all of the
proposals and recommends that you vote to approve them.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of a fund on the record date. The record date is
February 16, 1999.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card and mailing it in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposals or
how to vote your shares, please call Fidelity at 1-800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."
