SUPPLEMENT TO THE FIDELITY CAPITAL & INCOME FUND AND FIDELITY HIGH
INCOME FUND JUNE 26, 1998 PROSPECTUS
On April 14, 1999, shareholders of High Income approved a proposal
to revise the fund's current all-inclusive management fee structure to
a group fee structure that is standard for other comparable Fidelity
bond funds effective May 1, 1999.
The following information replaces the similar information found
under the heading "Annual Fund Operating Expenses" in the "Key Facts"
section beginning on page 3.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets.
Each fund pays a management fee to FMR. It also incurs other expenses
for services such as maintaining shareholder records and furnishing
shareholder statements and financial reports. A fund's expenses are
factored into its share price or dividends and are not charged
directly to shareholder accounts (see "Breakdown of Expenses" page
20).
The following figures are based on historical expenses, adjusted to
reflect current fees, of each fund and are calculated as a percentage
of average net assets of each fund. A portion of the brokerage
commissions that a fund pays is used to reduce that fund's expenses.
In addition, each fund has entered into arrangements with its
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances are used to reduce custodian and transfer
agent expenses. Including these reductions, the total fund operating
expenses presented in the table would have been 0.82% for Capital &
Income.
The following information replaces the similar information for High
Income under the heading "Annual Fund Operating Expenses" in the "Key
Facts" section beginning on page 3.
HIGH INCOME
Management fee 0.59%
12b-1 fee None
Other expenses 0.16%
Total fund operating expenses 0.75%
HIGH INCOME
1 year $ 8
3 years $ 24
5 years $ 42
10 years $ 93
Effective May 1, 1999, FMR has voluntarily agreed to reimburse High
Income to the extent that total operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
exceed 0.80% of its average net assets through December 31, 2000.
The following information replaces the similar information found
under the heading "Breakdown of Expenses" in the "The Funds in Detail"
section beginning on page 11.
BREAKDOWN OF EXPENSES
Like all mutual funds, each fund pays fees related to its daily
operations. Expenses paid out of each fund's assets are reflected in
its share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs.
FMR in turn pays fees to affiliates who provide assistance with
these services. Each fund also pays OTHER EXPENSES, which are
explained below.
FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a fund if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated at any time without notice, can
decrease a fund's expenses and boost its performance.
The following information replaces the heading and the information
found under the heading "Management and Other Expenses" in the "The
Funds in Detail" section beginning on page 11.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The
fee is calculated by adding a group fee rate to an individual fund fee
rate, dividing by twelve, and multiplying the result by the fund's
average net assets throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For April 1998, the group fee rate was 0.13%. The individual fund
fee rate is 0.45% for Capital & Income and 0.45% for High Income.
For the fiscal year ended April 30, 1998, Capital & Income paid a
total management fee rate of 0.59% of the fund's average net
assets.
For the fiscal year ended April 30, 1998, High Income paid FMR a
management fee of 0.80% of the fund's average net assets and FMR paid
all of the other expenses of the fund with limited exceptions.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East.
These sub-advisers provide FMR with investment research and advice on
issuers based outside the United States. Under the sub-advisory
agreements, FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of the costs of providing these services.
The sub-advisers may also provide investment management services.
In return, FMR pays FMR U.K. and FMR Far East a fee equal to 50% of
its management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis.
OTHER EXPENSES
While the management fee is a significant component of the funds'
annual operating costs, the funds have other expenses as well.
The funds contract with FSC to perform transfer agency, dividend
disbursing, shareholder servicing, and accounting functions. These
services include processing shareholder transactions, valuing each
fund's investments, handling securities loans for each fund, and
calculating each fund's share price and dividends.
For the fiscal year ended April 1998, transfer agency and pricing
and bookkeeping fees paid (as a percentage of average net assets)
amounted to the following for Capital & Income. These amounts are
before expense reductions, if any.
Transfer Agency and Pricing
and Bookkeeping Fees Paid by
Fund
Capital & Income 0.23%
In the case of High Income, FMR, not the fund, paid for these
services for the fiscal year ended April 1998 under the fund's
all-inclusive management contract in effect at that time.
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
The following information supplements the information found under the
heading "FMR and Its Affiliates" in the "The Funds in Detail" section
beginning on page 11:
In August 1998, the NGC Asbestos Diseases and Property Damage
Settlement Trust commenced an action in the state District Court of
Dallas County, Texas, against FMR and other unrelated parties. The
complaint alleges that during the reorganization of National Gypsum
Company, the defendants (including FMR acting on behalf of Capital &
Income and another Fidelity fund) failed to disclose information
material to the valuation of the reorganized entity. The complaint
seeks actual and punitive damages, plus costs and interest, and the
imposition of a constructive trust. FMR denies the allegations and
intends to defend the lawsuit vigorously.
