SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
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[X] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[ ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) FIDELITY DEVONSHIRE 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:
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[ ] 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:
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FIDELITY EQUITY-INCOME FUND
FIDELITY MID-CAP STOCK FUND
FIDELITY REAL ESTATE INVESTMENT PORTFOLIO
FIDELITY UTILITIES FUND
FUNDS OF
FIDELITY DEVONSHIRE 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 Equity Income Fund, Fidelity Mid-Cap Stock Fund,
Fidelity Real Estate Investment Portfolio, and Fidelity Utilities Fund
(the funds), will be held at the office of Fidelity Devonshire Trust
(the trust), 82 Devonshire Street, Boston, Massachusetts 02109 on
November 18, 1998, at 11:00 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 trust.
3. To authorize the Trustees to adopt an amended and restated
Declaration of Trust.
4. To approve amended management contracts for Fidelity Equity-Income
Fund and Fidelity Real Estate Investment Portfolio.
5. To approve an amended management contract for Fidelity Mid-Cap
Stock Fund.
6. To approve an amended management contract for Fidelity Utilities
Fund.
7. To approve a Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Equity-Income Fund.
8. To approve an agreement and plan providing for the reorganization
of Fidelity Mid-Cap Stock Fund from a separate series of one
Massachusetts business trust to another.
9. To adopt a new fundamental investment policy for Fidelity
Equity-Income Fund, Fidelity Real Estate Investment Portfolio, and
Fidelity Utilities 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.
10. To amend Fidelity Utilities Fund's fundamental investment
limitation concerning the concentration of its investments in the
public utilities industry.
11. To make Fidelity Real Estate Investment Portfolio's current
fundamental 65% investment policy non-fundamental.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
12. To amend Fidelity Equity-Income Fund's, Fidelity Mid-Cap Stock
Fund's, and Fidelity Utilities Fund's fundamental investment
limitation concerning diversification, to exclude securities of other
investment companies from the limitation.
13. To replace Fidelity Real Estate Investment Portfolio's
non-fundamental investment policy concerning the purchase and sale of
real estate with a fundamental investment policy.
The Board of Trustees has fixed the close of business on September
21, 1998 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
September 21, 1998
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
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY DEVONSHIRE TRUST:
FIDELITY EQUITY-INCOME FUND
FIDELITY MID-CAP STOCK FUND
FIDELITY REAL ESTATE INVESTMENT PORTFOLIO
FIDELITY UTILITIES FUND
TO BE HELD ON NOVEMBER 18, 1998
This Proxy Statement is furnished in connection with a solicitation
of proxies made by, and on behalf of, the Board of Trustees of
Fidelity Devonshire Trust (the trust) to be used at the Special
Meeting of Shareholders of Fidelity Equity-Income Fund, Fidelity
Mid-Cap Stock Fund, Fidelity Real Estate Investment Portfolio, and
Fidelity Utilities Fund (the funds) and at any adjournments thereof
(the Meeting), to be held on November 18, 1998 at 11:00 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 September 21,
1998. 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 $6,000 (Fidelity Equity-Income
Fund), $3,000 (Fidelity Mid-Cap Stock Fund), $3,000 (Fidelity Real
Estate Investment Portfolio), and $3,000 (Fidelity Utilities Fund),
respectively. The expenses in connection with preparing this Proxy
Statement and its enclosures and of all solicitations will be paid by
the funds. The funds 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 the funds, is 82 Devonshire
Street, Boston, Massachusetts 02109.
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. The
expenses in connection with telephone voting will be paid by the
funds. 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 $8,000 (Fidelity Equity-Income
Fund), $3,000 (Fidelity Mid-Cap Stock Fund), $4,000 (Fidelity Real
Estate Investment Portfolio), and $3,000 (Fidelity Utilities 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.
Shares of each fund of the trust issued and outstanding as of July
31, 1998 are indicated in the following table:
FIDELITY EQUITY-INCOME FUND XX
FIDELITY MID-CAP STOCK FUND XX
FIDELITY REAL ESTATE INVESTMENT PORTFOLIO XX
FIDELITY UTILITIES FUND XX
As of July 31, 1998, the nominees and officers of the trust owned, in
the aggregate, less than __% of the funds' outstanding shares.
Shareholders of record at the close of business on September 21, 1998
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.
The following table summarize the proposals applicable to each fund.
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PROPOSAL # PROPOSAL DESCRIPTION APPLICABLE FUNDS
1. TO ELECT AS TRUSTEES THE 12 ALL
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 APPROVE AN AMENDED FIDELITY EQUITY-INCOME
MANAGEMENT CONTRACT FOR THE FUND, FIDELITY REAL ESTATE
FUND THAT WOULD REDUCE THE INVESTMENT PORTFOLIO
MANAGEMENT FEES PAYABLE TO
FMR BY THE FUND AS FMR'S ASSETS
UNDER MANAGEMENT INCREASE.
5. TO APPROVE AN AMENDED FIDELITY MID-CAP STOCK
MANAGEMENT CONTRACT FOR THE FUND
FUND THAT WOULD REDUCE THE
MANAGEMENT FEE PAYABLE TO FMR
BY THE FUND AS FMR'S ASSETS
UNDER MANAGEMENT INCREASE AND
WOULD MODIFY THE PERFORMANCE
ADJUSTMENT CALCULATION TO
CALCULATE THE FUND'S INVESTMENT
PERFORMANCE AND THAT OF ITS
COMPARATIVE INDEX TO THE NEAREST
0.01%.
6. TO APPROVE AN AMENDED FIDELITY UTILITIES FUND
MANAGEMENT CONTRACT FOR THE
FUND THAT WOULD REDUCE THE
MANAGEMENT FEE PAYABLE TO FMR
BY THE FUND AS FMR'S ASSETS
UNDER MANAGEMENT INCREASE AND
WOULD CHANGE THE COMPARATIVE
SECURITIES INDEX USED FOR
CALCULATING THE FUND'S
MANAGEMENT FEE PERFORMANCE
ADJUSTMENT.
7. TO APPROVE A DISTRIBUTION AND FIDELITY EQUITY-INCOME
SERVICE PLAN FOR THE FUND WHICH FUND
DESCRIBES ALL MATERIAL ASPECTS OF
THE PROPOSED FINANCING FOR THE
DISTRIBUTION OF FUND SHARES.
8. REORGANIZATION: TO APPROVE AN FIDELITY MID-CAP STOCK
AGREEMENT AND PLAN PROVIDING FOR FUND
THE REORGANIZATION OF THE FUND
FROM A SEPARATE SERIES OF ONE
MASSACHUSETTS BUSINESS TRUST TO
ANOTHER MASSACHUSETTS BUSINESS
TRUST.
9. TO ADOPT A NEW FUNDAMENTAL FIDELITY EQUITY-INCOME
INVESTMENT POLICY FOR THE FUND TO FUND, FIDELITY REAL ESTATE
INVEST ALL OF ITS ASSETS IN ANOTHER INVESTMENT PORTFOLIO,
OPEN-END INVESTMENT COMPANY FIDELITY UTILITIES FUND
MANAGED BY FMR OR AN AFFILIATE
WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE AND POLICIES.
10. TO AMEND THE FUND'S FUNDAMENTAL FIDELITY UTILITIES FUND
INVESTMENT LIMITATION CONCERNING
THE CONCENTRATION OF ITS
INVESTMENTS IN THE PUBLIC UTILITIES
INDUSTRY.
11. TO MAKE THE FUND'S CURRENT FIDELITY REAL ESTATE
CURRENT FUNDAMENTAL 65% INVESTMENT PORTFOLIO
INVESTMENT POLICY
NON-FUNDAMENTAL.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
12 DIVERSIFICATION: TO AMEND THE FIDELITY EQUITY-INCOME
DIVERSIFICATION LIMITATION TO FUND, FIDELITY MID-CAP
EXCLUDE "SECURITIES OF OTHER STOCK FUND, FIDELITY
INVESTMENT COMPANIES" FROM UTILITIES FUND
ISSUER DIVERSIFICATION LIMITS.
13 REAL ESTATE: TO REPLACE THE FIDELITY REAL ESTATE
NON-FUNDAMENTAL INVESTMENT INVESTMENT PORTFOLIO
POLICY CONCERNING THE PURCHASE
AND SALE OF REAL ESTATE FOR THE FUND
WITH A FUNDAMENTAL INVESTMENT
POLICY.
</TABLE>
FOR A FREE COPY OF FIDELITY EQUITY-INCOME FUND'S, FIDELITY REAL
ESTATE INVESTMENT PORTFOLIO'S, AND FIDELITY UTILITIES FUND'S ANNUAL
REPORTS FOR THE FISCAL YEAR ENDED JANUARY 31, 1998 AND FIDELITY
MID-CAP STOCK FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED APRIL 30,
1998 [AND THE SEMIANNUAL REPORT FOR THE FISCAL PERIOD ENDED JULY 31,
1998 FOR FIDELITY EQUITY INCOME FUND, FIDELITY REAL ESTATE INVESTMENT
PORTFOLIO, AND FIDELITY UTILITIES FUND] 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 13 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF
THE OUTSTANDING VOTING SECURITIES" OF THE APPROPRIATE FUNDS. 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 Devonshire 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
Devonshire Trust and have served in that capacity continuously since
originally elected or appointed. Robert M. Gates, Marvin L. Mann,
William O. McCoy, and Robert C. Pozen were selected by the trust's
Nominating and Administration Committee (see page __) and were
appointed to the Board in March 1997, October 1993, January 1997, 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 Robert M. Gates, William O.
McCoy, and Robert C. Pozen, each of the nominees is currently a
Trustee or General Partner, as the case may be, of 60 registered
investment companies (trusts or partnerships) advised by FMR. Mr.
Gates and Mr. McCoy each is currently a Trustee or General Partner, as
the case may be, of 53 registered investment companies (trusts or
partnerships) advised by FMR. Mr. Pozen is currently a Trustee or
General Partner, as the case may be, of 52 registered investment
companies (trusts or partnerships) 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.
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
RALPH F. COX PRESIDENT OF RABAR ENTERPRISES 1991
(MANAGEMENT
CONSULTING-ENGINEERING INDUSTRY,
(66) 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
SEPTEMBER 1991, MRS. DAVIS WAS
THE SENIOR VICE PRESIDENT OF
(66) 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.
ROBERT M. GATES CONSULTANT, AUTHOR, AND LECTURER 1997
(1993). MR. GATES WAS DIRECTOR OF
THE CENTRAL INTELLIGENCE AGENCY
(55) (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 1985
EXECUTIVE OFFICER AND A DIRECTOR OF
FMR CORP.; A DIRECTOR AND
(68) 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.
E. BRADLEY JONES PRIOR TO HIS RETIREMENT IN 1984, MR. 1990
JONES WAS CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF LTV STEEL
(71) 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.
DONALD J. KIRK EXECUTIVE-IN-RESIDENCE (1995) AT 1987
COLUMBIA UNIVERSITY GRADUATE
SCHOOL OF BUSINESS AND A FINANCIAL
CONSULTANT. FROM 1987 TO JANUARY
(65) 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 FMR. 1990
PRIOR TO MAY 31, 1990, HE WAS A
DIRECTOR OF FMR AND EXECUTIVE VICE
(55) 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.
WILLIAM O. MCCOY VICE PRESIDENT OF FINANCE FOR THE 1997
UNIVERSITY OF NORTH CAROLINA
(16-SCHOOL SYSTEM, 1995). PRIOR TO
(65) 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
GROUP (STRATEGIC ADVISORY SERVICES).
MR. MCDONOUGH IS A DIRECTOR OF
(70) 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).
MARVIN L. MANN CHAIRMAN OF THE BOARD OF LEXMARK 1993
INTERNATIONAL, INC. (OFFICE MACHINES,
1991). PRIOR TO 1991, HE HELD THE
(65) 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 ALSO 1997
PRESIDENT AND A DIRECTOR OF FMR
(1997); AND PRESIDENT AND A
(52) 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, INC. 1989
(MANAGEMENT AND FINANCIAL ADVISORY
SERVICES). PRIOR TO RETIRING IN 1987,
MR. WILLIAMS SERVED AS CHAIRMAN OF
(70) 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 OF
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).
** 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 July 31, 1998 the nominees, Trustees and officers of the trust
and each fund owned, in the aggregate, less than __% 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 January 31, 1998 for Fidelity Equity-Income Fund,
Fidelity Real Estate Investment Portfolio, and Fidelity Utilities Fund
and eleven times during the twelve months ended April 30, 1998 for
Fidelity Mid-Cap Stock Fund. 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 January 31, 1998 for
Fidelity Equity-Income Fund, Fidelity Real Estate Investment
Portfolio, and Fidelity Utilities Fund, and the twelve months ended
April 30, 1998 for Fidelity Mid-Cap Stock Fund, 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 January 31, 1998 for Fidelity Equity-Income Fund,
Fidelity Real Estate Investment Portfolio, and Fidelity Utilities
Fund, and the twelve months ended April 30, 1998 for Fidelity Mid-Cap
Stock Fund, 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 January 31, 1998 (for
Fidelity Equity-Income Fund, Fidelity Real Estate Investment
Portfolio, and Fidelity Utilities Fund) and April 30, 1998 (for
Fidelity Mid-Cap Stock Fund), or calendar year ended December 31,
1997, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AGGREGATE COMPENSATION J. GARY RALPH F. PHYLLIS ROBERT EDWARD E.
FROM A FUND BURKHEAD* COX BURKE M. C. BRADLEY
*,# DAVIS GATES JOHNSON JONES
3D**
EQUITY-INCOME FUND B, C, E $0 $7,316 $7,175 $6,885 $0 $7,223
MID-CAP STOCK FUND B $0 $583 $583 $593 $0 $583
REAL ESTATE INVESTMENT $0 $917 $897 $856 $0 $904
PORTFOLIO B
UTILITIES FUND B, D, F $0 $535 $523 $495 $0 $527
TOTAL COMPENSATION FROM $0 $214,500 $210,000 $176,000 $0 $211,500
THE FUND COMPLEX*, A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AGGREGATE COMPENSATION DONALD PETER WILLIAM GERALD C. MARVIN ROBERT THOMAS
FROM A FUND J. S. O. MCCOY MCDONOUG L. C. R.
KIRK LYNCH H MANN POZEN WILLIAMS
** **
EQUITY-INCOME FUND
B, C, E $7,223 $0 $7,514 $9,032 $7,207 $0 $7,316
MID-CAP STOCK FUND B, $583 $0 $593 $727 $575 $0 $583
REAL ESTATE INVESTMENT $904 $0 $940 $1,131 $905 $0 $917
PORTFOLIO B
UTILITIES FUND B, D, F $527 $0 $530 $658 $526 $0 $535
TOTAL COMPENSATION FROM $211,500 $0 $214,500 $264,500 $214,500 $0 $214,500
THE FUND COMPLEX*, A
</TABLE>
* Information is for the calendar year ended December 31, 1997 for 230
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, 1997, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $62,500; 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, $53,699; Marvin L. Mann, $53,699; and Thomas R.
Williams, $62,462.
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, $3,462, Phyllis Burke Davis, $3,462, Robert M. Gates, $3,246, E.
Bradley Jones, $3,462, Donald J. Kirk, $3,462, William O. McCoy,
$3,522, Gerald C. McDonough, $4,039, Marvin L. Mann, $3,462, and
Thomas R. Williams, $3,462.
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $253, Phyllis Burke Davis, $253, Robert M. Gates, $233, E.
Bradley Jones, $253, Donald J. Kirk, $253, William O. McCoy, $257,
Gerald C. McDonough, $295, Marvin L. Mann, $253, and Thomas R.
Williams, $253.
E For the fiscal year ended January 31, 1998 for Fidelity
Equity-Income Fund, certain of the non-interested Trustees' aggregate
compensation from the fund includes accrued voluntary deferred
compensation as follows: Ralph F. Cox, $2,887; Marvin L. Mann, $2,887;
William O. McCoy, $257; and Thomas R. Williams, $2, 887.
F For the fiscal year ended January 31, 1998 for Fidelity Utilities
Fund, certain of the non-interested Trustees' aggregate compensation
from the fund includes accrued voluntary deferred compensation as
follows: Ralph F. Cox, $210; Marvin L. Mann, $210; William O. McCoy,
$19; and Thomas R. Williams, $210.
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 years, the firm of
Coopers & Lybrand L.L.P. acted as each fund's independent accountants.
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 accountant's 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 July 16, 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 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 FUND STRUCTURE. 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,
Fidelity Equity-Income Fund, Fidelity Real Estate Investment
Portfolio, and Fidelity Utilities Fund policies do not allow for such
investments. Proposal 9 on page __ seeks the approval of Fidelity
Equity-Income Fund's, Fidelity Real Estate Investment Portfolio's, and
Fidelity Utilities 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.
For more information on the Master Feeder Fund Structure, see Proposal
9 on page __.
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 has determined that a
fund should invest in a master fund, the Trustees believe it could be
in the best interest of Fidelity Equity-Income Fund, Fidelity Real
Estate Investment Portfolio, and Fidelity Utilities 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 9), if they determine that a Master Feeder Fund Structure is
in the best interest of a fund, and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to a 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.
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 the funds' Management Contracts. For more information on this
topic generally as it relates to each fund, see "Modification of
Management Contract Amendment Provisions" on page __ for Fidelity
Equity-Income Fund and Fidelity Real Estate Investment Portfolio, page
__ for Fidelity Mid-Cap Stock Fund, and page __ for Fidelity Utilities
Fund.
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, short-term trading 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 APPROVE AMENDED MANAGEMENT CONTRACTS FOR FIDELITY EQUITY-INCOME
FUND AND FIDELITY REAL ESTATE INVESTMENT PORTFOLIO.
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). Each fund's Amended Contract modifies the management fee
that FMR receives from each fund to provide for lower fees when FMR's
assets under management exceed certain levels. In addition, each
Amended Contract allows FMR and the trust, on behalf of each fund, to
modify each Management Contract subject to the requirements of the
1940 Act. The existing Management Contracts (Present Contracts)
currently require the vote of a majority of each fund's outstanding
voting securities to authorize all amendments. See "Modification of
Management Contract Amendment Provisions" on page __ for more details.
EACH AMENDED CONTRACT WILL RESULT IN A MANAGEMENT FEE THAT IS THE SAME
AS, OR LOWER THAN, THE FEE PAYABLE UNDER THE PRESENT CONTRACTS FOR
EACH FUND. (For information on FMR, see the section entitled
"Activities and Management of FMR" on page __.)
PROPOSED AMENDMENTS TO THE PRESENT MANAGEMENT CONTRACTS. Copies of
each Amended Contract, marked to indicate the proposed amendments, are
supplied as Exhibit 2 on page __ for Fidelity Equity-Income Fund and
Exhibit 3 on page __ for Fidelity Real Estate Investment Portfolio.
Except for the modifications discussed above, they are substantially
identical to their Present Contracts. (For a detailed discussion of
each fund's Present Contract, refer to the section entitled "Present
Management Contracts" beginning on page __.) If approved by
shareholders, each Amended Contract will take effect on December 1,
1998 (or, if later, the first day of the first month following
approval) and will remain in effect through July 31, 1999 and
thereafter, but only as long as their 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 each fund. If an Amended Contract is not approved, the
Present Contract will continue in effect through July 31, 1999, and
thereafter only as long as their continuance is approved at least
annually as described above.
The management fee is an amount equal to a percentage of each fund's
average annual 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. Each Amended Contract
modifies the Group Fee Rate by providing for lower fee rates if FMR's
assets under management remain above $210 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). For example, as assets under management by
FMR increase, the Group Fee Rate declines. Each Amended Contract would
not change the group fee calculation for assets under management by
FMR of $210 billion or less. Above $210 billion in assets under
management by FMR, the Group Fee Rate declines under each fund's
Present Contract and Amended Contact, but under the Amended Contract,
it declines faster. Group Fee Rates that are lower than those
contained in each fund's Present Contract, implementing the economics
of the Amended 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. Each Amended Contract adds 10 new fee breakpoints for
assets under management by FMR above $210 billion as illustrated in
the following table. (For an explanation of how the Group Fee Rate is
used to calculate the management fee, see the section entitled
"Present Management Contracts" beginning on page ___.)
GROUP FEE RATE BREAKPOINTS
PRESENT CONTRACT AMENDED CONTRACT
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT* ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
OVER 174 .3000% 174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
OVER 534 .2500%
The result at various levels of group net assets is illustrated by the
table below.
EFFECTIVE ANNUAL GROUP FEE RATES
GROUP NET PRESENT AMENDED
ASSETS CONTRACT* CONTRACT
($ BILLIONS)
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
* 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 July 31, 1998 were
approximately $648 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended July 31, 1998,
average assets under management by FMR were $648 billion. Fidelity
Equity-Income Fund's and Fidelity Real Estate Investment Portfolio's
management fee rates under each fund's Amended Contract, for the month
ended July 31, 1998, would have been 0.4675% and 0.5875%,
respectively, compared to 0.4888% and 0.6088%, respectively, under the
Present Contracts. The management fee rate remains the same under both
the Present Contracts and each Amended Contract until assets under
FMR's management exceed $210 billion, at which point the management
fee rate under each Amended Contract begins to decline relative to the
Present Contracts.
The following chart compares each fund's management fee as calculated
under the terms of the Present Contracts for the fiscal year ended
January 31, 1998 to the management fee each fund would have incurred
if an Amended Contract had been in effect.
FUND NAME PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT FEE* MANAGEMENT FEE DIFFERENCE
EQUITY-INCOME FUND $87,442,785 $84,814,476 (3.01)%
REAL ESTATE $13,856,588 $13,536,829 (2.31)%
INVESTMENT PORTFOLIO
* 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 July
31, 1998 to the management fee each fund would have incurred if each
Amended Contract had been in effect.
FUND NAME PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT FEE* MANAGEMENT FEE DIFFERENCE
EQUITY-INCOME FUND $107,554,891 $103,518,304 (3.759)%
REAL ESTATE $13,412,928 $13,023,221 (2.91)%
INVESTMENT PORTFOLIO
* 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
Contracts allow FMR and the trust, on behalf of each fund, to amend
the Management Contracts 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 Contracts explicitly
require the vote of a majority of the outstanding voting securities of
each fund to authorize all amendments. Generally, the proposed
modification to the Present Contracts' amendment provisions will allow
FMR and the trust, on behalf of each fund, to amend the Management
Contracts without shareholder vote IF THE 1940 ACT PERMITS THEM TO DO
SO. For example, under current interpretations of Section 15 of the
1940 Act, each Amended Contract would give FMR and the trust the
ability to amend the Management Contracts 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 Contracts subject
to 1940 Act constraints. Of course, any future amendments to the
Management Contracts would require the approval of each 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 each Amended Contract to shareholders was
approved by the Board of Trustees of each fund, including all of the
Independent Trustees, on July 16, 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 each Amended Contract in
advance of the meeting at which each 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 each 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 and the use of "soft"
commission dollars to pay fund expenses and to pay for research and
other similar services, (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 impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including each fund's
shareholders.
In considering each 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 each 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 equity 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 each fund's 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 Contracts' 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 Contracts 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 Contracts' 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 an Amended Contract to shareholders of each
fund and recommends that shareholders of each fund vote FOR each
Amended Contract. If approved, each Amended Contract will take effect
on the first day of the first month following shareholder approval.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY MID-CAP
STOCK 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 modifies several aspects of the
management fee that FMR receives from the fund for managing its
investments and business affairs. 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 __ for more details. (For information on FMR, see
the section entitled "Activities and Management of FMR," on page __.)
CURRENT MANAGEMENT FEE. The management fee is calculated and paid
monthly, and is normally expressed as an annual percentage of the
fund's average net assets. The fee has two components: a Basic Fee and
a Performance Adjustment. The Basic Fee is an annual percentage of the
fund's average net assets for the current month. The Basic Fee rate is
the sum of a Group Fee rate, which declines as FMR's fund assets under
management increase, and a fixed individual fund fee rate of 0.30%.
The Basic Fee rate for the fund's fiscal year ended April 30, 1998
(not including the fee amendments discussed below) was 0.5945%.
The Performance Adjustment is a positive or negative dollar amount
based on the fund's performance and assets for the most recent 36
months. If the fund outperforms the Standard & Poor's MidCap 400 Index
(the Index) over 36 months, FMR receives a positive Performance
Adjustment, and if the fund underperforms the Index, the management
fee is reduced by a negative Performance Adjustment. The Performance
Adjustment is an annual percentage of the fund's average net assets
over the 36-month performance period. The Performance Adjustment rate
is 0.02% for each percentage point of outperformance or
underperformance, subject to a maximum of 0.20% if the fund
outperforms or underperforms the Index by more than ten percentage
points. Performance of the fund and the Index are rounded to the
nearest whole percentage point for purposes of the calculation.
PROPOSED MANAGEMENT FEE AMENDMENTS. The Amended Contract would (1)
reduce the Group Fee rate further if FMR's assets under management
remain over $210 billion, (2) modify the Performance Adjustment
calculation to round the performance of the fund and the Index to the
nearest 0.01%, rather than the nearest 1.00%, and (3) allow 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 __
for more details.
IMPACT OF GROUP FEE RATE REDUCTION. At FMR's current level of assets
under management ($648 billion as of July 31, 1998), the changes to
the Group Fee rate reduce the management fee. FMR has voluntarily
implemented the Group Fee reductions pending shareholder approval, and
the fund has paid lower management fees as a result. For the fund's
fiscal year ended April 30, 1998, the management fee using the
proposed Group Fee reductions (including the Performance Adjustment)
was 0.5960% of the fund's average net assets. The Group Fee reductions
lowered the management fee rate by (0.0091)% compared to the rate FMR
was entitled to receive under the Present Contract 0.6051%.
IMPACT OF PERFORMANCE ADJUSTMENT CHANGES. The more precise rounding
method for the Performance Adjustment would have no change on the
management fee rate for the fiscal year ended April 30, 1998.
COMBINED EFFECT OF FEE CHANGES. For the fiscal year ended April 30,
1998, the Group Fee reductions and the changes to the Performance
Adjustment would have resulted in a 1.50% reduction in the total
management fee. The future impact will depend on many different
factors, and may represent an increase or decrease from the management
fee under the Present Contract. The Group Fee rate reductions will
either reduce the management fee or leave it unchanged, depending on
the level of FMR's assets under management. Calculating performance to
the nearest 0.01% may increase or decrease the Performance Adjustment,
depending on whether performance would have been rounded up or down.
A copy of the Amended Contract, marked to indicate the proposed
amendments, is supplied as Exhibit 4 on page __. Except for the
modifications discussed above, the Amended Contract is substantially
identical to the fund's Present Contract with FMR. (For a detailed
discussion of the fund's Present Contract, refer to the section
entitled "Present Management Contracts," on page __.) If approved by
shareholders, the Amended Contract will take effect on the first day
of the first month following approval and will remain in effect
through July 31, 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 July 31, 1999, and thereafter only as long as its
continuance is approved at least annually as above.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on
the aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets
increase, the Group Fee rate declines. The Amended Contract would not
change the Group Fee rate if group assets are $210 billion or less.
Above $210 billion in group assets, the Group Fee rate declines under
both contracts, but under the Amended Contract, it declines faster.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets.
The rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets
increase. The Amended Contract revises the current fee breakpoints for
assets under FMR's management above $210 billion and adds seven new
fee breakpoints for assets under management by FMR above $318 billion
as illustrated in the following table. (For an explanation of how the
Group Fee rate is used to calculate the management fee see the section
entitled "Present Management Contracts" on page __.)
GROUP FEE RATE BREAKPOINTS
AVERAGE GROUP PRESENT GROUP AMENDED
ASSETS CONTRACT ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
174 - 228 .3000% 174 - 210 .3000%
228 - 282 .2950% 210 - 246 .2950%
282 - 336 .2900% 246 - 282 .2900%
OVER 336 .2850% 282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
OVER 534 .2500%
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are
combined to arrive at the Group Fee rate, see "Present Management
Contracts" on page __.)
EFFECTIVE GROUP FEE RATES
GROUP PRESENT AMENDED
ASSETS CONTRACT CONTRACT
($ BILLIONS)
150 .3371% .3371%
200 .3284% .3284%
250 .3223% .3219%
300 .3175% .3163%
350 .3133% .3113%
400 .3098% .3067%
450 .3070% .3024%
500 .3048% .2982%
550 .3030% .2942%
FMR voluntarily adopted various additional Group Fee breakpoints for
group assets over $210 billion in 1994 and 1996. Although the new fee
breakpoints have not been added to the management contract pending
shareholder approval, FMR has voluntarily based its management fee on
the Group Fee schedule contained in the Amended Contract since January
1, 1996. Group assets for July 31, 1998 were approximately $648
billion.
MODIFICATIONS TO PERFORMANCE ADJUSTMENT - ROUNDING METHOD. The annual
Performance Adjustment rate equals 0.02% for each percentage point by
which the fund outperforms or underperforms the Index over a 36-month
performance period. Under the Present Contract, the investment
performance of both the fund and the Index are rounded to the nearest
full percentage point (for example, 15.5123% is
rounded to 16%.) Rounding to full percentage points results in the
Performance Adjustment rate being applied in 0.02% increments. In
comparison, under the Amended Contract, the investment performance of
both the fund and Index are rounded to the nearest 0.01% (using the
prior example, 15.5123% is rounded to 15.51%) prior to calculating the
difference in investment performance. The more precise rounding method
results in a more accurate measure of the difference in investment
performance and allows for the Performance Adjustment to be applied in
0.0002% increments. This reduces the chance of minor changes in
performance resulting in significant changes to the Performance
Adjustment, and ultimately the fund's management fee.
During fiscal 1998, using the more precise rounding methodology, the
impact on the annual performance fee rate would have been 0% as a
percentage of the fund's average net assets for the year.
COMPARISON OF MANAGEMENT FEES. The following table compares the
fund's management fee as calculated under the terms of the Present
Contract (not including FMR's voluntary implementation of the Group
Fee reductions) for fiscal 1998 to the management fee the fund would
have incurred if the Amended Contract had been in effect. Management
fees are expressed in dollars and as percentages of the fund's average
net assets for the year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PRESENT CONTRACT AMENDED CONTRACT DIFFERENCE
$ % $ % $ %
BASIC FEE 9,531,961 .6036 9,388,566 .5945 (143,395) (1.50)
PERFORMAN 24,339 .0015 24,219 .0015 (120) (.49)
CE
ADJUSTMENT
TOTAL 9,556,300 .6051 9,412,785 .5960 (143,515) (1.50)
MANAGEME
NT FEE
</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 (not including
FMR's voluntary implementation of the Group Fee reductions) 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 of the fund and are calculated as a percentage of
average net assets.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
PRESENT CONTRACT AMENDED CONTRACT
MANAGEMENT FEE 0.6051% .5960%
12B-1 FEE NONE NONE
OTHER EXPENSES 0.3040% .3040%
TOTAL FUND OPERATING EXPENSES 0.9091% .9000%
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. The 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
operating expenses presented in the table would have been 0.8600%
under the Present Contract and 0.8691% under the Amended Contract.
EXAMPLE: The following table 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 $9 $29 $50 $111
AMENDED CONTRACT $9 $29 $50 $111
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.
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 July 16, 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
and June to July 1994, and the modifications to the Performance
Adjustment calculation during the period from June to July 1995. 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 monthly meetings 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 and the use of
"soft" commission dollars to pay fund expenses and to pay for research
and other similar services, (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 impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) 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 of 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 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 equity 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 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 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. 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 foregoing summary does
not detail all of the matters considered. 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 rates, that is the reduction of
the Group Fee Rate schedule and the modifications to the performance
adjustment calculation, 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.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY UTILITIES
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 modifies (i) two aspects of the
management fee that FMR receives from the fund for managing its
investments and business affairs, and (ii) one other provision of the
fund's existing management contract with FMR (the Present Contract).
CURRENT MANAGEMENT FEE. The fund's management fee is calculated and
paid monthly and is normally expressed as an annual percentage of the
fund's average net assets. The fee has two components: a Basic Fee and
a Performance Adjustment. The Basic Fee is an annual percentage of the
fund's average net assets for the current month. The Basic Fee rate is
the sum of a Group Fee rate, which declines as FMR's fund assets under
management increase, and a fixed individual fund fee rate of 0.20%.
The Basic Fee rate for the fund's fiscal year ended January 31, 1998
(not including the fee amendments discussed below) was .5046%.
The Performance Adjustment is a positive or negative dollar amount
applied to the Basic Fee and is based on the fund's performance and
assets for the most recent 36 months. If the fund outperforms its
current comparative securities index, the Standard & Poor's Utilities
Index (the Current Index), over 36 months, FMR receives a positive
Performance Adjustment, which increases the management fee. If the
fund underperforms the Current Index, the management fee is reduced by
a negative Performance Adjustment. The Performance Adjustment is an
annual percentage of the fund's average net assets over the 36-month
performance period. The Performance Adjustment rate is 0.02% for each
percentage point of outperformance or underperformance, subject to a
maximum rate of 0.15% if the fund outperforms or underperforms the
Current Index by 7.5% or more over the performance period. Performance
of the fund and the Current Index are rounded to the nearest 0.01% for
purposes of the calculation. Under the Present Contract, the
Performance Adjustment for the fund's fiscal year ended January 31,
1998 equaled .1074% of the fund's average net assets for the year.
PROPOSED MANAGEMENT CONTRACT AMENDMENTS. The Amended Contract would
(1) reduce the Group Fee rate further if FMR's assets under management
remain over $210 billion; (2) PROSPECTIVELY change the comparative
securities index used to calculate the fund's Performance Adjustment
from the Current Index to the Russell 3000 Utilities Index (the
Proposed Index); and (3) allow FMR and the trust, on behalf of the
fund, to modify the Management Contract subject to the requirements of
the 1940 Act (the Present Contract 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
__ for more details.) The financial impact of the proposed changes to
the management fee is summarized briefly in the following paragraphs.
The changes are discussed in detail in the remainder of the proposal.
IMPACT OF PROPOSED GROUP FEE RATE REDUCTION. At FMR's current level
of assets under management ($648 billion as of July 31, 1998), the
changes to the Group Fee rate reduce FMR's management fee. (FMR has
already voluntarily implemented the proposed Group Fee reductions
pending shareholder approval, and the fund has paid lower management
fees as a result.) For the fund's fiscal year ended January 31, 1998,
the management fee using the proposed Group Fee reductions (and
including the Performance Adjustment as presently calculated under the
Present Contract) was .6046% of the fund's average net assets. The
proposed Group Fee reductions lower the management fee rate by .0074%
of the fund's average net assets for the year compared to the rate FMR
was entitled to receive under the Present Contract (.5046%).
IMPACT OF PROPOSED CHANGE IN PERFORMANCE ADJUSTMENT INDEX. To more
fully depict the financial effect of the proposed index change, the
following figures assume, for fiscal 1998, a complete substitution of
the rolling 36 month historical performance of the Proposed Index for
the rolling 36 month historical performance of the Current Index.
Under the terms of the Amended Contract, the proposed change in the
fund's Performance Adjustment index will actually occur on a gradual
basis over the 36 month period after shareholder approval of the
Amended Contract. See "Implementation of Change in Performance
Adjustment Index" on page ___ for details.
For the fund's fiscal year ended January 31, 1998, using the rolling
36 month historical performance of the Proposed Index instead of the
rolling 36 month historical performance of the Current Index produces
a Performance Adjustment of .0784% of the fund's average net assets
for the year. Thus, for fiscal 1998, substituting the Proposed Index's
historical performance for the Current Index's performance (and using
the Present Contract's Group Fee breakpoints without the proposed
reductions) reduces the fund's management fee by $385,990 and lowers
the management fee rate by .0289% of the fund's average net assets for
the year compared to the rate FMR was entitled to receive under the
Present Contract (.6120%).
COMBINED EFFECT OF PROPOSED FEE CHANGES. Assuming both the proposed
Group Fee reductions and the proposed change in Performance Adjustment
index had been in effect during the fund's fiscal year ended January
31, 1998, the fund's total management fee for fiscal 1998 would have
decreased by .0363% of the fund's average net assets for the year. The
future impact of the proposed fee changes will depend on many
different factors and may represent an increase or decrease from the
management fee under the Present Contract. The Group Fee rate
reductions will either reduce the management fee or leave it
unchanged, depending on the level of FMR's assets under management.
The proposed change to the Performance Adjustment Index will either
increase the management fee or reduce it, depending on the performance
of the fund and the relative performance of the Proposed Index.
PRESENT AND AMENDED CONTRACTS. FMR is the fund's investment adviser
pursuant to a management contract dated September 1, 1994, which was
approved by shareholders on August 3, 1994. (For information on FMR,
see the section entitled "Activities and Management of FMR," on page
__.) A copy of the Amended Contract, marked to indicate the proposed
amendments, is supplied as Exhibit 5 on page __. Except for the
modifications discussed above, the Amended Contract is substantially
identical to the fund's Present Contract with FMR. (For a detailed
discussion of the fund's Present Contract, refer to the section
entitled "Present Management Contracts," on page __.) If approved by
shareholders, the Amended Contract will take effect on the first day
of the first month following approval and will remain in effect
through July 31, 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 July 31, 1999, and thereafter only as long as its
continuance is approved at least annually as above.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on
the aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets
increase, the Group Fee rate declines. The Amended Contract would not
change the Group Fee rate if group assets are $210 billion or less.
Above $210 billion in group assets, the Group Fee rate declines under
both contracts, but under the Amended Contract, it declines faster.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets.
The rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets
increase. The Amended Contract revises the current fee breakpoints for
assets under management by FMR above $210 billion and adds seven new
fee breakpoints for assets under FMR's management above $318 billion
as illustrated in the following table. (For an explanation of how the
Group Fee rate is used to calculate the management fee see the section
entitled "Present Management Contracts" on page __.)
GROUP FEE RATE BREAKPOINTS
AVERAGE GROUP PRESENT GROUP AMENDED
ASSETS CONTRACT* ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
174-228 .3000% 174-210 .3000%
228-282 .2950% 210-246 .2950%
282-336 .2900% 246-282 .2900%
OVER 336 .2850% 282-318 .2850%
318-354 .2800%
354-390 .2750%
390-426 .2700%
426-462 .2650%
462-498 .2600%
498-534 .2550%
OVER 534 .2500%
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are
combined to arrive at the Group Fee rate, see "Present Management
Contracts" on page __.)
EFFECTIVE GROUP FEE RATES
Group Present Amended
Assets Contract* Contract
($ billions)
150 .3371% .3371%
200 .3284% .3284%
250 .3223% .3219%
300 .3175% .3163%
350 .3133% .3113%
400 .3098% .3067%
450 .3070% .3024%
500 .3048% .2982%
550 .3030% .2942%
*Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
FMR voluntarily adopted various additional Group Fee breakpoints for
group assets over $210 billion listed above in 1994 and 1996. Although
the new fee breakpoints have not been added to the management contract
pending shareholder approval, FMR has voluntarily based its management
fee on the Group Fee schedule contained in the Amended Contract since
January 1, 1996. Group assets for July 31, 1998 were approximately
$648 billion.
CHANGE IN PERFORMANCE ADJUSTMENT INDEX
COMPARISON OF PROPOSED AND CURRENT INDICES. Under the Present
Contract, the fund's Performance Adjustment is based on a comparison
of the fund's performance (including expenses) to the performance of
its Current Index, the Standard & Poor's Utilities Index. If the
proposal is approved, the fund will change its Performance Adjustment
index prospectively to the Proposed Index, the Russell 3000 Utilities
Index.
The Proposed Index provides significantly more comprehensive coverage
of utility companies than the Current Index. As currently
constituted, the Current Index is composed of only 37 companies and is
dominated by electric utilities. Moreover, the Current Index excludes
the securities of telephone companies, which, until their removal from
the index in mid-1996, represented more than half of its
capitalization. Unlike the Current Index, the Proposed Index contains
over 200 stocks and includes securities of telephone, cable television
and radio companies. As defined in the fund's prospectus, the term
"public utility companies" includes companies that provide
electricity, natural gas, water, public communication services, or
sanitary services to the public. The Proposed Index includes this
broad range of investments while the Current Index does not. By
providing greater coverage of utility companies, the Proposed Index is
more representative of the fund's possible investment universe and is,
therefore, a more appropriate performance benchmark.
Because the fund's non-fundamental 65% name test policy has always
included telephone companies, the proposed change in the fund's
Performance Adjustment index will not necessitate any changes to this
policy. (Telephone companies currently represent approximately [60%]
of the Proposed Index. As of July 31, 1998, the fund's weighting in
telephone companies was approximately ____% of its assets.) Unrelated
to the change in the fund's Performance Adjustment index, the Board of
Trustees is proposing to modify the fund's fundamental concentration
policy as well as the fund's name test policy by deleting the term
"public" from each the policy. The intent of the proposed
modification is to further clarify the policies. See Proposal 10 on
page ___ for more information.
IMPLEMENTATION OF CHANGE IN PERFORMANCE ADJUSTMENT INDEX. If the
proposal is approved, the change in the fund's Performance Adjustment
index will be implemented on a prospective basis beginning with the
first day of the month following shareholder approval. However,
because the Performance Adjustment is based on a rolling 36 month
measurement period, comparisons to the Proposed Index will not be
fully implemented for 36 months after shareholder approval. During
this transition period, the fund's returns will be compared to a 36
month blended index return that reflects the performance of the
Proposed Index for the portion of the performance period subsequent to
its adoption and the performance of Current Index for the remainder of
the period. For example, the Performance Adjustment for the first full
month following shareholder approval would be calculated by comparing
the fund's performance over the 36 month performance period to a
blended index return calculated using the Current Index's performance
for the first 35 months of the performance period and the Proposed
Index's performance for the 36th month. Each month for the following
35 months, the blended index return would reflect an additional month
of the Proposed Index's performance and one less month of the Current
Index's performance. At the conclusion of the transition period, the
performance of the Current Index would be eliminated from the
Performance Adjustment calculation, and the calculation would include
only the performance of the Proposed Index.
COMPARISON OF MANAGEMENT FEES. The following table compares the
fund's management fee for the fiscal year ended January 31, 1998 as
calculated under the terms of the Present Contract (not including
FMR's voluntary implementation of the Group Fee reductions) to the
management fee the fund would have incurred if both the proposed Group
Fee reductions and the proposed change in Performance Adjustment index
had been in effect. For this purpose, the Performance Adjustment
amounts presented for the Amended Contract for fiscal 1998 have been
calculated using the rolling 36 month historical performance of the
Proposed Index during the period. Management fees are expressed in
dollars and as percentages of the fund's average net assets for the
year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Present Contract Amended Contract Difference
$ % $ % $ %
Basic Fee 6,729,921 .5046 6,630,766 .4972 (99,155) (.0074)
Performance 1,432,589 .1074 1,045,744 .0784 (386,845) (.0290)
Adjustment
Total 8,162,510 .6120 7,676,510 .5756 (486,000) (.0364)
Management
Fee
</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 January 31, 1998 under the Present Contract (not including
FMR's voluntary implementation of the Group Fee reductions) and if
both the proposed Group Fee reductions and the proposed change in
Performance Adjustment index had been in effect during the same
period. As with the table above, the Performance Adjustment
incorporated in the management fee expense listed for the Amended
Contract has been calculated using the rolling 36 month historical
performance of the Proposed Index during fiscal 1998.
The following figures are based on historical expenses adjusted to
reflect current fees of the fund and are calculated as a percentage of
average net assets.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Present Contract Amended Contract
Management Fee 0.60% .58%
12b-1 Fee None None
Other Expenses 0.27% .27%
Total Fund Operating Expenses 0.87% .85%
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. In addition, the 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 operating expenses presented in the table would have been 0.85%
under the Present Contract and 0.83% under the Amended Contract.
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 $9 $28 $48 $107
Amended Contract $9 $27 $47 $105
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.
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 July 16, 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
and June to July 1994, and the change to the Performance Adjustment
index during the two month period from June to July 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 monthly meetings, the Trustees received materials that relate 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 and the use of "soft"
commission dollars to pay fund expenses and to pay for research and
other similar services, (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 impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) 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 of 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 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 equity 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 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 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
(i) that the existing management fee structure is fair and reasonable,
(ii) that the proposed modifications to the management fee structure,
that is the reduction of the Group Fee Rate schedule, the proposed
change to the fund's Performance Adjustment index, 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 month
following shareholder approval.
7. TO APPROVE A DISTRIBUTION AND SERVICE PLAN PURSUANT TO RULE 12B-1
FOR FIDELITY EQUITY-INCOME FUND.
The Board of Trustees has approved, and recommends that shareholders
of Fidelity Equity-Income Fund approve a Distribution and Service Plan
(the Plan) for the fund. A copy of the Plan is attached to this Proxy
Statement as Exhibit 6.
THE PLAN. The Plan was approved by the Board of Trustees as provided
for by Rule 12b-1 (the Rule) promulgated by the Securities and
Exchange Commission (SEC) under the Investment Company Act of 1940
(the 1940 Act). The Rule provides that an investment company (e.g., a
mutual fund) acting as a distributor of its shares must do so pursuant
to a written Plan "describing all material aspects of the proposed
financing of distribution.'' Under the Rule, an investment company is
deemed to be acting as a distributor of its shares if it engages
"directly or indirectly in financing any activity which is primarily
intended to result in the sale of shares issued by such company,
including, but not necessarily limited to, advertising, compensation
of underwriters, dealers, and sales personnel, the printing and
mailing of prospectuses to other than current shareholders, and the
printing and mailing of sales literature.''
The Plan is designed to avoid legal uncertainties which may arise
from the ambiguity of the phrase "primarily intended to result in the
sale of shares'' and from the term "indirectly'' as used in the Rule.
The SEC has neither approved nor disapproved the Plan.
The Plan contemplates that all expenses relating to the distribution
of fund shares shall be paid for by FMR, or Fidelity Distributors
Corporation (FDC), a wholly owned subsidiary of FMR Corp., out of past
profits and other resources, including management fees paid by a fund
to FMR. The Plan also recognizes that FMR, either directly or through
FDC, may make payments from these sources to securities dealers and to
other third parties who engage in the sale of fund shares or who
render shareholder services. The Plan provides that, to the extent
that the fund's payment of management fees to FMR might be considered
to constitute the "indirect'' financing of activities "primarily
intended to result in the sale of shares,'' such payment is expressly
authorized. THE PLAN DOES NOT AUTHORIZE PAYMENTS BY THE FUND OTHER
THAN THOSE THAT ARE TO BE MADE TO FMR UNDER ITS MANAGEMENT CONTRACT.
The fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plan. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
Although the Plan contemplates that FMR and FDC may engage in various
distribution activities, it does not require them to perform any
specific type of distribution activity or to incur any specific level
of expense for such activities.
The Plan contains a number of provisions relating to reporting
obligations and to its amendment and termination as required by the
Rule. If approved by shareholders, the Plan will continue in effect as
long as its continuance is specifically approved at least annually by
a majority of the Board of Trustees, including a majority of the
Trustees who are not "interested persons'' of the trust and who have
no direct or indirect financial interest in the operation of the Plan
or any agreement related to the Plan (the non-interested Trustees),
cast in person at a meeting called for the purpose of voting on the
Plan. The Plan may be amended at any time by the Trustees, except that
it may not be amended to authorize direct payments by the fund to
finance any activity primarily intended to result in the sale of
shares issued by the fund or to increase materially the amount spent
by the fund for distribution without the approval of a majority of the
outstanding shares of the fund and the Trustees. In addition, any
amendment of the fund's Management Contract to increase the amount
paid by the fund to FMR shall be effective only upon approval by vote
of a majority of the outstanding voting securities of the fund. All
material amendments to the Plan also must be approved by a majority of
the non-interested Trustees. The Plan, and any agreements related to
the Plan, may be terminated at any time by a vote of the majority of
the non-interested Trustees or by a vote of the majority of the
outstanding shares of the fund. The Plan requires that the Trustees
receive, at least quarterly, a written report as to the amounts
expended during the quarter by FMR, or FDC, in connection with
financing any activity primarily intended to result in the sale of
shares issued by the fund, and the purposes for which such
expenditures were made. As required by the Rule, while the Plan is in
effect, the selection and nomination of those Trustees who are not
"interested persons" shall be committed to the discretion of the
non-interested Trustees then in office.
TRUSTEE CONSIDERATION. In determining to recommend the adoption of
the Plan, the Board considered a variety of factors and was advised by
counsel who are not counsel to FMR or FDC. The Trustees believe that
the fees paid by the fund to FMR under the Management Contract, are
fair and reasonable, that the services provided thereunder are
necessary and appropriate for the fund and its shareholders, and that
the fund does not indirectly finance the distribution of its shares in
contravention of the Rule. Nonetheless, the Trustees concluded that
adoption of the Plan would avoid legal uncertainties which might arise
as a result of what they and FMR believes to be potentially subjective
and ambiguous language contained in the Rule and in public releases
issued by the SEC in connection with the proposal and adoption of the
Rule (SEC Releases). The Trustees believe that the adoption of the
Plan is advisable to minimize such legal uncertainties and to provide
other benefits to the fund and its shareholders.
The Trustees noted that the fund's Plan does not involve any direct
payment by the fund to finance any activity primarily intended to
result in the sale of shares issued by the fund, and that any
amendment of the fund's Management Contract with FMR to increase the
amount paid by the fund thereunder would require approval of both the
Trustees and the fund's shareholders. The Trustees also considered the
factors suggested in the SEC Releases including: the need for
independent counsel or experts to assist the Trustees in reaching a
determination; the nature and causes of the problems and circumstances
which made consideration of a Plan appropriate; the way in which a
Plan would resolve or alleviate the problems, including the nature and
approximate amount of the expenditures contemplated by the Plan; the
merits of possible alternatives to the Plan; the interrelationship
between the Plan and the activities of FMR in financing the
distribution of the fund's shares; the possible benefits of the Plan
to FMR and its affiliates relative to those expected to accrue to the
fund; and consequently the effects of the Plan on existing
shareholders.
The reduction in legal uncertainties arising from the potentially
subjective and ambiguous language that appears in the Rule and in the
SEC Releases enables the Trustees, in connection with their review of
the fund's Management Contract with FMR, to consider the full range of
services provided by FMR and FDC, including services which may be
related to the distribution of the fund's shares. In addition, the
Board of Trustees considered alternatives to the Plan, including
direct payments by the fund to FDC and/or third parties and the
implementation of a sales load. The Trustees believe it is appropriate
to ensure that FMR and FDC have the flexibility to direct their
distribution activities in a manner consistent with prevailing market
conditions by using, subject to approval of the Trustees, their
resources, including the current management fee, to make payments to
third parties. To the extent that FMR has greater flexibility under
the Plan, additional sales of the fund's shares may result. The
Trustees believe that this flexibility has the potential to benefit
the fund by reducing the possibility that the fund would experience
net redemptions, which might require the liquidation of portfolio
securities in amounts and at times that could be disadvantageous for
investment purposes. Of course, there can be no assurance that these
events will occur.
The Board of Trustees recognized that a greater level of fund assets
benefits FMR by increasing its management fee revenues. The Board
noted the high quality of investment management services and the
expansion of, and many innovations in, investor services that have
been provided by FMR over the years. The Board believes that revenues
received by FMR contribute to its continuing ability to attract and
retain a high caliber of investment and other personnel and to develop
and implement new systems for providing services and information to
shareholders. The Board considers this ability to be an important
benefit to the fund and its shareholders.
CONCLUSION. For the reasons stated above, the members of the Board of
Trustees unanimously concluded in the exercise of their business
judgment and in light of their fiduciary duties under state law and
the 1940 Act that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. The Trustees recommend that
shareholders of the fund vote FOR approval of the Plan. With respect
to the fund, if the Plan is not approved, the Board and FMR will
consider alternative means of obtaining the services that are to be
provided under the Plan.
8. TO APPROVE AN AGREEMENT AND PLAN PROVIDING FOR THE REORGANIZATION
OF FIDELITY MID-CAP STOCK FUND FROM A SEPARATE SERIES OF ONE
MASSACHUSETTS BUSINESS TRUST TO ANOTHER.
The Board of Trustees has approved an Agreement and Plan of
Reorganization (the Plan of Reorganization) in the form attached to
this Proxy Statement as Exhibit 7. The Plan of Reorganization provides
for the reorganization of Fidelity Mid-Cap Stock Fund (the Fund) from
a separate series of Fidelity Devonshire Trust (the Trust), a
Massachusetts business trust, to a newly-established, separate series
of Fidelity Commonwealth Trust, also a Massachusetts business trust
(the Reorganization).
The investment objective, policies, and limitations of the Fund will
not change except as approved by shareholders and as described in this
proxy statement. A separate series of the Trust will carry on the
business of the Fund following the Reorganization (the Series). The
Series, which has not yet commenced business operations, will have an
investment objective, policies, and limitations identical to those of
the Fund (except as they may be modified pursuant to a vote of the
shareholders as proposed in this proxy statement).
Both the Trust and Fidelity Commonwealth Trust are Massachusetts
business trusts, organized under substantially similar Declarations of
Trust. Except as noted below and as the Trust's Declaration of Trust
may be modified pursuant to a vote of the Trust's shareholders as
proposed in this proxy statement, the rights of the security holders
of the Fund under state law and the Fund's governing documents are
expected to remain the same after the Reorganization. Unlike the
Trust's Current Declaration of Trust, Fidelity Commonwealth 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 Trust's 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 fund's policies must permit the
structure. Fidelity Commonwealth Trust currently has the ability to
allow each series to invest all of its assets in another open-end
investment company. If shareholders of the Fund vote FOR the
Reorganization, the Fund will have the ability to invest all of its
assets in another open-end investment company. If shareholders of the
Fund vote AGAINST the Reorganization, but vote FOR Proposal 3,
amending and restating the Fund's current Declaration of Trust, the
Fund will also have the ability to invest all of its assets in another
open-end investment company.
The Reorganization will not affect the operation of the Fund in a
material manner. The same individuals serve as Trustees of both
trusts. Both trusts are authorized to issue an unlimited number of
shares of beneficial interest, and each Declaration of Trust permits
the Trustees to create one or more additional series or funds.
The Fund's fiscal year end will not change as a result of the
Reorganization, although the Trustees may change the fiscal year at
their discretion.
FMR, the Fund's investment adviser, will be responsible for the
investment management of the Series, subject to the supervision of the
Board of Trustees, under a management contract substantively identical
to the contract in effect between FMR and the Fund immediately prior
to the Closing Date (including as it may be modified pursuant to a
vote of shareholders of the Fund as proposed in Proposal 5) (the New
Management Contract); similarly, Fidelity Management & Research (U.K.)
Inc. (FMR U.K.) and; Fidelity Management & Research (Far East) Inc.
(FMR Far East), the Fund's sub-advisers, will have primary
responsibility for providing investment advice and research services
outside the United States or investment management authority under
Sub-Advisory Agreements substantively identical to the agreements in
effect between FMR U.K. and FMR Far East and FMR immediately prior to
the Closing Date (New Sub-Advisory Agreements).
The Fund's distribution agent, Fidelity Distributors Corporation
(FDC) will distribute shares of the Series under a General
Distribution Agreement substantively identical to the contract in
effect between FDC and the Fund immediately prior to the Closing Date.
REASON FOR THE PROPOSED REORGANIZATION. The Fund is presently
organized as a series of the Trust, which has four series of shares or
funds. The Board of Trustees unanimously recommends reorganization of
the Fund to a separate series of Fidelity Commonwealth Trust (i.e.,
into the Series), which will succeed to the business of the Fund.
Moving the Fund to Fidelity Commonwealth Trust will consolidate and
streamline the production and mailing of certain legal documents. THE
PROPOSED CHANGE WILL HAVE NO MATERIAL EFFECT ON SHAREHOLDERS OR THE
MANAGEMENT OF THE FUND.
The proposal to present the Plan of Reorganization to shareholders
was approved by the Board of Trustees of the Trust, including all of
the Trustees who are not interested persons of FMR, on July 16, 1998.
The Board of Trustees recommends that Fund shareholders vote FOR the
approval of the Plan of Reorganization described below. Such a vote
encompasses approval of the reorganization of the Fund to a separate
Series of Fidelity Commonwealth Trust; temporary waiver of certain
investment limitations of the Fund to permit the Reorganization (see
"Temporary Waiver of Investment Restrictions" on page _); and
authorization of the Trust, as sole shareholder of the Series, to
approve (i) the New Management Contract; (ii) the New Sub-Advisory
Agreements; and (iii) the Distribution and Service Plan for the Series
under Rule 12b-1, substantively identical to the Plan in effect with
respect to the Fund immediately prior to the Closing Date as such
Distribution and Service Plan may be adopted pursuant to a vote of
shareholders of the Fund as proposed in this proxy statement (the New
Plan). If shareholders of the Fund do not approve the Plan of
Reorganization, the Fund will continue to operate as a series of the
Trust.
SUMMARY OF THE PLAN OF REORGANIZATION. The following discussion
summarizes the important terms of the Plan of Reorganization. This
summary is qualified in its entirety by reference to the Plan of
Reorganization itself.
On the Closing Date (defined below) of the Reorganization, the Fund
will transfer all of its assets to the Series, a series of shares of
Fidelity Commonwealth Trust established for the purpose of effecting
the Reorganization, in exchange for the assumption by the Series of
all of the liabilities of the Fund and the issuance of shares of
beneficial interest in the Series (Series shares) equal to the number
of Fund shares outstanding on the Closing Date. Immediately
thereafter, the Fund will distribute one Series share for each Fund
share (the Fund shares) held by the shareholder on the Closing Date to
each Fund shareholder, in exchange for such Fund shares. Immediately
after this distribution of the Series shares, the Fund will be
terminated and, as soon as practicable thereafter, will be wound up
and liquidated. UPON COMPLETION OF THE REORGANIZATION, EACH FUND
SHAREHOLDER WILL BE THE OWNER OF FULL AND FRACTIONAL SERIES SHARES
EQUAL IN NUMBER, DENOMINATION, AND AGGREGATE NET ASSET VALUE TO HIS OR
HER FUND SHARES.
The Plan of Reorganization authorizes the Trust as the then sole
initial shareholder of the Series to approve (i) the New Management
Contract (including as the Management Contract may be modified as
proposed in this proxy statement), (ii) the New Sub-Advisory
Agreements, and (iii) the New Plan.
Fidelity Commonwealth Trust's Board of Trustees will hold office
without time limits, 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 removal; (c) any Trustee
who requests to be retired by written instrument signed by a majority
of the other Trustees or who is unable to serve due to physical or
mental incapacity by reason of disease or otherwise, death, or for any
other reason, may be retired; and (d) a Trustee may be removed at any
Special Meeting of the shareholders by a vote of two-thirds of the
outstanding shares of Fidelity Commonwealth 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 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 New Management Contract, the New Sub-Advisory Agreements, and the
New Plan will take effect on the Closing Date. The New Management
Contract and the New Sub-Advisory Agreements, will continue in force
until July 31, 1999. The New Plan will continue in force until April
30, 1999. The New Sub-Advisory Agreements, and the New Management
Contract, will continue in force thereafter from year to year so long
as their continuance is approved at least annually by (i) the vote of
a majority of the Trustees who are not "interested persons" of
Fidelity Commonwealth Trust, FMR, FMR U.K., or FMR Far East, cast in
person at a meeting called for the purpose of voting on such approval,
and (ii) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding shares of the Series. The New Plan will
continue in effect only if approved annually by a vote of the Trustees
and of those Trustees who are not interested persons, cast in person
at a meeting called for that purpose. The New Management Contract and
the New Sub-Advisory Agreements will be terminable without penalty on
sixty days' written notice either by Fidelity Commonwealth Trust, FMR,
FMR U.K. or FMR Far East, as the case may be, and will terminate
automatically in the event of its assignment. The New Plan may be
terminable at any time, without the payment of any penalty, by a vote
of a majority of the Independent Trustees or by a vote of a majority
of the outstanding voting securities of the Fund.
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Reorganization will become effective at the
close of business on June 25, 1999 (the Closing Date). However, the
Reorganization may become effective at such other date as the parties
may agree in writing.
The obligations of the Trust and Fidelity Commonwealth Trust under
the Plan of Reorganization are subject to various conditions as stated
therein. Notwithstanding the approval of the Plan of Reorganization by
Fund shareholders, the Plan of Reorganization may be terminated or
amended at any time prior to the Reorganization by action of the
Trustees to provide against unforeseen events, if (1) there is a
material breach by the other party of any representation, warranty, or
agreement contained in the Plan of Reorganization to be performed at
or prior to the Closing Date or (2) it reasonably appears that a party
will not or cannot meet a condition of the Plan of Reorganization.
Generally, either party may at any time waive the other party's
compliance with any of the covenants and conditions contained in, or
both parties may amend, the Plan of Reorganization, provided that such
waiver or amendment does not materially adversely affect the interests
of Fund shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS AND PLANS. Fidelity
Commonwealth Trust's transfer agent will establish an account for the
Series' shareholders containing the appropriate number and
denomination of Series shares to be received by each holder of Fund
shares under the Plan of Reorganization. Such accounts will be
identical in all material respects to the accounts currently
maintained by the Fund's transfer agent for the Fund's shareholders.
Fund shareholders who are receiving payment under a withdrawal plan
with respect to Fund shares will retain the same rights and privileges
as to Series shares under the Plan of Reorganization. Similarly, no
further action will be necessary in order to continue any automatic
investment plan or retirement plan currently maintained by a Fund
shareholder with respect to Fund shares.
EXPENSES. The Fund and the Series shall each be responsible for all
of their respective expenses of the Reorganization, estimated at
$9,000 in the aggregate.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS. Certain fundamental
investment restrictions of the Fund, which prohibit the Fund from
acquiring more than a stated percentage of ownership of another
company, might be construed as restricting the Fund's ability to carry
out the Reorganization. By approving the Plan of Reorganization, Fund
shareholders will be agreeing to waive, only for the purpose of the
Reorganization, those fundamental investment restrictions that could
prohibit or otherwise impede the transaction.
TAX CONSEQUENCES OF THE REORGANIZATION. Each trust will receive an
opinion from their counsel, Kirkpatrick & Lockhart LLP, that the
Reorganization will constitute a tax-free reorganization within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended. Accordingly, no gain or loss will be recognized for
federal income tax purposes by the Fund, the Series, or the Fund's
shareholders upon (1) the transfer of the Fund's assets in exchange
solely for the Series shares and the assumption by the Trust on behalf
of the Series of the Fund's liabilities or (2) the distribution of
Series shares to the Fund's shareholders in exchange for their Fund
shares. The opinion further provides, among other things, that (a) the
basis for federal income tax purposes of the Series shares to be
received by each Fund shareholder will be the same as that of his or
her Fund shares immediately prior to the Reorganization; and (b) each
Fund shareholder's holding period for his or her Series shares will
include the Fund shareholder's holding period for his or her Fund
shares, provided that said Fund shares were held as capital assets on
the date of the exchange.
CONCLUSION. The Board of Trustees has concluded that the proposed
Plan of Reorganization to reorganize the Fund into a separate Series
of a Massachusetts business trust is in the best interest of the
Fund's shareholders. The Trustees recommend that the Fund's
shareholders vote FOR the approval of the Plan of Reorganization as
described above. Such a vote encompasses approval of the
reorganization of the Fund to a separate Series of a Massachusetts
business trust; temporary waiver of certain investment limitations of
the Fund to permit the Reorganization (see "Temporary Waiver of
Investment Restrictions" on page __); authorization of the the Trust,
as sole shareholder of the Series, to approve (i) the New Management
Contract (including modifications proposed in this proxy statement),
(ii) the New Sub-Advisory Agreements for the Series between FMR and
FMR U.K. and FMR Far East, and (iii) the New Plan. If approved, the
Plan of Reorganization will take effect on the Closing Date. If the
Plan of Reorganization is not approved, the Fund will continue to
operate as a series of the Trust.
9. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR FIDELITY
EQUITY-INCOME FUND, FIDELITY REAL ESTATE INVESTMENT PORTFOLIO, AND
FIDELITY UTILITIES FUND PERMITTING 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.
The Board of Trustees has approved, and recommends that shareholders
of Fidelity Equity-Income Fund, Fidelity Real Estate Investment
Portfolio, and Fidelity Utilities Fund approve, the adoption of a new
fundamental investment policy that would permit 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. Adoption of the policy would allow the 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 each 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," each 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 then 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 8.
If the proposal is approved by shareholders, THE TRUSTEES WILL ONLY
AUTHORIZE INVESTING EACH FUND'S ASSETS IN A MASTER FUND IF THEY
DETERMINE THAT A MASTER FEEDER FUND STRUCTURE IS IN THE BEST INTERESTS
OF EACH FUND'S SHAREHOLDERS, and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to each 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
though 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 each fund should invest in a Master Fund, the Trustees believe it
could be in the best interests of each fund to adopt such a structure
at a future date.
At present, certain of each fund's fundamental investment policies
and limitations would prevent each fund from investing all of its
assets in a Master Fund and would require a vote of shareholders
before each fund could participate in a Master Feeder Fund Structure.
These policies include Fidelity Equity-Income Fund and Fidelity
Utilities Fund's limitations on investing more than 5% of total assets
in a single issuer and purchasing more than 10% of the outstanding
voting securities of a single issuer, Fidelity Equity-Income Fund's
limitation on investing more than 25% of assets in a single industry,
and for each fund, its policy on underwriting securities. 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 each
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 the 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.
Each 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 each fund would be managed as part of a larger fund.
Were each 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 each 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 each 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 each fund. Each fund would then resume investing
directly in individual securities as it does currently.
If, as a Feeder Fund, each fund is asked to vote at a shareholder
meeting of the Master Fund, the fund, if required by applicable law or
the its policies, would hold a meeting of its shareholders to vote on
the matters to be considered at the Master Fund shareholder meeting.
The 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 each fund's assets in a Master Fund only if
they determine that a Master Feeder Fund Structure is in the best
interests of each fund's shareholders and if, upon advice of counsel,
they determine that the investment will not have material adverse tax
consequences to each 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 EACH 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.
10. TO AMEND FIDELITY UTILITIES FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING THE CONCENTRATION OF ITS INVESTMENTS IN THE
PUBLIC UTILITIES INDUSTRY.
Fidelity Utilities 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 any of its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry except
that the fund will invest more than 25% of its total assets in
securities of public utility companies."
The Trustees recommend that shareholders of the fund approve the
following amended fundamental investment limitation governing
concentration (deleted language is [bracketed]):
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry except
that the fund will invest more than 25% of its total assets in
securities of [public] utility companies."
The proposed concentration policy differs from the existing policy
only in one respect: it removes the word "public" from the phrase
"public utility companies." Inclusion of the term "public" in the
current concentration policy is potentially confusing to shareholders.
The prospectus defines public utility companies to include companies
that provide electricity, natural gas, water, public communication
services, or sanitary services to the public. As a result, the
universe of utility companies in which the fund concentrates may
include non-governmental or "private" utility companies, such as
long-distance and local telephone companies. Elimination of the term
"public" will clarify the fund's concentration policy. If the proposal
is approved, the amended 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 the fund is managed, the investment
performance of the fund, or the securities or instruments in which the
fund invests.
In addition, if the proposal is approved, the Trustees intend to
modify the fund's non-fundamental 65% name test policy to similarly
remove the term "public" from the policy.
The fund's current name test policy states:
"FMR normally invests at least 65% of the fund's total assets in all
types of securities of public utility companies."
The proposed policy is as follows (deleted language is [bracketed]):
"FMR normally invests at least 65% of the fund's total assets in all
types of securities of [public] utility companies."
As with the proposed modification of the fund's concentration policy,
the deletion of the term "public" from the fund's name test policy is
intended to clarify the policy and minimize investor confusion and
will not affect the way the fund is managed.
CONCLUSION. The Board of Trustees believes that amending the fund's
current fundamental investment limitation concerning concentration is
in the best interest of the fund and its shareholders. The Trustees
recommend that shareholders vote FOR the proposal. If approved by
shareholders, the amended fundamental concentration limit will become
effective when the fund's disclosure is revised to reflect the
changes. If the proposal is not approved by the fund's shareholders,
the fund's current concentration limit will remain unchanged.
11. TO MAKE FIDELITY REAL ESTATE INVESTMENT PORTFOLIO'S CURRENT
FUNDAMENTAL 65% INVESTMENT POLICY NON-FUNDAMENTAL.
The current fundamental 65% investment policy for the fund is as
follows:
"Under normal conditions, at least 65% of the fund's total assets
will be invested in the equity securities of companies principally
engaged in the real estate industry."
The Board of Trustees has approved, and recommends that the
shareholders of the fund approve, making the fundamental 65% policy
above non-fundamental. If shareholders approve this proposal, the
Trustees intend to adopt unchanged the fund's previously fundamental
65% policy as a new non-fundamental policy of the fund.
By making the fund's 65% investment policy non-fundamental, the
Trustees will be able to react more quickly when the SEC adopts a
definitive version of its proposed name test rule (Name Test Rule).
The SEC first proposed the rule in February 1997. The rule governs the
use of mutual fund names and, upon its adoption, is likely to apply to
Fidelity Real Estate Investment Portfolio. As proposed, the Name Test
Rule requires, among other things, that a mutual fund with a name that
suggests that the fund focuses its investments in securities of
issuers in a particular industry to invest at least 80% of its assets
in securities of issuers in that industry. It is not known what the
final rule will require. FMR anticipates that the SEC will adopt a
definitive version of the Name Test Rule later in 1998.
When the SEC adopts a definitive version of the Name Test Rule, it is
possible that the fund will have to modify its 65% investment policy
to comply with the adopted rule. By making the fund's 65% policy
non-fundamental in advance of the Name Test Rule's adoption, the
Trustees will be able to modify these policies to comply with the rule
without the delay and expense of a shareholder meeting.
Approval of the proposal will give the Trustees the flexibility to
conform the fund's 65% policy to the requirements of the final Name
Test Rule without the costs and delays of a shareholder meeting. Any
future changes to the 65% policy would require the Board of Trustees'
approval, but would not require shareholder approval.
The Trustees anticipate that approval of the proposal will have no
material effect on the fund or its investment operations.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. Following shareholder approval, the proposed
non-fundamental policy will become effective when the fund's
disclosure is revised to reflect the changes. If the proposal is not
approved by the shareholders of the fund, the fund's current
fundamental policy will remain in effect.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 12 and 13 is to revise two 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.
12. TO AMEND FIDELITY EQUITY-INCOME FUND'S, FIDELITY MID-CAP STOCK
FUND'S, AND FIDELITY UTILITIES FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING DIVERSIFICATION, TO EXCLUDE SECURITIES OF OTHER
INVESTMENT COMPANIES FROM THE LIMITATION.
The current fundamental investment limitation concerning
diversification for Fidelity Equity-Income Fund and Fidelity Mid-Cap
Stock Fund 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 current fundamental investment limitation concerning
diversification for Fidelity Utilities Fund 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 obligations issued
or guaranteed by the government of the United States, or any of its
agencies or instrumentalities) if, as a result thereof, (a) more than
5% of the fund's total assets would be invested in the securities of
such issuer, or (b) the fund would hold more than 10% of the voting
securities of such issuer."
The Trustees recommend that shareholders of each fund vote to replace
each fund's current fundamental investment limitation with the
following amended fundamental investment limitation governing
diversification:
"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, 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."
The percentage limits in the proposed fundamental limitation
concerning diversification are the percentage limitations imposed by
the 1940 Act for diversified investment companies. The amended
fundamental diversification limitation makes one 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.
If this proposal is approved, the amended fundamental diversification
limitations 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 the 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.
13. TO REPLACE FIDELITY REAL ESTATE INVESTMENT PORTFOLIO'S
NON-FUNDAMENTAL INVESTMENT POLICY CONCERNING THE PURCHASE AND SALE OF
REAL ESTATE WITH A FUNDAMENTAL INVESTMENT POLICY.
Currently, the fund does not have a fundamental investment limitation
describing its policy regarding the purchase and sale of real estate.
Pursuant to Section 8(b) of the 1940 Act, a mutual fund must state its
policy relating to, among other things, the purchase and sale of real
estate.
The fund's non-fundamental real estate policy currently states:
"The fund does not currently intend to purchase or sell real estate
(except that the fund may purchase and sell mortgage-related
securities and securities of companies that deal in real estate or
interests therein and may liquidate real estate acquired as a result
of default on a mortgage) but this shall not prevent the fund from
investing in marketable securities issued by companies such as real
estate investment trusts which deal in real estate or interests
therein and participation interests in pools of real estate mortgage
loans."
The Board of Trustees recommends that the fund's non-fundamental
policy regarding the purchase and sale of real estate be replaced with
Fidelity's standard fundamental real estate policy. Fundamental
policies can be changed or eliminated only with shareholder approval,
while non-fundamental policies may be changed without a vote of
shareholders.
The proposed fundamental real estate policy for Fidelity Real Estate
Investment Portfolio is set forth below:
"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 proposed fundamental real estate policy would clarify the types
of securities in which the fund is authorized to invest and conform
the investment limitation to a fundamental policy that is expected to
become standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page __). The proposed
fundamental policy differs from the fund's current non-fundamental
policy in two notable ways: (i) the new policy broadens the explicit
exception to the prohibition on buying and selling real estate to
exclude real estate acquired as a result of ownership of securities or
other instruments rather than the narrower exception in the current
policy which explicitly allows the fund to liquidate real estate
acquired as a result of a default on a mortgage; and (ii) the new
policy broadly permits the fund to invest in securities or other
instruments backed by real estate or securities of companies engaged
in the real estate business whereas the current policy more
specifically describes the types of companies that deal in real estate
or interests therein to include marketable securities issued by
companies such as real estate investment trusts which deal in real
estate or interests therein, and participation interests in pools of
real estate mortgage loans.
Adoption of the proposed fundamental real estate policy is not
expected to affect the way the fund is managed, the investment
performance of the fund, or the securities or instruments in which the
fund invests. Once adopted, the proposed fundamental policy could only
be changed by shareholder vote.
CONCLUSION. The Board of Trustees believes that adopting the proposed
fundamental investment policy is in the best interest of the fund and
its shareholders. The Trustees recommend that shareholders vote FOR
the proposal. Upon shareholder approval, will become effective when
the disclosure is revised to reflect the changes. If the proposal is
not approved by shareholders of the fund, the fund's non-fundamental
policy will remain unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the
Meeting. However, 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 each fund and advised by FMR is contained in the
Table of Average Net Assets and Expense Ratios in Exhibit 9 beginning
on page __ for Fidelity Mid-Cap Stock Fund and in the Table of Average
Net Assets and Expenses Rations in Exhibit 10 beginning on page __ for
Fidelity Equity-Income Fund, Fidelity Real Estate Investment
Portfolio, and Fidelity Utilities Fund.
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, Robert
A. Lawrence, Ms. Abigail Johnson, Messrs. Richard A. Spillane Jr.,
Barry Greenfield, and Stephen R. Peterson,are currently officers of
the trust and officers or employees of FMR or FMR Corp. With the
exception of Mr. Costello, Mr. Silver, and [PORTFOLIO MANAGER(S) IF
NOT A STOCKHOLDER - CALL A PROXY COORDINATOR FOR THIS INFORMATION],
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 February 1, 1997 through July 31, 1998 (for
Fidelity Equity-Income Fund, Fidelity Real Estate Investment
Portfolio, and Fidelity Utilities Fund) and May 1, 1997 through July
31, 1998 (for Fidelity Mid-Cap Stock Fund) [the following
transactions/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.[A PROXY COORDINATOR WILL EMAIL YOU THIS INFORMATION FOR
INCLUSION IN 2PP]
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 Equity-Income
Fund, Fidelity Real Estate Investment Portfolio, Fidelity Mid-Cap
Stock Fund, and Fidelity Utilities 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 9 for Fidelity Mid-Cap Stock Fund beginning on page __ and
Exhibit 10 for Fidelity Equity-Income Fund, Fidelity Real Estate
Investment Portfolio, and Fidelity Utilities Fund beginning on page
__.
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 other funds advised by FMR;
Chairman and a Director of Fidelity Investments Money Management, Inc.
(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
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 contracts described in proposals 4, 5,
and 6.
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 the funds for
fiscal 1998 are presented in the table below:
PRICING AND
FUND TRANSFER AGENT FEES BOOKKEEPING FEES
Equity-Income Fund $34,528,000 $927,000
Mid-Cap Stock Fund $3,735,000 $628,000
Real Estate Investment $4,920,000 $803,000
Portfolio
Utilities Fund $2,750,000 $553,000
FSC also received fees for administering each fund's securities
lending program. Securities lending fees are based on the number and
duration of individual securities loans. Securities lending fees for
fiscal 1998 for the funds are presented in the table below:
FUND SECURITIES LENDING FEES
Equity-Income Fund $25,000
Mid-Cap Stock Fund $0
Real Estate Investment Portfolio $0
Utilities Fund $6,000
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 management contracts dated
December 1, 1993, which was approved by shareholders on November 17,
1993 for Fidelity Equity-Income Fund, with breakpoints for average net
assets over $174 billion; February 17, 1994, which was approved by
FMR, then the sole shareholder, on February 24, 1994 for Fidelity
Mid-Cap Stock Fund, with breakpoints for average net assets over $336
billion; April 1, 1993, which was approved by shareholders on March
24, 1993 for Fidelity Real Estate Investment Portfolio, with
breakpoints for average net assets over $174 billion; and September 1,
1994, which was approved by shareholders on August 3, 1994 for
Fidelity Utilities Fund, with breakpoints for average net assets over
$336 billion.
For the services of FMR under Fidelity Equity-Income Fund's and
Fidelity Real Estate Investment Portfolio's management contracts, each
fund pays FMR a monthly management fee which has two components: a
group fee rate and an individual fund fee rate.
For the services of FMR under Fidelity Mid-Cap Stock Fund's and
Fidelity Utilities Fund's management contracts, each fund pays FMR a
monthly management fee which has two components: a basic fee, which is
the sum of a group fee rate and an individual fund fee rate, and a
performance adjustment based on a comparison of Fidelity Mid-Cap Stock
Fund's performance to that of the Standard & Poor's MidCap 400 Index
(S&P MidCap 400) and Fidelity Utilities Fund's performance to that of
the Standard & Poor's Utilities Index (S&P Utilities Index).
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 for Fidelity Equity-Income Fund, Fidelity Real Estate Investment
Portfolio, and Fidelity Utilities Fund at $555 billion of group net
assets - the approximate level for January 1998 - was .2937%, which is
the weighted average of the respective fee rates for each level of
group net assets up to $555 billion. The effective annual fee rate for
Fidelity Mid-Cap Stock Fund at $626 billion of group net assets - the
approximate level for April 1998 - was .2888%, 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 and August 1, 1994, for each fund, and for Fidelity
Equity-Income Fund and Fidelity Real Estate Investment Portfolio,
November 1, 1993, FMR voluntarily modified the breakpoints in the
group fee rate schedules. The revised group fee rate schedules,
depicted below, provide for lower management fee rates as FMR's assets
under management increase.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
The individual fund fee rate for each fund is indicated below.
FUND INDIVIDUAL FUND FEE RATE
Fidelity Equity-Income Fund 0.18%*
Fidelity Mid-Cap Stock Fund 0.30%
Fidelity Real Estate Investment Portfolio 0.30%
Fidelity Utilities Fund 0.20%
Based on the average group net assets advised by FMR for January 31,
1998, Fidelity Equity-Income Fund's and Fidelity Real Estate
Investment Portfolio's annual management fee rate would be calculated
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fund Group Fee Rate Individual Fund Management
Fee Rate Fee Rate
Equity-Income Fund 0.2937% + 0.18% = 0.4737%
Real Estate 0.2937% + 0.30% = 0.5937%
Investment Portfolio
</TABLE>
Based on the average group net assets advised by FMR for April 30,
1998 and January 31, 1998, Fidelity Mid-Cap Stock Fund's and Fidelity
Utilities Fund's annual basic fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fund Group Fee Rate Individual Fund Basic Fee Rate
Fee Rate
Mid-Cap Stock Fund 0.2888% + 0.30% = 0.5888%
Utilities Fund 0.2937% + 0.20% = 0.4937%
</TABLE>
One-twelfth of this annual management fee for Fidelity Equity-Income
Fund and Fidelity Real Estate Investment Portfolio, and basic fee rate
for Fidelity Mid-Cap Stock Fund and Fidelity Utilities Fund, 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.
*Pursuant to the amended Management Contract dated December 1, 1993
for Fidelity Equity-Income Fund, the individual fund fee rate was
increased from 0.04% to 0.12%. This amount will be increased on
December 1, 1995, December 1, 1996, December 1, 1997, and December 1,
1998, to 0.14%, 0.16%, 0.18%, and 0.20%, respectively.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Fidelity
Mid-Cap Stock Fund and Fidelity Utilities Fund is subject to upward or
downward adjustment, depending upon whether, and to what extent, each
fund's investment performance for the performance period exceeds, or
is exceeded by, the record of the S&P MidCap400 Index for Fidelity
Mid-Cap Stock Fund and the S&P Utilities Index for Fidelity Utilities
Fund, over the same period. The performance period consists of the
most recent month plus the previous 35 months. For Fidelity Mid-Cap
Stock Fund, each percentage point of difference, calculated to the
nearest 1.00% (up to a maximum difference of +/-10.00 ) is multiplied
by a performance adjustment rate of 0.02%. Thus, the maximum
annualized adjustment rate is +/-0.20%. For Fidelity Utilities Fund,
each percentage point of difference, calculated to the nearest 0.01%,
(up to a maximum difference of +/-7.50) is multiplied by a performance
adjustment rate of 0.02%. Thus, the maximum annualized adjustment rate
is +/-0.15%. This performance comparison is made at the end of each
month. One twelfth (1/12) of this rate is then applied to each fund's
average net assets for the entire performance period, giving a dollar
amount which will be added to (or subtracted from) the basic fee.
Fidelity Mid-Cap Stock Fund's and Fidelity Utilities Fund's
performance is calculated based on change in net asset value (NAV).
For purposes of calculating the performance adjustment, any dividends
or capital gain distributions paid by each fund are treated as if
reinvested in fund shares at the NAV as of the record date for
payment. The record of the Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on Fidelity Mid-Cap
Stock Fund's and Fidelity Utilities Fund's performance compared to the
investment record of their respective indices, the controlling factor
is not whether the funds' performance is up or down per se, but
whether it is up or down more or less than the record of their
respective indices. Moreover, the comparative investment performance
of the funds is based solely on the relevant performance period
without regard to the cumulative performance over a longer or shorter
period of time.
During fiscal 1998, for its services as investment adviser to the
funds, FMR received fees (including the amount of any performance
adjustment and including the group fee breakpoints voluntarily adopted
by FMR) as follows:
MANAGEMENT FEE
MANAGEMENT PERFORMANCE AS A PERCENTAGE OF
FUND FEE ADJUSTMENT AVERAGE NET ASSETS
Equity-Income Fund $84,814,476 n/a 0.46%
Mid-Cap Stock Fund $9,388,566 $24,439 0.60%
Real Estate $13,536,829 n/a 0.60%
Investment Portfolio
Utilities Fund $6,630,766 $1,431,734 0.60%
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.
SUB-ADVISORY AGREEMENTS
On behalf of Fidelity Equity-Income Fund, Fidelity Mid-Cap Stock
Fund, Fidelity Real Estate Investment Portfolio, and Fidelity
Utilities 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. On behalf of each fund, FMR may also
grant the sub-advisers investment management authority as well as the
authority to buy and sell securities if FMR believes it would be
beneficial to the funds. Each of Fidelity Equity-Income Fund, Fidelity
Real Estate Investment Portfolio, and Fidelity Utilities Fund's
sub-advisory agreements, dated December 1, 1993, were approved by
shareholders on November 17, 1993. Fidelity Mid-Cap Stock Fund's
sub-advisory agreements, dated February 17, 1994, were approved by FMR
as sole shareholder of the fund on February 24, 1994.
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.
On behalf of each fund, for providing discretionary investment
management and executing portfolio transactions, FMR pays FMR U.K. and
FMR Far East a fee equal to 50% of its monthly management fee rate
(including any performance adjustment for Fidelity Mid-Cap Stock Fund
and Fidelity Utilities Fund) with respect to each fund's average net
assets managed by the sub-adviser on a discretionary basis.
For providing investment advice and research services, on behalf of
each fund, the fees paid to the sub-advisers for the fiscal year ended
1998 were as follows:
Fund FMR U.K. FMR Far East
Equity-Income Fund $1,126,000 $1,116,000
Mid-Cap Stock Fund $4,000 $4,000
Real Estate Investment Portfolio $9,000 $9,000
Utilities Fund $27,000 $27,000
For discretionary investment management and execution of portfolio
transactions, no fees were paid to FMR U.K. and FMR Far East, on
behalf of the funds, for fiscal 1998.
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.
The brokerage commissions paid to NFSC and FBS by each fund for
fiscal 1998 are listed in the following table:
To NFSC To FBS % To NFSC % To FBS
Fund
Equity-Income Fund $1,121,000 $88,000 11.1% 0.9%
Mid-Cap Stock Fund $480,712 $0 13.7% 0%
Real Estate $943,000 $0 22% 0%
Investment Portfolio
Utilities Fund $94,000 $0 6% 0%
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 [CHECK WITH MARKETING TO
DETERMINE WHO CONTACT WILL BE.], 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.
EXHIBIT 1
FORM OF AMENDED AND RESTATED DECLARATION OF TRUST
The language to be added to the current contract is ((underlined)) and
the language to be deleted is set forth in [brackets]. Headings that
were underlined in the trust's current Amended and Restated
Declaration of Trust remain underlined in this Exhibit.
AMENDED AND RESTATED DECLARATION OF TRUST
[DATED MARCH 17, 1994]
DATED ________________, 1998
AMENDED AND RESTATED DECLARATION OF TRUST, made [March 17, 1994]
((______, 1998)) 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 November 20, 1980 by
Richard M. Reilly 3d, Caleb Loring Jr., and Frank Nesvet 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]trust 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 Devonshire Trust."
DEFINITION
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] ((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]
((including such Class or Classes of Shares as the Trustees may from
time to time create and establish and including)) fractions of
[s]((S))hares 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 Devonshire 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[;and]((.))
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 [P]((p))ower 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]
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
[T}((t))rust 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. Any general liabilities,
expenses, costs, charges, or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be
allocated and charged by the Trustees between or among any one or more
of the Series in such manner as the Trustees in their sole discretion
deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series for all purposes. Any
creditor of any Series may look only to the assets of that Series to
satisfy such creditor's debt.]
((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 Trustees, 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. 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.
[LIMITATION OF PERSONAL LIABILITY]
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
[SECTION 7. The Trustees shall have no power to bind any Shareholder
personally or to call upon Any shareholder 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 shall include a recitation limiting the obligation represented
thereby to the Trust and its assets (but the omission of such a
recitation shall not operate to bind any Shareholder).]
((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 Shareholder 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]
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 3d, Caleb Loring, Jr. and
Frank Nesvet and such other individuals as the Board of Trustees shall
appoint pursuant to Section 4 of this 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 [(a)] (((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. An appointment
of a Trustee may be made by the Trustees then in office 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 Trustee]
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 unfilled
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 [P]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, the)) [The] 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] ((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,] ((investment adviser,
manager,)) custodian, [or] 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, and to pledge, mortgage, or hypothecate the
assets of the Trust, subject to ((the)) applicable [limitations]
((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. ((Except as otherwise provided herein or in the 1940 Act,
the)) [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]place of all meetings of the Trustees shall be given by the party
calling the meeting to each Trustee by telephone((, telefax,)) [or]
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)] ((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] [s]((S))uch
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 contracts whereby the other party shall undertake to furnish
the Trustees with transfer agency and Shareholder services. [The]((
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, ((as modified by or
interpreted by any applicable order or orders of the Commission))
[(including] ((or)) any ((rules or)) [amendments] ((regulations))
[thereof] ((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; (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;)))) [(iv)](((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)](((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
shares shall be voted by individual Series, except (i) when required
by the 1940 Act, Shares shall be voted in the aggregate and not by
individual Series; and (ii) 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. A
Shareholder of each Series shall be entitled to vote for each dollar
of net asset value (number of Shares owned times net asset value per
Share) of such Series, on any matter on which such Shareholder 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 to be
taken by Shareholders.
((On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series, except as provided in the
following sentence and except (a) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series;
and (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 Series 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 or Class thereof on any matter on which such Shareholder 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
((modified by or interpreted by any applicable order or orders of))
the [same may be amended from time to time] ((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, ((a company
that is a member of a national securities exchange,)) [or] 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.))
[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 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 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, ((or other entity
permitted)) [organized] under the [laws of the United States or one of
the states thereof] ((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,)) [and] having capital, [and] surplus, and [individual]
((undivided)) profits of at least two million dollars ($2,000,000), 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] ((amount
as shall be allowed by the Commission 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]
DISTRIBUTIONS, 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 dividend"].
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 [p]((P))rincipal [u]((U))nderwriter 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]order 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 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 [LIABILITIES] 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, [O]((o))r investment adviser of the Trust, but
nothing contained herein shall pro[T]((t))ect 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]
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 "expenses" 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]Interested [p]((P))ersons 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.
[SHAREHOLDERS]
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] TRUST NOT A PARTNERSHIP, ETC.
SECTION 1. It is hereby expressly declared that a trust ((is created
hereby)) and not a partnership, ((joint stock association,
corporation, bailment, or any form of a legal relationship other than
a trust)) [is created hereby]. No Trustee hereunder shall have any
power to ((personally)) bind [personally] 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.
[Trustee's] 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.
[TERMINATION OF TRUST]
DURATION; TERMINATION OF TRUST, A SERIES OR A CLASS; MERGERS, ETC.
[SECTION 4.] [(a)]((SECTION 4.1. DURATION.)) [This] ((The)) Trust
shall continue without limitation of time, but subject to the
provisions [of sub-section (b)] of this [Section 4] ((Article XII.))
[(b) 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 such 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.]
((SECTION 4.2 TERMINATION OF THE TRUST, A SERIES OR A CLASS. (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.
(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.
(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
[d]((D))eclaration of [t]((T))rust 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
[d]((D))eclaration of [t]((T))rust shall be filed by the Trustees with
the Secretary of [t]((T))he 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 [d]((D))eclarations of
[t]((T))rust 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
[d]((D))eclaration of [t]((T))rust. In this instrument or in any such
supplemental [d]((D))eclaration of [t]((T))rust, 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 [d]((D))eclaration of [t]((T))rust. 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
UNDERLINED LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY DEVONSHIRE TRUST:
FIDELITY EQUITY-INCOME FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] AMENDMENT made this [1st day of December 1993]
(( day of 1998,)) by and between Fidelity
Devonshire Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Fund"), on behalf of Fidelity Equity-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 Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [April 1, 1990] ((December 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 December 1, 1993 or the first day of the month following
approval](( ______, 1998)).
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
and an Individual Fund Fee [Rate].
(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 [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 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 .5200%
3 - 6 .4900%
6 - 9 .4600%
9 - 12 .4300%
12 - 15 .4000%
15 - 18 .3850%
18 - 21 .3700%
21 - 24 .3600%
24 - 30 .3500%
30 - 36 .3450%
36 - 42 .3400%
42 - 48 .3350%
48 - 66 .3250%
66 - 84 .3200%
84 - 102 .3150%
102 - 138 .3100%
138 - 174 .3050%
[Over - 174] [.3000%]
((174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
Over - 534 .2500%))
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
[.12%] ((.20%)). [The Individual Fund Fee Rate shall be adjusted
annually on December 1 or, if later, the first day or anniversary
thereof, of the month the Modified Contract becomes effective pursuant
to the following schedule:]
Adjustment Date Individual Fund Fee Rate
[December 1, 1993*] [.12%]
[December 1, 1995*] [.14%]
[December 1, 1996*] [.16%]
[December 1, 1997*] [.18%]
[December 1, 1998*] [.20%]
[*of, if later, the first day of the month the Modified Contract
becomes effective in the anniversary thereof.]
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.
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
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 [F}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 July
31, [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.
FIDELITY DEVONSHIRE TRUST:
ON BEHALF OF FIDELITY EQUITY-INCOME FUND
SIGNATURE LINES OMITTED
EXHIBIT 3
UNDERLINED LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY DEVONSHIRE TRUST:
FIDELITY REAL ESTATE INVESTMENT PORTFOLIO
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] AMENDMENT made this [1st day of April 1993]
(( day of 1998,)) by and between Fidelity
Devonshire Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "[f]((F))und"), on behalf of Fidelity Real Estate Investment
Portfolio (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 [f]((F))und, on behalf of the Portfolio, and
[Fidelity Management & Research Company] ((the Adviser)) hereby
consent, pursuant to Paragraph 6 of the existing Management Contract
dated [April 1, 1990] ((April 1, 1993)) to a modification of said
Contract in the manner set forth below. The [modified] ((Amended))
Management Contract shall [take effect]((,)) when executed by ((duly))
authorized officers of the [f]((F))und and [the] Adviser, ((take
effect on ______, 1998.))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the [f]((F))und'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 [f]((F))und, of all Trustees of the
[f]((F))und who are "interested persons" of the [f]((F))und 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 [f]((F))und'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
[f]((F))und. 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
[f]((F))und'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 [f]((F))und as the [f]((F))und'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 [f]((F))und's
Board of Trustees with respect to [f]((F))und 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 [f]((F))und
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 [f]((F))und 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 [f]((F))und, and that the Adviser may be or become
interested in the [f]((F))und 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
[g]((G))roup [f]((F))ee [rate] and an [i]((I))ndividual [f]((F))und
[f]((F))ee [Rate].
(a) Group Fee Rate. The [g]((G))roup [f]((F))ee [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 [g]((G))roup
[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 .5200%
3 - 6 .4900%
6 - 9 .4600%
9 - 12 .4300%
12 - 15 .4000%
15 - 18 .3850%
18 - 21 .3700%
21 - 24 .3600%
24 - 30 .3500%
30 - 36 .3450%
36 - 42 .3400%
42 - 48 .3350%
48 - 66 .3250%
66 - 84 .3200%
84 - 102 .3150%
102 - 138 .3100%
138 - 174 .3050%
[Over - 174] [.3000%]
((174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
Over - 534 .2500%))
(b) Individual [f]((F))und [f]((F))ee [r]((R))ate. The
[i]((I))ndividual [f]((F))und [f]((F))ee [r]((R))ate shall be .30%.
The sum of the [g]((G))roup [f]((F))ee [r]((R))ate, calculated as
described above to the nearest millionth, and the [i]((I))ndividual
[f]((F))und [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 [of the fund]
((or other organizational document))) determined as of the close of
business on each business day throughout the month.
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
[f]((F))und's Trustees other than those who are "interested persons"
of the [f]((F))und 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
[f]((F))und 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 [F}((f))idelity 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 [f]((F))und'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 July
31, [1993] ((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 [f]((F))und 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 [f]((F))und 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 [f]Fund's Declaration of
Trust ((or other organizational document)) and agrees that the
obligations assumed by the [f]((F))und 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 [f]((F))und. 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.
FIDELITY DEVONSHIRE TRUST:
ON BEHALF OF FIDELITY REAL ESTATE INVESTMENT PORTFOLIO
SIGNATURE LINES OMITTED
EXHIBIT 4
UNDERLINED LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY DEVONSHIRE TRUST:
FIDELITY MID-CAP STOCK FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made this [17th day of February 1994]
(( day of 1998,)) by and between Fidelity
Devonshire Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Fund"), on behalf of Fidelity Mid-Cap Stock 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 Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated February 17, 1994 to a modification of said
Contract in the manner set forth below. The Amended Management
Contract shall, when executed by duly authorized officers of the Fund
and Adviser, take effect on ______, 1998.))
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 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 Basic Fee
and a Performance Adjustment. The Performance Adjustment is added to
or subtracted from the Basic Fee depending on whether the Portfolio
experienced better or worse performance than the Standard & Poor's
MidCap 400 Index (the "Index"). The Performance Adjustment is not
cumulative. An increased fee will result even though the performance
of the Portfolio over some period of time shorter than the performance
period has been behind that of the Index, and, conversely, a reduction
in the fee will be made for a month even though the performance of the
Portfolio over some period of time shorter than the performance period
has been ahead of that of the Index. The Basic Fee and the Performance
Adjustment will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows:
(i) 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 .5200%
3 - 6 .4900%
6 - 9 .4600%
9 - 12 .4300%
12 - 15 .4000%
15 - 18 .3850%
18 - 21 .3700%
21 - 24 .3600%
24 - 30 .3500%
30 - 36 .3450%
36 - 42 .3400%
42 - 48 .3350%
48 - 66 .3250%
66 - 84 .3200%
84 - 102 .3150%
102 - 138 .3100%
138 - 174 .3050%
[174 - 228] [.3000%]
[228 - 282] [.2950%]
[282 - 336] [.2900%]
[Over - 336] [.2850%]
((174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
Over - 534 .2500%))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.30%.
(b) Basic Fee. One-twelfth of the Basic 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. The resulting dollar amount comprises the
Basic Fee.
(c) Performance Adjustment Rate: The Performance Adjustment Rate is
0.02% for each percentage point (the performance of the Portfolio and
the Index each being calculated to the nearest [percentage point]
((0.01%)) that the Portfolio's investment performance for the
performance period was better or worse than the record of the Index as
then constituted. The maximum performance adjustment rate is 0.20%.
The performance period will commence with the first day of the first
full month following the Portfolio's commencement of operations.
During the first eleven months of the performance period for the
Portfolio, there will be no performance adjustment. Starting with the
twelfth month of the performance period, the performance adjustment
will take effect. Following the twelfth month a new month will be
added to the performance period until the performance period equals 36
months. Thereafter the performance period will consist of the current
month plus the previous 35 months.
The Portfolio's investment performance will be measured by comparing
(i) the opening net asset value of one share of the Portfolio on the
first business day of the performance period with (ii) the closing net
asset value of one share of the Portfolio as of the last business day
of such period. In computing the investment performance of the
Portfolio and the investment record of the Index, distributions of
realized capital gains, the value of capital gains taxes per share
paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of
investment income on the part of the Portfolio, and all cash
distributions of the securities included in the Index, will be treated
as reinvested in accordance with Rule 205-1 or any other applicable
rules under the Investment Advisers Act of 1940, as the same from time
to time may be amended.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will 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 and
the performance period.
(e) 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 for that month.
The Basic Fee Rate will be computed on the basis of and applied to net
assets averaged over that month ending on the last business day on
which this Contract is in effect. The amount of this Performance
Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36-month period ending on the
last business day on which this Contract is in effect provided that if
this Contract has been in effect less than 36 months, the computation
will be made on the basis of the period of time during which it has
been in effect.
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.
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 July
31, [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.
FIDELITY DEVONSHIRE TRUST:
ON BEHALF OF FIDELITY MID-CAP STOCK FUND
SIGNATURE LINES OMITTED
EXHIBIT 5
UNDERLINED LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY DEVONSHIRE TRUST:
FIDELITY UTILITIES FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made this [1st day of September 1994]
(( day of 1998,)) by and between Fidelity
Devonshire Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Fund"), on behalf of Fidelity Utilities 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 Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [modified December 1, 1993](( September 1,
1998)) 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 September 1, 1994 or the first day of the
month following approval] __________, ((1998.))
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 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 Basic Fee
and a Performance Adjustment. ((Except as otherwise provided in
sub-paragraph (e) of this paragraph 3,)) [T]((t))he Performance
Adjustment is added to or subtracted from the Basic Fee depending on
whether the Portfolio experienced better or worse performance than the
[Standard & Poor's Utilities Index] ((Russell 3000 Utilities Index))
(the "Index"). The Performance Adjustment is not cumulative. An
increased fee will result even though the performance of the Portfolio
over some period of time shorter than the performance period has been
behind that of the Index, and, conversely, a reduction in the fee will
be made for a month even though the performance of the Portfolio over
some period of time shorter than the performance period has been ahead
of that of the Index. The Basic Fee and the Performance Adjustment
will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows:
(i) 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 [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 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 .5200%
3 - 6 .4900%
6 - 9 .4600%
9 - 12 .4300%
12 - 15 .4000%
15 - 18 .3850%
18 - 21 .3700%
21 - 24 .3600%
24 - 30 .3500%
30 - 36 .3450%
36 - 42 .3400%
42 - 48 .3350%
48 - 66 .3250%
66 - 84 .3200%
84 - 102 .3150%
102 - 138 .3100%
138 - 174 .3050%
[174 - 228] [.3000%]
[228 - 282] [.2950%]
[282 - 336] [.2900%]
[Over 336] [.2850%]
((174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
Over 534 .2500%))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.20%.
(b) Basic Fee. One-twelfth of the Basic 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. The resulting dollar amount comprises the
Basic Fee.
(c) Performance Adjustment Rate: ((Except as otherwise provided in
sub-paragraph (e) of this paragraph 3,)) [T]((t))he Performance
Adjustment Rate is 0.02% for each percentage point (the performance of
the Portfolio and the Index each being calculated to the nearest
0.01%) that the Portfolio's investment performance for the performance
period was better or worse than the record of the Index as then
constituted. The maximum performance adjustment rate is 0.15%.
[The performance period will commence on December 1, 1993. During the
first eleven months of the performance period for the Portfolio, there
will be no performance adjustment. Starting with the twelfth month of
the performance period, the performance adjustment will take effect.
Following the twelfth month a new month will be added to the
performance period until the performance period equals 36 months.
Thereafter the performance period will consist of the current month
plus the previous 35 months.] ((The performance period consists of the
current month plus the previous 35 months)).
The Portfolio's investment performance will be measured by comparing
(i) the opening net asset value of one share of the Portfolio on the
first business day of the performance period with (ii) the closing net
asset value of one share of the Portfolio as of the last business day
of such period. In computing the investment performance of the
Portfolio and the investment record of the Index, distributions of
realized capital gains, the value of capital gains taxes per share
paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of
investment income on the part of the Portfolio, and all cash
distributions of the securities included in the Index, will be treated
as reinvested in accordance with Rule 205-1 or any other applicable
rules under the Investment Advisers Act of 1940, as the same from time
to time may be amended.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will 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 and
the performance period.
(e) ((For the 35 month period commencing on _____________ (the
Commencement Date) (such period hereafter referred to as the
Transition Period), the Performance Adjustment Rate shall be
calculated by comparing the Portfolio's investment performance against
the blended investment records of the Index and the Standard & Poor's
Utilities Index (the index used to calculate the Portfolio's
Performance Adjustment prior to the Commencement Date (the Prior
Index)), such calculation being performed as follows:
For the first month of the Transition Period, the Performance
Adjustment Rate shall be calculated by comparing the Portfolio's
investment performance over the 36 month performance period against a
blended index investment record that reflects the investment record of
the Prior Index for the first 35 months of the performance period and
the investment record of the Index for the 36th month of the
performance period. For each subsequent month of the Transition
Period, the Performance Adjustment Rate shall be calculated by
comparing the Portfolio's investment performance over the 36 month
performance period against a blended index investment record that
reflects one additional month of the Index's performance and one less
month of the Prior Index's performance. This calculation methodology
shall continue until the expiration of the Transition Period, at which
time the investment record of the Prior Index shall be eliminated from
the Performance Adjustment calculation, and the calculation shall
include only the investment record of the Index.
[(e)](f))) 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 for that
month. The Basic Fee Rate will be computed on the basis of and applied
to net assets averaged over that month ending on the last business day
on which this Contract is in effect. The amount of this Performance
Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36-month period ending on the
last business day on which this Contract is in effect provided that if
this Contract has been in effect less than 36 months, the computation
will be made on the basis of the period of time during which it has
been in effect.
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.
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 July
31, [1995] ((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.
FIDELITY DEVONSHIRE TRUST:
ON BEHALF OF FIDELITY UTILITIES FUND
SIGNATURE LINES OMITTED
EXHIBIT 6
FORM OF
DISTRIBUTION AND SERVICE PLAN
FIDELITY DEVONSHIRE TRUST: FIDELITY EQUITY-INCOME FUND
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") of
Fidelity Equity-Income Fund (the "Portfolio"), a series of shares of
Fidelity Devonshire Trust (the "Fund").
2. The Fund has entered into a General Distribution Agreement with
respect to the Portfolio with Fidelity Distributors Corporation (the
"Distributor"), a wholly-owned subsidiary of Fidelity Management &
Research Company (the "Adviser"), under which the Distributor uses all
reasonable efforts, consistent with its other business, to secure
purchasers for the Portfolio's shares of beneficial interest
("shares"). Under the agreement, the Distributor pays the expenses of
printing and distributing any prospectuses, reports and other
literature used by the Distributor, advertising, and other promotional
activities in connection with the offering of shares of the Portfolio
for sale to the public. It is recognized that the Adviser may use its
management fee revenues as well as past profits or its resources from
any other source, to make payment to the Distributor with respect to
any expenses incurred in connection with the distribution of Portfolio
shares, including the activities referred to above.
3. The Adviser directly, or through the Distributor, may, subject to
the approval of the Trustees, make payments to securities dealers and
other third parties who engage in the sale of shares or who render
shareholder support services, including but not limited to providing
office space, equipment and telephone facilities, answering routine
inquiries regarding the Portfolio, processing shareholder transactions
and providing such other shareholder services as the Fund may
reasonably request.
4. The Portfolio will not make separate payments as a result of this
Plan to the Adviser, Distributor or any other party, it being
recognized that the Portfolio presently pays, and will continue to
pay, a management fee to the Adviser. To the extent that any payments
made by the Portfolio to the Adviser, including payment of management
fees, should be deemed to be indirect financing of any activity
primarily intended to result in the sale of shares of the Portfolio
within the context of Rule 12b-1 under the Act, then such payments
shall be deemed to be authorized by this Plan.
5. This Plan shall become effective upon the approval by a vote of at
least a "majority of the outstanding voting securities of the
Portfolio" (as defined in the Act), the plan having been approved by a
vote of a majority of the Trustees of the Fund, including a majority
of Trustees who are not "interested persons" of the Fund (as defined
in the Act) and who have no direct or indirect financial interest in
the operation of this Plan or in any agreements related to this Plan
(the "Independent Trustees"), cast in person at a meeting called for
the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect from the date specified above until April 30, 1999 and from
year to year thereafter, provided, however, that such continuance is
subject to approval annually by a vote of a majority of the Trustees
of the Fund, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to authorize direct payments by the
Portfolio to finance any activity primarily intended to result in the
sale of shares of the Portfolio, to increase materially the amount
spent by the Portfolio for distribution, or any amendment of the
Management Contract to increase the amount to be paid by the Portfolio
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of the Portfolio, and
(b) any material amendments of this Plan shall be effective only upon
approval in the manner provided in the first sentence in this
paragraph.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of the
Portfolio.
8. During the existence of this Plan, the Fund shall require the
Adviser and/or Distributor to provide the Fund, for review by the
Fund's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended in connection with
financing any activity primarily intended to result in the sale of
shares of the Portfolio (making estimates of such costs where
necessary or desirable) and the purposes for which such expenditures
were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of shares of the Portfolio.
10. Consistent with the limitation of shareholder liability as set
forth in the Fund's Declaration of Trust or other organizational
document, any obligations assumed by the Portfolio pursuant to this
Plan and any agreements related to this Plan shall be limited in all
cases to the Portfolio and its assets, and shall not constitute
obligations of any other series of shares of the Fund.
11. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
EXHIBIT 7
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as
of the __ day of ____ 1998, by and between Fidelity Devonshire Trust
(Devonshire Trust), on behalf of Fidelity Mid-Cap Stock Fund (the
Fund), a separate series of Devonshire Trust, and Fidelity
Commonwealth Trust (Commonwealth Trust), each a business trust duly
formed under the laws of the Commonwealth of Massachusetts.
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the Code). The
reorganization will comprise (a) the transfer of all of the assets of
the Fund to a series of Commonwealth Trust (the Series) solely in
exchange for shares of beneficial interest of the Series (the Series
Shares) and the assumption by the Series of the Fund's liabilities;
and (b) the constructive distribution of such Series Shares by the
Fund to its shareholders (Fund Shareholders) in complete liquidation
and termination of the Fund, in exchange for all of the Fund's
outstanding shares (Fund Shares). The Fund shall receive shares of the
Series equal to the number of Fund Shares on the Closing Date (as
defined below). Immediately thereafter, the Fund shall then distribute
to each Fund Shareholder one Series Share for each Fund Share held by
the shareholder on the Closing Date. The foregoing transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE FUND
Devonshire Trust, on behalf of the Fund, represents and warrants as
follows:
(a) The Fund is a series of Devonshire Trust, a business trust duly
formed, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts, and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local
authorizations to carry out its business as now being conducted and to
carry out this Agreement;
(b) The Fund is a series of Devonshire Trust, which is duly
registered as an open-end management investment company under the
Investment Company Act of 1940 (the 1940 Act), as amended, and such
registration is in full force and effect;
(c) The Fund is not in, and the execution, delivery and performance
of this Agreement will not result in a violation of any provision of
the Amended and Restated Declaration of Trust or the Bylaws of
Devonshire Trust, or, to the Fund's knowledge, of any agreement,
indenture, instrument, contract, lease or other undertaking to which
the Fund is a party or by which the Fund is bound or result in the
acceleration of any obligation or the imposition of any penalty under
any agreement, judgment or decree to which the Fund is a party or is
bound;
(d) The Fund has no material contracts or other commitments (other
than this Agreement) that will not be terminated without liability to
the Fund on or prior to the Closing Date;
(e) To the Fund's knowledge, no material legal, administrative, or
other proceeding or investigation of, or before, any court or
governmental body presently is pending or threatened against the Fund
or any of its properties or assets that assert liability on the part
of the Fund, except as previously disclosed in writing to Commonwealth
Trust. The Fund knows of no facts that might form the basis for the
institution of such proceedings;
(f) The Fund has filed or will file all federal and state tax returns
that, to the knowledge of the Fund's officers, are required to be
filed by the Fund and has paid or will pay all federal and state taxes
shown to be due on said returns or provision shall have been made for
the payment thereof, and, to the best of the Fund's knowledge, no such
return is currently under audit and no assessment has been asserted
with respect to such returns;
(g) All of the issued and outstanding shares of the Fund are, and at
the Closing Date will be, duly and validly issued and outstanding and
fully paid and nonassessable as a matter of Massachusetts law (except
as disclosed in the Fund's Statement of Additional Information) and
have been offered for sale in conformity with all applicable federal
securities laws. All of the issued and outstanding shares of the Fund
will, at the Closing Date, be held by the persons and in the amounts
as certified in accordance with the provisions of this Agreement;
(h) The information to be furnished by the Fund for use in
applications for orders, registration statements, proxy materials and
other documents that may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with federal securities and
other laws and regulations thereunder applicable thereto;
(i) At both the Valuation Time (as defined in Section 4) and the
Closing Date (as defined in Section 6), the Fund will have the full
right, power, and authority to sell, assign, transfer, and deliver its
portfolio securities and any other assets of the Fund to be
transferred to the Series pursuant to this Agreement. As of the
Closing Date, subject only to the delivery of the Fund's portfolio
securities and any such other assets as contemplated by this
Agreement, the Series will acquire the Fund's portfolio securities and
any such other assets subject to no encumbrances, liens, or security
interests (except for those that may arise in the ordinary course and
are disclosed to the Series) and without any restrictions upon the
transfer thereof;
(j) The execution, delivery, and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of the Fund, and this Agreement
constitutes a valid and binding obligation of the Fund enforceable in
accordance with its terms, subject to shareholder approval;
(k) To the best knowledge of the Fund's management, there is no plan
or intention by any of the Fund's shareholders to sell, exchange or
otherwise dispose of any of the Series Shares to be received in the
Reorganization;
(l) The Fund shares are widely held and may be purchased and redeemed
upon request;
(m) Immediately following consummation of the Reorganization, the
Fund Shareholders will own all of the Series Shares and will own such
shares solely by reason of their ownership of the Fund Shares
immediately prior to the Reorganization;
(n) Immediately following the consummation of the Reorganization,
Commonwealth Trust will hold, on behalf of the Series, the same assets
and be subject to the same liabilities that the Fund held or was
subject to immediately prior thereto, except for assets used to pay
expenses incurred in connection with the Reorganization. Assets used
to pay expenses and all distributions (except for distributions and
redemptions arising in the ordinary course of the Fund's business as
an open-end investment company) made by the Fund immediately preceding
the Reorganization will, in the aggregate, constitute less than
[Confirm with Treasurers: 1%] of the net assets of the Fund;
(o) At the time of the Reorganization, the Fund will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire shares
of beneficial interest in the Fund;
(p) The Fund's liabilities to be assumed by the Series in the
Reorganization were incurred by the Fund in the ordinary course of its
business and are associated with the assets to be transferred;
(q) Fund Shareholders each will pay their own expenses, if any,
incurred in connection with the Reorganization;
(r) The fair market value of the Fund's assets to be transferred by
the Fund to the Series will equal or exceed the Fund's liabilities to
be assumed by the Series plus the liabilities to which the transferred
assets are subject;
(s) The Fund is a regulated investment company as defined in Section
851 of the Code;
(t) The Fund is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the
meaning of Section 368(a)(3)(A) of the Code;
(u) To the Fund's knowledge, no consent, approval, authorization, or
order of any court or governmental authority is required for the
consummation by the Fund of the transactions contemplated by this
Agreement, except such as shall have been obtained under the
Securities Act of 1933 (the 1933 Act), the Securities Exchange Act of
1934 (the 1934 Act), and the 1940 Act;
(v) The Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of June 30, 1998 and those
incurred in the ordinary course of the Fund's business as an
investment company since same date as determined above; and
(w) The Fund will be liquidated immediately after the Reorganization.
2. REPRESENTATIONS AND WARRANTIES OF COMMONWEALTH TRUST
Commonwealth Trust represents and warrants as follows:
(a) Commonwealth Trust is a business trust duly formed, validly
existing, and in good standing under the laws of the Commonwealth of
Massachusetts. It has all necessary federal, state, and local
authorizations to carry out its business as now being conducted and to
carry out this Agreement;
(b) Commonwealth Trust is duly registered as an open-end management
investment company under the 1940 Act, and the Series is a duly
established and designated series of Commonwealth Trust;
(c) Commonwealth Trust is not in, and the execution, delivery and
performance of this Agreement will not result in a violation of any
provision of the Declaration of Trust or [Supplement to the
Declaration of Trust] or Commonwealth Trust's Bylaws, or, to
Commonwealth Trust's knowledge, of any agreement, indenture,
instrument, contract, lease or other undertaking to which Commonwealth
Trust is a party or by which Commonwealth Trust is bound or result in
the acceleration of any obligation or the imposition of any penalty
under any agreement, judgment or decree to which Commonwealth Trust is
a party or is bound;
(d) To Commonwealth Trust's knowledge, no material legal,
administrative, or other proceeding or investigation of, or before,
any court or governmental body presently is pending or threatened
against Commonwealth Trust or any of its properties or assets that
assert liability on the part of Commonwealth Trust, except as
previously disclosed in writing to Commonwealth Trust. Commonwealth
Trust knows of no facts that might form the basis for the institution
of such proceedings;
(e) Commonwealth Trust intends for the Series to be a regulated
investment company under Section 851 of the Code;
(f) Prior to the Closing Date, there shall be no issued and
outstanding Series Shares or any other securities issued by the Series
(except for the one share that may be issued to FMR); Series Shares
issued in connection with the transactions contemplated herein will be
duly and validly issued and outstanding, fully paid and non-assessable
under Massachusetts law on the Closing Date;
(g) The execution, delivery, and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Commonwealth Trust, and, upon its
proper execution, this Agreement will constitute a valid and binding
obligation of Commonwealth Trust enforceable against the Series in
accordance with its terms;
(h) As of the Closing Date, the Series Shares will have been duly
authorized and, when so issued and delivered, will be duly and validly
issued shares of the Series, fully paid and non-assessable under
Massachusetts law except that under Massachusetts law, shareholders of
a Massachusetts business trust, under certain circumstances, may be
held personally liable for obligations of Commonwealth Trust;
(i) The fair market value of the Series Shares to be received by the
Fund Shareholders will be equal to the fair market value of their Fund
Shares surrendered in exchange therefor;
(j) Commonwealth Trust has no plan or intention on behalf of the
Series to issue additional Series Shares following the Reorganization
other than in the ordinary course of the business of the Series as the
series of a registered open-end investment company;
(k) Commonwealth Trust has no plan or intention to redeem or
otherwise reacquire any of the Series Shares issued to the Fund
Shareholders pursuant to the Reorganization other than through
redemptions arising in the ordinary course of the business of the
Series as a series of a registered open-end investment company;
(l) Following the Reorganization, Commonwealth Trust, on behalf of
the Series, will continue the Fund's historic business;
(m) No consideration other than series shares will be issued in
exchange for the Fund shares in the Reorganization.
(n) At the time of the Reorganization, there will be no intercompany
indebtedness existing between the Series and the Fund that was issued,
acquired, or that will be settled at a discount.
(o) At the time of the Reorganization, the Series will be a regulated
investment company as defined in section 851 of the Code.
(p) Commonwealth Trust has no plan or intention to sell or otherwise
dispose of any of the Fund's assets to be acquired by the Series in
the Reorganization, except for dispositions made in the ordinary
course of its business or dispositions necessary to maintain the
status of the Series as a regulated investment company under Section
851 of the Code;
(q) The information to be furnished by Commonwealth Trust with
respect to the Series for use in applications for orders, registration
statements, proxy materials and other documents that may be necessary
in connection with the transactions contemplated hereby shall be
accurate and complete and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto;
(r) Commonwealth Trust, on behalf of the Series, shall use all
reasonable efforts to obtain the approvals and authorizations required
by the 1933 Act and the 1940 Act as it may deem appropriate in order
to operate after the Closing Date; and
(s) To Commonwealth Trust's knowledge, no consent, approval,
authorization, or order of any court or governmental authority is
required for the consummation by the Series of the transactions
contemplated by this Agreement, except such as shall have been
obtained under the 1933 Act, the 1934 Act, and the 1940 Act.
(t) Commonwealth Trust, on behalf of the Series, will use the
Employer Identification Number that was used by the Fund.
3. REORGANIZATION
(a) Subject to the requisite approval of the Fund Shareholders, if
applicable, and to the other terms and conditions contained herein,
the Fund agrees to assign, convey, transfer, and deliver to the Series
established by Commonwealth Trust solely for the purpose of acquiring
all of the assets of the Fund (which Series has not issued any Series
Shares (except for one share that may be issued to FMR) or commenced
operations) as of the Closing Date all of the assets of the Fund of
any kind and nature existing on the Closing Date. The Series agrees in
exchange therefor (1) to assume all of the Fund's liabilities existing
on or after the Closing Date, whether or not determinable on the
Closing Date, and (2) to issue and deliver to the Fund the number of
full and fractional Series Shares equal to the value and number of
full and fractional shares of the Fund outstanding at the time of the
closing, as described in paragraph 6, as of the Closing Date provided
for in Section 6(a).
(b) The assets of the Fund to be acquired by the Series and allocated
thereto shall include, without limitation, all cash, cash equivalents,
securities, receivables (including interest or dividends receivables),
claims, choses in action, and other property owned by the Fund, and
any deferred or prepaid expenses shown as an asset on the books of the
Fund on the Closing Date. The Fund will pay or cause to be paid to the
Series any dividend or interest payments received by it on or after
the Closing Date with respect to the assets transferred to the Series
hereunder, and the Series will retain any dividend or interest
payments received by it after the Valuation Time (as defined in
Section 4) with respect to the assets transferred hereunder without
regard to the payment date thereof. The liabilities of the Fund to be
assumed by the Series and allocated thereto, shall include (except as
otherwise provided herein) all of the Fund's liabilities, debts,
obligations, and duties,of whatever kind or nature, whether absolute,
accrued, contingent,or otherwise, whether or not determinable on the
Closing Date, and whether or not specifically referred to in this
Agreement.
(c) Immediately upon delivery to the Fund of the Series Shares, the
individual Trustees of Devonshire Trust or any officer duly authorized
by them, on the Devonshire Trust's behalf as the then sole shareholder
of the Series, shall (1) approve (i) a Management Contract between
Commonwealth Trust, on behalf of the Series, and FMR, (ii)
Sub-Advisory Agreements between FMR and Fidelity Management & Research
(U.K.) Inc., and Fidelity Management & Research (Far East) Inc., (iii)
a Distribution and Service Plan under Rule 12b-1 under the 1940 Act
between Commonwealth Trust, on behalf of the Series, and Fidelity
Distributors Corporation (FDC) substantively identical to the
contracts, agreements and plans currently in effect with respect to
the Fund immediately prior to the Closing Date (as defined below),
except as to the parties to such contract, agreement and plan, (iv)
the independent accountants who currently serve in that capacity for
the Fund, and (v) the adoption of revised fundamental policy described
in Proposal 12 of the Proxy Statement.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), the Fund will
constructively distribute to the Fund Shareholders the Series Shares
pro rata in proportion to their respective shares of beneficial
interest in the Fund, such Fund Shareholders being shareholders of
record as determined as of the Valuation Time on the Closing Date in
accordance with the Devonshire Trust's Amended and Restated
Declaration of Trust, in liquidation of such Fund. Such distribution
will be accomplished by the Fund's transfer agent opening accounts on
the share records of the Series in the names of such Fund Shareholders
and transferring the Series Shares thereto. Each Fund Shareholder's
account shall be credited with the respective pro rata number of full
and fractional (rounded to the third decimal place) Series Shares due
that shareholder. All outstanding Fund Shares, including any
represented by certificates, shall simultaneously be canceled on the
Fund's share transfer records. The Series shall not issue certificates
representing Series Shares in connection with such distribution.
(e) Immediately after the distribution of the Series Shares as set
forth in Section 3(d), the Fund shall be liquidated and terminated,
and any such further actions shall be taken in connection therewith as
required by applicable law.
(f) Any transfer taxes payable upon issuance of Series Shares in a
name other than that of the registered holder on the Fund's books of
the Fund Shares constructively exchanged for the Series Shares shall
be paid by the person to whom such Series Shares are to be issued, as
a condition of such transfer.
(g) Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the date on which it is
liquidated.
4. VALUATION
(a) The valuation time shall be the close of business of the New York
Stock Exchange on the Closing Date (the Valuation Time).
(b) The value of the Fund's net assets to be acquired by the Series
hereunder shall be the net asset value per share computed as of the
Valuation Time, using the valuation procedures set forth in the Fund's
then current Prospectus and Statement of Additional Information.
(c) The number, value, and denomination of full and fractional Series
Shares to be issued in exchange for the Fund's net assets shall be
equal to the number, value, and denomination of full and fractional
Fund Shares outstanding on the Closing Date.
(d) All computations pursuant to this Section shall be made by
Fidelity Service Company, Inc. (FSC), a wholly-owned subsidiary of FMR
Corp., in accordance with its regular practice as pricing agent for
the Fund.
5. FEES; EXPENSES
(a) Commonwealth Trust and the Fund each represents that there is no
person who dealt with it who by reason of such dealings is entitled to
any broker's or finder's fees or commissions arising out of the
transactions contemplated hereby.
(b) The Fund shall be responsible for all expenses, fees and other
charges in connection with the transactions contemplated by the
Agreement.
6. CLOSING DATE
(a) The transfer of the Fund's assets in exchange for the assumption
by the Series of the Fund's liabilities and the issuance of Series
Shares, as described above, together with related acts necessary to
consummate the same, (the Closing), unless otherwise provided herein,
shall occur at the principal office of the Devonshire Trust and
Commonwealth Trust, 82 Devonshire Street, Boston, Massachusetts, on
____, 199_, or at such other place or date as the parties may agree in
writing (the Closing Date). All acts taking place at the Closing shall
be deemed to take place simultaneously as of the Valuation Time or at
such other time and/or place as the parties may agree.
(b) In the event that, on the Closing Date (i) any of the markets for
securities held by the Fund are closed to trading, or (ii) trading
thereon is restricted, or (iii) trading or reporting of trading on
said markets or elsewhere is disrupted, all so that accurate appraisal
of the total net asset value of the Fund is impracticable, the Closing
Date shall be postponed until the first business day after the day
when such trading shall have been fully resumed and reporting shall
have been restored, or such other date as the parties may agree.
(c) The Fund shall deliver at the Closing a certificate of an
authorized officer stating that it has notified The Chase Manhattan
Bank, as custodian for the Fund, of the Fund's reorganization to a
series of Commonwealth Trust.
(d) Fidelity Service Company, Inc., as transfer agent for the Fund,
shall deliver at the Closing a certificate as to the conversion on its
books and records of each Fund Shareholder account to an account as a
holder of Series Shares. Commonwealth Trust shall issue and deliver a
confirmation to the Fund evidencing the Series Shares to be credited
as of the Closing Date or provide evidence satisfactory to the Fund
that such Series Shares have been credited to the Fund's account on
the books of Commonwealth Trust. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts or other documents as such other party or its
counsel may reasonably request.
7. SHAREHOLDER MEETING AND TERMINATION OF THE FUND
(a) If required to do so pursuant to the terms of Devonshire Trust's
Amended and Restated Declaration of Trust or otherwise by applicable
law, the Fund agrees to call a meeting of its shareholders (the
Shareholder's Meeting) to consider and act upon this Agreement. The
Fund shall take all other action necessary to obtain approval of the
transactions contemplated hereby.
(b) The Fund agrees that as soon as reasonably practicable after
distribution of the Series Shares, the Fund shall be liquidated and
terminated as a series of Devonshire Trust pursuant to its Amended and
Restated Declaration of Trust, any further actions shall be taken in
connection therewith as required by applicable law, and on and after
the Closing Date the Fund shall not conduct any business except in
connection with its liquidation and termination.
8. CONDITIONS TO OBLIGATIONS OF COMMONWEALTH TRUST
The obligations of Commonwealth Trust hereunder shall be subject to
the following conditions:
(a) That the Fund furnishes to Commonwealth Trust a statement, dated
as of the Closing Date, signed by an officer of Devonshire Trust,
certifying that as of the Valuation Time and the Closing Date all
representations and warranties of the Fund made in this Agreement are
true and correct in all material respects and that the Fund has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to such dates;
(b) That the Fund furnishes Commonwealth Trust with copies of the
resolutions, certified by an officer of Devonshire Trust, evidencing
the adoption of this Agreement and, if applicable, the approval of the
transactions contemplated herein by the requisite vote of the holders
of the outstanding shares of beneficial interest of the Fund;
(c) That the Fund shall deliver to Commonwealth Trust at the Closing
a statement of its assets and liabilities, together with a certificate
as to the aggregate asset value of the Fund's portfolio securities,
all as of the Valuation Time, certified on the Fund's behalf by its
Treasurer or Assistant Treasurer;
(d) That the Fund's custodian shall deliver to Commonwealth Trust a
certificate identifying the assets of the Fund held by such custodian
as of the Valuation Time on the Closing Date and stating that at the
Valuation Time (i) the assets held by the custodian will be
transferred to the Series; (ii) the Fund's assets have been duly
endorsed in proper form for transfer in such condition as to
constitute good delivery thereof; and (iii) to the best of the
custodian's knowledge, all necessary taxes in conjunction with the
delivery of the assets, including all applicable federal and state
stock transfer stamps, if any, have been paid or provision for payment
has been made;
(e) That the Fund's transfer agent shall deliver to Commonwealth
Trust at the Closing a certificate setting forth the number of shares
of the Fund outstanding as of the Valuation Time and the name and
address of each holder of record of any such shares and the number of
shares held of record by each such shareholder;
(f) If applicable, that the Fund calls a Shareholder's Meeting to
consider and act upon this Agreement and that the Fund takes all other
action necessary to obtain approval of the transactions contemplated
hereby;
(g) That the Fund delivers to Commonwealth Trust a certificate of an
officer of Devonshire Trust, dated the Closing Date, that there has
been no material adverse change in the Fund's financial position since
June 30, 1998, other than changes in the market value of its portfolio
securities, or changes due to net redemptions of its shares, dividends
paid, or losses from operations; and
(h) That all of the issued and outstanding shares of beneficial
interest of the Fund shall have been offered for sale and sold in
conformity with all applicable state securities laws and, to the
extent that any audit of the records of the Fund or its transfer agent
by Commonwealth Trust or its agents shall have revealed otherwise, the
Fund shall have taken all actions that in the opinion of Commonwealth
Trust are necessary to remedy any prior failure on the part of the
Fund to have offered for sale and sold such shares in conformity with
such laws.
9. CONDITIONS TO OBLIGATIONS OF THE FUND
The obligations of the Fund hereunder shall be subject to the
following conditions:
(a) That Commonwealth Trust shall have executed and delivered to the
Fund an Assumption of Liabilities, certified by an officer of
Commonwealth Trust, dated as of the Closing Date pursuant to which
Trust, on behalf of the Series, will assume all of the liabilities of
the Fund existing at the Valuation Time in connection with the
transactions contemplated by this Agreement;
(b) That Commonwealth Trust furnishes to the Fund a statement, dated
as of the Closing Date, signed by an officer of Trust, certifying that
as of the Valuation Time and the Closing Date all representations and
warranties of the Series made in this Agreement are true and correct
in all material respects, and Commonwealth Trust has complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such dates; and
(c) That the Fund shall have received an opinion of Kirkpatrick &
Lockhart LLP, counsel to the Fund and Commonwealth Trust, to the
effect that the Series Shares are duly authorized and upon delivery to
the Fund as provided in this Agreement will be validly issued and will
be fully paid and nonassessable under Massachusetts law.
10. CONDITIONS TO OBLIGATIONS OF THE FUND AND COMMONWEALTH TRUST
The obligations of the Fund and Commonwealth Trust hereunder shall be
subject to the following conditions:
(a) If applicable, that this Agreement shall have been adopted and
the transactions contemplated herein shall have been approved by the
requisite vote of the holders of the outstanding shares of beneficial
interest of the Fund;
(b) That all consents of other parties and all other consents,
orders, and permits of federal, state, and local regulatory
authorities (including those of the Securities and Exchange Commission
and of state blue sky and securities authorities, including "no
action" positions of such federal or state authorities) deemed
necessary by Commonwealth Trust or the Fund to permit consummation, in
all material respects, of the transactions contemplated hereby shall
have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect
on the assets or properties of Commonwealth Trust or the Fund,
provided that either party hereto may for itself waive any of such
conditions;
(c) That all proceedings taken by either the Fund or the Series in
connection with the transactions contemplated by this Agreement and
all documents incidental thereto shall be satisfactory in form and
substance to it and its counsel, Kirkpatrick & Lockhart LLP;
(d) That Commonwealth Trust shall have taken all necessary action so
that the Series shall be a series of a registered open-end investment
company under the 1940 Act immediately after the closing.
(e) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement;
(f) That Commonwealth Trust and the Fund shall have received an
opinion of Kirkpatrick & Lockhart LLP satisfactory to Commonwealth
Trust and the Fund that for federal income tax purposes:
(i) The Reorganization will be a reorganization under Section
368(a)(1)(F) of the Code, and the Fund and the Series will each be
parties to the Reorganization under section 368(b) of the Code;
(ii) No gain or loss will be recognized by the Fund upon the
transfer of all of its assets to the Series in exchange solely for the
Series Shares and the assumption of the Fund's liabilities followed by
the distribution of those the Series Shares to the shareholders of the
Fund;
(iii) No gain or loss will be recognized by the Series on the
receipt of the Fund's assets in exchange solely for the the Series
Shares and the assumption of the Fund's liabilities;
(iv) The basis of the Fund's assets in the hands of the Series will
be the same as the basis of such assets in the Fund's hands
immediately prior to the Reorganization;
(v) The Series' holding period in the assets to be received from the
Fund will include the Fund's holding period in such assets;
(vi) A Fund Shareholder will recognize no gain or loss on the
exchange of his or her shares of beneficial interest in the Fund for
the Series Shares in the Reorganization;
(vii) A Fund Shareholder's basis in the the Series Shares to be
received by him or her will be the same as his or her basis in the
Fund Shares exchanged therefor;
(viii) A Fund Shareholder's holding period for his or her Series
Shares will include the holding period of the Fund Shares exchanged,
provided that those Fund Shares were held as capital assets on the
date of the Reorganization.
(ix) The Reorganization will not result in the termination of the
Fund's taxable year, and the Fund's tax attributes enumerated in
Section 381(c) of the Code will be taken into account by the Series as
if there had been no conversion.
Notwithstanding anything herein to the contrary, neither the Fund nor
Commonwealth Trust may waive the conditions set forth in this
subsection 10(f).
11. COVENANTS OF THE FUND
(a) The Fund covenants to operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that
such ordinary course of business will include the payment of customary
dividends and distributions.
(b) The Fund covenants that the Series Shares are not being acquired
for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
(c) The Fund covenants that it will assist Commonwealth Trust in
obtaining such information as Commonwealth Trust reasonably requests
concerning the beneficial ownership of Fund Shares.
(d) The Fund covenants that its liquidation and termination will be
effected in the manner provided in its Declaration of Trust and
[Supplement to the Declaration of Trust] in accordance with applicable
law and, after the Closing Date, the Fund will not conduct any
business except in connection with its liquidation and termination.
12. TERMINATION; WAIVER
(a) The parties hereto may terminate this Agreement by mutual
consent. In addition, either party may, at its option, terminate this
Agreement at or prior to the Closing Date because
(i) Of a material breach by the other of any representation,
warranty, or agreement contained herein to be performed at or prior to
the Closing Date; or
(ii) A condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
(b) In the event of any such termination, there shall be no liability
for damages on the part of Commonwealth Trust or the Fund, or their
respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES
(a). This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter
hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement
signed by each party hereto and shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the appropriate
officers of Devonshire Trust, Commonwealth Trust, the Fund, or the
Series; provided, however, that following the shareholders' meeting,
if any, called by the Fund pursuant to Section 7 of this Agreement, no
such amendment may have the effect of changing the provisions for
determining the number of the Series Shares to be received by the Fund
shareholders under this Agreement to the detriment of such
shareholders without their further approval.
(c) Either party may waive any condition to its obligations
hereunder, provided that such waiver does not have any material
adverse effect on the interests of Fund Shareholders.
The representations, warranties, and covenants contained in the
Agreement, or in any document delivered pursuant hereto or in
connection herewith, shall survive the consummation of the
transactions contemplated hereunder.
14. LIMITATION OF LIABILITY
Copies of the Declarations of Trust of Commonwealth Trust as
[supplemented] and Devonshire Trust, as restated and amended, are on
file with the Secretary of State of the Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf
of the Trustees of Commonwealth Trust and Devonshire Trust as trustees
and not individually and that the obligations of the Fund and the
Series under this instrument are not binding upon any of Devonshire
Trust's or Commonwealth Trust's Trustees, officers, or shareholders
individually, but are binding only upon the assets and property of
such Fund or Series. The Fund and Commonwealth Trust each agrees that
its obligations hereunder apply only to such Fund and the Series,
respectively, and not to its shareholders individually or to the
trustees of such Fund or Series.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer of any rights or obligations hereunder shall be made by
any party without the written consent of the other party. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation other than the
parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
FIDELITY DEVONSHIRE TRUST, on behalf of
FIDELITY MID-CAP STOCK FUND
[SIGNATURE LINES OMITTED]
FIDELITY COMMONWEALTH TRUST
[SIGNATURE LINES OMITTED]
FIDELITY MANAGEMENT & RESEARCH COMPANY]
[SIGNATURE LINES OMITTED]
EXHIBIT 8
COMPARISON OF STAND ALONE FUND STRUCTURE
TO
MASTER FEEDER FUND STRUCTURE
STAND ALONE FUND STRUCTURE
EDGAR DESCRIPTION NO. 1 - FOR 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
EDGAR DESCRIPTION NO. 2 - FOR 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 9
[TABLE WILL BE UPDATED IN A SUBSEQUENT FILING]
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INVESTMENT FISCAL AVERAGE RATIO OF NET RATIO OF
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES EXPENSES TO
(MILLIONS)(B) TO AVERAGE AVERAGE NET
NET ASSETS ASSETS (C)
PAID
TO FMR (C)
GROWTH
Select Portfolios:
Air Transportation 2/28/95 $ 9.4 0.24%* 2.50%*
((pound))
American Gold 2/28/95 350.5 0.62 1.41
Automotive ((pound)) 2/28/95 102.2 0.62 1.80*
Biotechnology ((pound)) 2/28/95 413.9 0.62 1.59
Brokerage and
Investment
Management ((pound)) 2/28/95 30.5 0.26* 2.54*
Chemicals ((pound)) 2/28/95 144.0 0.62 1.51*
Computers ((pound)) 2/28/95 131.6 0.62 1.69*
Construction and 2/28/95 40.9 0.62 1.74*
Housing ((pound))
Consumer Products 2/28/95 7.9 0.30* 2.49*
((pound))
Defense and 2/28/95 5.2 -* 2.49*
Aerospace ((pound))
Developing 2/28/95 222.6 0.62 1.50*
Communications
((pound))
Electronics ((pound)) 2/28/95 155.8 0.62 1.71*
Energy ((pound)) 2/28/95 104.4 0.62 1.85
Energy Service ((pound)) 2/28/95 59.4 0.62 1.79*
Environmental 2/28/95 45.0 0.62 2.01*
Services ((pound))
Financial Services 2/28/95 108.2 0.62 1.54*
((pound))
Food and 2/28/95 92.7 0.62 1.68*
Agriculture ((pound))
Health Care ((pound)) 2/28/95 642.9 0.62 1.36*
Home Finance ((pound)) 2/28/95 200.7 0.62 1.45*
Industrial 2/28/95 123.8 0.62 1.78*
Equipment ((pound))
Industrial Materials 2/28/95 177.3 0.62 1.53*
((pound))
Insurance ((pound)) 2/28/95 10.3 0.62 2.34*
Leisure ((pound)) 2/28/95 73.1 0.62 1.62*
Medical Delivery ((pound)) 2/28/95 214.0 0.62 1.45*
Multimedia ((pound)) ((PSI)) 2/28/95 31.5 0.62 2.03*
Natural Gas ((pound)) 2/28/95 77.1 0.62 1.66*
Paper and Forest 2/28/95 56.2 0.62 1.87*
Products ((pound))
Precious Metals and 2/28/95 437.1 0.62 1.46
Minerals ((pound))
Regional Banks ((pound)) 2/28/95 143.9 0.62 1.56*
Select Portfolios
(continued):
Retailing ((pound)) 2/28/95 $ 60.8 0.62% 1.96*%
Software and 2/28/95 182.1 0.62 1.50*
Computer
Services ((pound))
Technology ((pound)) 2/28/95 206.1 0.62 1.56*
Telecommunications 2/28/95 374.3 0.62 1.55*
((pound))
Transportation ((pound)) 2/28/95 12.7 0.62 2.36*
Utilities 2/28/95 224.4 0.62 1.42*
Growth((pound))((PSI))
Magellan ((pound)) 3/31/95 35,788.6 0.75 0.96*
Mid Cap Stock 4/30/95** 300.2 0.66(dagger) 1.22(dagger)*
Small Cap Stock 4/30/95 640.2 0.56 0.90*
Fidelity Fifty ((pound)) 6/30/94** 44.2 0.63(dagger) 1.58(dagger)
Blue Chip Growth 7/31/94 1,359.3 0.70 1.22
Low-Priced Stock ((pound)) 7/31/94 2,084.5 0.79 1.13
OTC Portfolio 7/31/94 1,296.9 0.50 .88
Export Fund 8/31/95** 62.6 0.62(dagger) 1.65(dagger)
Advisor Strategic
Opportunities:
Class A ((pound)) 9/30/94 337.0 0.72 1.84
Class B ((pound)) 9/30/94** 3.3 0.72 2.63(dagger)
Initial Shares ((pound)) 9/30/94 19.6 0.72 1.14
Destiny I 9/30/94 3,204.9 0.65 0.70
Destiny II 9/30/94 1,326.8 0.73 0.80
Advisor Emerging Asia 10/31/94 125.5 1.00(dagger) 1.78(dagger)
Fund, Inc. ((OVAL))
Advisor Global 10/31/94 115.8 0.77 2.07*
Resources ((pound))
Advisor Growth 10/31/94 3,215.2 0.69 1.62*
Opportunities -
Class A
Advisor Overseas ((epslon)) 10/31/94 428.7 0.80 2.12
Canada ((epslon)) 10/31/94 214.8 0.80 1.57
Capital Appreciation 10/31/94 1,720.3 0.77 1.17
((pound))
Disciplined Equity ((pound)) 10/31/94 891.4 0.72 1.05
Diversified 10/31/94 316.5 0.72 1.25
International ((epslon))
Emerging Markets ((epslon)) 10/31/94 1,639.2 0.77 1.52
Europe ((epslon)) 10/31/94 493.3 0.72 1.35
Europe Capital 10/31/94** 288.2 0.77(dagger) 1.54(dagger)
Appreciation ((epslon))
International Value 10/31/95** 9.6 0.77(dagger) 2.00(dagger)*
((Rex-all))
Japan ((Rex-all)) 10/31/94 362.4 0.75 1.42
Latin America ((epslon)) 10/31/94 $ 782.5 0.77% 1.48%
Overseas ((epslon)) 10/31/94 1,895.8 0.80 1.24
Pacific Basin ((Rex-all)) 10/31/94 509.8 0.86 1.54
Southeast Asia ((Rex-all)) 10/31/94 806.9 0.69 1.47
Stock Selector ((pound)) 10/31/94 710.5 0.72 1.09
Value ((pound)) 10/31/94 3,325.0 0.52 0.79
Worldwide ((epslon)) 10/31/94 530.6 0.77 1.32
Advisor Equity
Portfolio Growth :
Class A ((pound)) 11/30/94 663.9 0.64 1.70
Institutional Class 11/30/94 364.1 0.64 0.84
((pound))
Emerging Growth ((pound)) 11/30/94 617.7 0.66 1.02
Growth Company ((pound)) 11/30/94 2,748.9 0.73 1.05
New Millennium 11/30/94 312.2 0.82 1.29
Retirement Growth ((pound)) 11/30/94 2989.2 0.77 1.07
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of April 30,1995, if fiscal year end figures are not yet available.
(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 (*).
(d) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations, or paid
by or due from brokers to which certain portfolio trades have been
directed. Funds so affected are indicated by an (*).
(dagger) Annualized
# Year end changed
** Less than a complete fiscal year
((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 (FIIAL
U.K.), 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, FIJ (New Markets Income and Advisor Emerging Markets only),
FIIA, and FIIAL U.K., 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.
((yen)) Fidelity Management & Research Company has entered into a
sub-advisory agreement with FMR Texas Inc., with respect to the fund.
((oval)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FIIA and FIJ, with respect to the fund.
((psi)) Effective August 3, 1994, Utilities Income Fund and Select
Utilities Portfolio have been renamed to Utilities Fund and Utilities
Growth Portfolio, respectively.
EXHIBIT 10
[TABLE WILL BE UPDATED IN A SUBSEQUENT FILING]
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
GROWTH AND INCOME
Equity-Income ((pound)) 1/31/97 $ 12,640.8 0.45%
Real Estate ((pound)) 1/31/97 1,021.7 0.60
Utilities Fund ((pound)) 1/31/97 1,312.8 0.54
Spartan U.S. Equity Index 2/28/97 5,035.0 0.01*
Spartan Market Index 4/30/97 1,491.9 0.45
Fidelity Fund ((pound)) 6/30/97 4,503.9 0.39
Balanced ((pound)) 7/31/97 3,927.2 0.45
Dividend Growth ((pound)) 7/31/97 2,674.3 0.65
Global Balanced ((Rex-all)) 7/31/97 76.2 0.75
Growth & Income ((pound)) 7/31/97 25,463.2 0.50
Puritan ((pound)) 7/31/97 19,047.2 0.45
Advisor Balanced: ((pound))
Class A 10/31/97 4.3 0.45*
Class B 10/31/97 7.7 0.45
Class T 10/31/97 2,909.7 0.45
Class C ((hollow diamond)) 10/31/98** 38.6 0.45
Institutional Class 10/31/97 28.2 0.45
International Growth & Income ((Rex-all)) 10/31/97 1,090.1 0.75
Advisor Equity Income: ((pound))
Class A 11/30/97 12.9 0.50*
Class B 11/30/97 586.4 0.50*
Class T 11/30/97 1,928.3 0.50
Class C 11/30/97 0.0 0.50*
Institutional Class 11/30/97 459.4 0.50
Advisor Growth & Income: ((pound))
Class A 11/30/97 2.8 0.50*
Class B 11/30/97 12.9 0.50*
Class T 11/30/97 55.6 0.50
Class C 11/30/97 0.0 0.50*
Institutional Class 11/30/97 13.5 0.50
Convertible Securities ((pound)) 11/30/97 1,080.2 0.46
Equity-Income II ((pound)) 11/30/97 15,981.8 0.50
Variable Insurance Products:
Equity-Income
Initial Class 12/31/97 8,495.3 0.50
Service Class 12/31/97 1,479.1 0.50
Variable Insurance Products II:
Index 500 12/31/97 $ 1,493.1 0.15%*
Variable Insurance Products III: ((pound))
Balanced Portfolio
Initial Class 12/31/97 162.0 0.45
Service Class 12/31/97 0.0 0.45
Growth & Income
Initial Class 12/31/97 174.8 0.49
Service Class 12/31/97 0.0 0.49
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of December 31, 1997, if fiscal year end figures are not yet
available.
(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 (*).
** Less than a complete fiscal year
((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 (FIIAL
U.K.), 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)) The ratio of net advisory fees to average net
assets paid to FMR represents the amount as of the prior fiscal year
end. Updated ratios will be presented for each class of shares of the
fund when the next fiscal year end figures are available.
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ---------------------------------------------------------------------
- -------------------------
FIDELITY DEVONSHIRE TRUST: FIDELITY EQUITY-INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d and Robert M. Gates, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of
Fidelity Devonshire 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 November 18, 1998 at 11:00 a.m. 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 _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316138106/fund# 023
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
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:
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the 12 nominees specified below as [ ] FOR all [ ] 1.
Trustees: Ralph F. Cox, Phyllis Burke Davis, nominees listed WITHHOLD
Robert M. Gates, Edward C. Johnson 3d, E. (except as marked to authority to
Bradley Jones, Donald J. Kirk, Peter S. Lynch, the contrary below). vote for all
William O. McCoy, Gerald C. McDonough, Marvin nominees.
L. Mann, Robert C. Pozen, 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>
______________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of PricewaterhouseCoopers FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP as independent accountants of the trust.
3. To authorize the Trustees to adopt an amended and FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
restated Declaration of Trust.
4. To approve amended management contracts for FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
Fidelity Equity-Income Fund and Fidelity Real
Estate Investment Portfolio.
5. To approve a Distribution and Service Plan pursuant FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
to Rule 12b-1 for Fidelity Equity-Income Fund.
6. To adopt a new fundamental investment policy for FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
Fidelity Equity-Income Fund, Fidelity Real Estate
Investment Portfolio, and Fidelity Utilities 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.
7. To amend Fidelity Equity-Income Fund's, Fidelity FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
Mid-Cap Stock Fund's, and Fidelity Utilities Fund's
fundamental investment limitation concerning
diversification, to exclude securities of other
investment companies from the limitation.
</TABLE>
EQU-PXC-0998 cusip # 316138106/fund# 023
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY DEVONSHIRE TRUST: FIDELITY MID-CAP STOCK FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d and Robert M. Gates, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of
Fidelity Devonshire 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 November 18, 1998 at 11:00 a.m. 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 _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316128404/fund# 337
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
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:
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the 12 nominees specified below as [ ] FOR all [ ] 1.
Trustees: Ralph F. Cox, Phyllis Burke Davis, nominees listed WITHHOLD
Robert M. Gates, Edward C. Johnson 3d, E. (except as marked to authority to
Bradley Jones, Donald J. Kirk, Peter S. Lynch, the contrary below). vote for all
William O. McCoy, Gerald C. McDonough, Marvin nominees.
L. Mann, Robert C. Pozen, 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>
______________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of PricewaterhouseCoopers FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP as independent accountants of the trust.
3. To authorize the Trustees to adopt an amended and FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
restated Declaration of Trust.
4. To approve an amended management contract for FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
Fidelity Mid-Cap Stock Fund.
5. To approve an agreement and plan providing for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
reorganization of Fidelity Mid-Cap Stock Fund from
a separate series of one Massachusetts business trust
to another.
6. To amend Fidelity Equity-Income Fund's, Fidelity FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
Mid-Cap Stock Fund's, and Fidelity Utilities Fund's
fundamental investment limitation concerning
diversification, to exclude securities of other
investment companies from the limitation.
</TABLE>
MCS-PXC-0998 cusip # 316128404/fund# 337
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY DEVONSHIRE TRUST: FIDELITY REAL ESTATE INVESTMENT PORTFOLIO
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d and Robert M. Gates, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of
Fidelity Devonshire 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 November 18, 1998 at 11:00 a.m. 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 _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316138205/fund# 303
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
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:
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the 12 nominees specified below as [ ] FOR all [ ] 1.
Trustees: Ralph F. Cox, Phyllis Burke Davis, nominees listed WITHHOLD
Robert M. Gates, Edward C. Johnson 3d, E. (except as marked to authority to
Bradley Jones, Donald J. Kirk, Peter S. Lynch, the contrary below). vote for all
William O. McCoy, Gerald C. McDonough, Marvin nominees.
L. Mann, Robert C. Pozen, 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>
_____________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of PricewaterhouseCoopers FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP as independent accountants of the fund.
3. To authorize the Trustees to adopt an amended and FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
restated Declaration of Trust.
4. To approve an amended management contract for FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
Fidelity Equity-Income Fund and Fidelity Real
Estate Investment Portfolio.
5. To adopt a new fundamental investment policy for FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
Fidelity Equity-Income Fund, Fidelity Real Estate
Investment Portfolio, and Fidelity Utilities 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 make Fidelity Real Estate Investment Portfolio's FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
current fundamental 65% investment policy
non-fundamental.
7. To replace Fidelity Real Estate Investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
Portfolio's non-fundamental investment policy
concerning the purchase and sale of real estate with a
fundamental investment policy.
</TABLE>
REA-PXC-0998 cusip # 316138205/fund# 303
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ---------------------------------------------------------------------
FIDELITY DEVONSHIRE TRUST: FIDELITY UTILITIES FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d and Robert M. Gates, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of
Fidelity Devonshire 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 November 18, 1998 at 11:00 a.m. 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 _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316128107/fund# 311
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
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:
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the 12 nominees specified below as [ ] FOR all [ ] 1.
Trustees: Ralph F. Cox, Phyllis Burke Davis, nominees listed WITHHOLD
Robert M. Gates, Edward C. Johnson 3d, E. (except as marked to authority to
Bradley Jones, Donald J. Kirk, Peter S. Lynch, the contrary below). vote for all
William O. McCoy, Gerald C. McDonough, Marvin nominees.
L. Mann, Robert C. Pozen, 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>
____________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of PricewaterhouseCoopers FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP as independent accountants of the trust.
3. To authorize the Trustees to adopt an amended and FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
restated Declaration of Trust.
4. To approve an amended management contract for FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
Fidelity Utilities Fund.
5. To adopt a new fundamental investment policy for FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
Fidelity Equity-Income Fund, Fidelity Real Estate
Investment Portfolio, and Fidelity Utilities 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 amend Fidelity Utilities Fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
investment limitation concerning the concentration
of its investments in the public utilities industry.
7. To amend Fidelity Equity-Income Fund's, Fidelity FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
Mid-Cap Stock Fund's, and Fidelity Utilities Fund's
fundamental investment limitation concerning
diversification, to exclude securities of other
investment companies from the limitation.
</TABLE>
UIF-PXC-0998 cusip # 316128107/fund# 311
