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:
<TABLE>
<CAPTION>
<S> <C>
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
</TABLE>
FIDELITY MUNICIPAL TRUST
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:
<TABLE>
<CAPTION>
<S> <C>
[ ] 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.
</TABLE>
(1) AMOUNT PREVIOUSLY PAID:
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
(3) FILING PARTY:
(4) DATE FILED:
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
SPARTAN MINNESOTA MUNICIPAL INCOME FUND
SPARTAN OHIO MUNICIPAL INCOME FUND
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
FUNDS OF
FIDELITY MUNICIPAL 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 Spartan Michigan Municipal Income Fund, Spartan Minnesota
Municipal Income Fund, Spartan Ohio Municipal Income Fund and Spartan
Pennsylvania Municipal Income Fund (the funds), will be held at the
office of Fidelity Municipal Trust (the trust), 82 Devonshire Street,
Boston, Massachusetts 02109 on December 16, 1998, at 9:00 a.m. The
purpose of the Meeting is to consider and act upon the following
proposals, and to transact such other business as may properly come
before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an Amended and Restated
Declaration of Trust.
4. To adopt a new fundamental investment policy for each fund
permitting each fund to invest all of its assets in another open-end
investment company managed by Fidelity Management & Research Company
or an affiliate with substantially the same investment objective and
policies.
5. To approve an amended management contract for Spartan Michigan
Municipal Income Fund, Spartan Minnesota Municipal Income Fund and
Spartan Ohio Municipal Income Fund.
6. To approve an amended management contract for Spartan Pennsylvania
Municipal Income Fund.
7. To replace each fund's fundamental 80% investment policy with a
non-fundamental policy.
8. To eliminate each fund's fundamental investment policy regarding
investment in below investment-grade debt securities.
9. To eliminate the fundamental 20% investment policy for Spartan
Michigan Municipal Income Fund, Spartan Minnesota Municipal Income
Fund and Spartan Ohio Municipal Income Fund.
The Board of Trustees has fixed the close of business on October 19,
1998 as the record date for the determination of the shareholders of
each fund 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
October 19, 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 MUNICIPAL TRUST:
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
SPARTAN MINNESOTA MUNICIPAL INCOME FUND
SPARTAN OHIO MUNICIPAL INCOME FUND
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
TO BE HELD ON DECEMBER 16, 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 Municipal Trust (the trust) to be used at the Special Meeting
of Shareholders of Spartan Michigan Municipal Income Fund, Spartan
Minnesota Municipal Income Fund, Spartan Ohio Municipal Income Fund
and Spartan Pennsylvania Municipal Income Fund (the funds) and at any
adjournments thereof (the Meeting), to be held on December 16, 1998 at
9:00 a.m. at 82 Devonshire Street, Boston, Massachusetts 02109, the
principal executive office of the trust and Fidelity Management &
Research Company (FMR), the funds' investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is being made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about October 19,
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. (D.F. King) may be paid
on a per-call basis to solicit shareholders on behalf of the funds at
an anticipated cost of approximately $2,000 (Spartan Michigan
Municipal Income Fund), $2,000 (Spartan Minnesota Municipal Income
Fund), $2,000 (Spartan Ohio Municipal Income Fund), and $2,000
(Spartan Pennsylvania Municipal Income Fund), respectively. The
expenses in connection with preparing this Proxy Statement and its
enclosures and of all solicitations for Spartan Michigan Municipal
Income Fund, Spartan Minnesota Municipal Income Fund and Spartan Ohio
Municipal Income Fund will be paid by the respective fund, provided
the expenses do not exceed each fund's existing expense cap of 0.55%.
Expenses exceeding Spartan Michigan Municipal Income Fund, Spartan
Minnesota Municipal Income Fund and Spartan Ohio Municipal Income
Fund's respective expense cap will be paid by FMR. Each of the
aforementioned funds (except Spartan Pennsylvania Municipal Income
Fund) will reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to the beneficial owners
of shares. The expenses in connection with preparing this Proxy
Statement and its enclosures and of all solicitations for Spartan
Pennsylvania Municipal Income Fund will be borne by FMR. FMR will
reimburse brokerage firms and others for their reasonable expenses in
forwarding solicitation material to the beneficial owners of shares of
Spartan Pennsylvania Municipal Income Fund. The principal business
address of Fidelity Distributors Corporation (FDC), the funds'
principal underwriter and distribution agent, 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 Spartan
Michigan Municipal Income Fund, Spartan Minnesota Municipal Income
Fund and Spartan Ohio Municipal Income Fund, provided the expenses do
not exceed each fund's existing expense cap, as described on page 1.
Expenses exceeding Spartan Michigan Municipal Income Fund's, Spartan
Minnesota Municipal Income Fund's and Spartan Ohio Municipal Income
Fund's expense cap will be paid by FMR. The expenses in connection
with telephone voting for Spartan Pennsylvania Municipal Income Fund
will be borne by FMR. If the funds record votes by telephone, they
will use procedures designed to authenticate shareholders' identities,
to allow shareholders to authorize the voting of their shares in
accordance with their instructions, and to confirm that their
instructions have been properly recorded. Proxies voted by telephone
may be revoked at any time before they are voted in the same manner
that proxies voted by mail may be revoked. D.F. King may be paid on a
per-call basis for vote-by-phone solicitations on behalf of the funds
at an anticipated cost of approximately $1,000 (Spartan Michigan
Municipal Income Fund), $1,000 (Spartan Minnesota Municipal Income
Fund), $1,000 (Spartan Ohio Municipal Income Fund), and $1,000
(Spartan Pennsylvania Municipal Income Fund).
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
AGAINST the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate.
The following table summarizes the proposals applicable to each fund.
PROPOSAL # PROPOSAL DESCRIPTION APPLICABLE FUND(S)
1. TO ELECT AS TRUSTEES THE TWELVE 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 ADOPT ALL
AN AMENDED AND RESTATED
DECLARATION OF TRUST.
4. TO ADOPT A NEW FUNDAMENTAL ALL
INVESTMENT POLICY 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.
5. TO APPROVE AN AMENDED SPARTAN MICHIGAN MUNICIPAL
MANAGEMENT CONTRACT FOR THE FUND INCOME FUND
THAT WOULD REDUCE THE MANAGEMENT SPARTAN MINNESOTA
FEE PAYABLE TO FMR BY THE FUND AS MUNICIPAL INCOME FUND
FMR'S ASSETS UNDER MANAGEMENT SPARTAN OHIO MUNICIPAL
INCREASE. INCOME FUND
6. TO APPROVE AN AMENDED SPARTAN PENNSYLVANIA
MANAGEMENT CONTRACT. MUNICIPAL INCOME FUND
7. TO REPLACE EACH FUND'S ALL
FUNDAMENTAL 80% INVESTMENT
POLICY WITH A NON-FUNDAMENTAL
POLICY.
8. TO ELIMINATE EACH FUND'S ALL
FUNDAMENTAL INVESTMENT POLICY
REGARDING INVESTMENT IN BELOW
INVESTMENT-GRADE DEBT SECURITIES.
9. TO ELIMINATE THE FUNDS ' SPARTAN MICHIGAN MUNICIPAL
FUNDAMENTAL 20% INVESTMENT INCOME FUND
POLICY. SPARTAN MINNESOTA
MUNICIPAL INCOME FUND
SPARTAN OHIO MUNICIPAL
INCOME FUND
Shares of each fund issued and outstanding as of August 31, 1998 are
indicated in the following table:
Spartan Michigan Municipa l Income Fund 39,936,171
Spartan Minnesota Municipal Income Fund 26,834,634
Spartan Ohio Municipal Income Fund 33,062,558
Spartan Pennsylvania Municipal I ncome Fund 24,225,739
As of August 31, 1998, the nominees and officers of the trust owned,
in the aggregate, less than 1% of each fund ' s
outstanding shares.
Shareholders of record at the close of business on October 19, 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.
FOR A FREE COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997 AND THE SEMIANNUAL REPORT FOR THE FISCAL
PERIOD ENDED JUNE 30, 1998 CALL 1-800-544-8888 OR WRITE TO FIDELITY
DISTRIBUTORS CORPORATION AT 82 DEVONSHIRE STREET, BOSTON,
MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS
SUFFICIENT TO APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE
APPROPRIATE FUND CAST AT THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL
2. APPROVAL OF PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" OF THE ENTIRE TRUST. APPROVAL OF
PROPOSALS 4 THROUGH 9 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 Municipal 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 Municipal
Trust and have served in that capacity continuously since originally
elected or appointed. Robert M. Gates, 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,
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 of 57 registered investment companies advised by FMR. Mr.
Gates and Mr. McCoy are currently a Trustee of 54 registered
investment companies advised by FMR. Mr. Pozen is currently a
Trustee of 51 registered investment companies advised by FMR.
In the election of Trustees, those twelve nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is
present, shall be elected.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
RALPH F. COX PRESIDENT OF RABAR ENTERPRISES 1991
(66) (MANAGEMENT CONSULTING-ENGINEERING
INDUSTRY, 1994). PRIOR TO FEBRUARY
1994, HE WAS PRESIDENT OF GREENHILL
PETROLEUM CORPORATION (PETROLEUM
EXPLORATION AND PRODUCTION). UNTIL
MARCH 1990, MR. COX WAS PRESIDENT
AND CHIEF OPERATING OFFICER OF UNION
PACIFIC RESOURCES COMPANY
(EXPLORATION AND PRODUCTION). HE IS A
DIRECTOR OF USA WASTE SERVICES, INC.
(NON-HAZARDOUS WASTE, 1993), CH2M
HILL COMPANIES (ENGINEERING), RIO
GRANDE, INC. (OIL AND GAS PRODUCTION),
AND DANIEL INDUSTRIES (PETROLEUM
MEASUREMENT EQUIPMENT
MANUFACTURER). IN ADDITION, HE IS A
MEMBER OF ADVISORY BOARDS OF TEXAS
A&M UNIVERSITY AND THE UNIVERSITY OF
TEXAS AT AUSTIN.
PHYLLIS BURKE DAVIS PRIOR TO HER RETIREMENT IN 1992
(66) SEPTEMBER 1991, MRS. DAVIS WAS
THE SENIOR VICE PRESIDENT OF
CORPORATE AFFAIRS OF AVON PRODUCTS,
INC. SHE IS CURRENTLY A DIRECTOR OF
BELLSOUTH CORPORATION
(TELECOMMUNICATIONS), EATON
CORPORATION (MANUFACTURING, 1991),
AND THE TJX COMPANIES, INC. (RETAIL
STORES), AND PREVIOUSLY SERVED AS A
DIRECTOR OF HALLMARK CARDS, INC.
(1985-1991) AND NABISCO BRANDS,
INC. IN ADDITION, SHE IS A MEMBER OF
THE PRESIDENT'S ADVISORY COUNCIL OF
THE UNIVERSITY OF VERMONT SCHOOL
OF BUSINESS ADMINISTRATION.
ROBERT M. GATES CONSULTANT, AUTHOR, AND LECTURER 1997
(55) (1993). MR. GATES WAS DIRECTOR OF
THE CENTRAL INTELLIGENCE AGENCY
(CIA) FROM 1991-1993. FROM 1989
TO 1991, MR. GATES SERVED AS
ASSISTANT TO THE PRESIDENT OF THE
UNITED STATES AND DEPUTY NATIONAL
SECURITY ADVISOR. MR. GATES IS A
DIRECTOR OF LUCASVARITY PLC
(AUTOMOTIVE COMPONENTS AND DIESEL
ENGINES), CHARLES STARK DRAPER
LABORATORY (NON-PROFIT), NACCO
INDUSTRIES, INC. (MINING AND
MANUFACTURING), AND TRW INC.
(ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS). MR. GATES
ALSO IS A TRUSTEE OF THE FORUM FOR
INTERNATIONAL POLICY AND OF THE
ENDOWMENT ASSOCIATION OF THE
COLLEGE OF WILLIAM AND MARY. IN
ADDITION, HE IS A MEMBER OF THE
NATIONAL EXECUTIVE BOARD OF THE BOY
SCOUTS OF AMERICA.
*EDWARD C. JOHNSON 3D PRESIDENT, IS CHAIRMAN, CHIEF 1984
(68) EXECUTIVE OFFICER AND A DIRECTOR OF
FMR CORP.; A DIRECTOR AND
CHAIRMAN OF THE BOARD AND OF THE
EXECUTIVE COMMITTEE OF FMR;
CHAIRMAN AND A DIRECTOR OF FIDELITY
INVESTMENTS MONEY MANAGEMENT,
INC. (1998), FIDELITY MANAGEMENT &
RESEARCH (U.K.) INC., AND FIDELITY
MANAGEMENT & RESEARCH (FAR EAST)
INC.
E. BRADLEY JONES PRIOR TO HIS RETIREMENT IN 1984, 1990
(71) MR. JONES WAS CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF LTV STEEL
COMPANY. HE IS A DIRECTOR OF TRW
INC. (ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS),
CONSOLIDATED RAIL CORPORATION,
BIRMINGHAM STEEL CORPORATION, AND
RPM, INC. (MANUFACTURER
OF CHEMICAL PRODUCTS), AND HE
PREVIOUSLY SERVED AS A DIRECTOR OF
NACCO INDUSTRIES, INC. (MINING AND
MANUFACTURING, 1985-1995),
HYSTER-YALE MATERIALS HANDLING, INC.
(1985-1995), AND CLEVELAND-CLIFFS
INC. (MINING), AND AS A TRUSTEE OF
FIRST UNION REAL ESTATE INVESTMENTS.
IN ADDITION, HE SERVES AS A TRUSTEE
OF THE CLEVELAND CLINIC FOUNDATION,
WHERE HE HAS ALSO BEEN A MEMBER
OF THE EXECUTIVE COMMITTEE AS WELL
AS CHAIRMAN OF THE BOARD AND
PRESIDENT, A TRUSTEE AND MEMBER OF
THE EXECUTIVE COMMITTEE OF
UNIVERSITY SCHOOL (CLEVELAND), AND A
TRUSTEE OF CLEVELAND CLINIC FLORIDA.
DONALD J. KIRK EXECUTIVE-IN-RESIDENCE (1995) AT 1987
(66) COLUMBIA UNIVERSITY GRADUATE
SCHOOL OF BUSINESS AND A FINANCIAL
CONSULTANT. FROM 1987 TO JANUARY
1995, MR. KIRK WAS A PROFESSOR AT
COLUMBIA UNIVERSITY GRADUATE
SCHOOL OF BUSINESS. PRIOR TO 1987,
HE WAS CHAIRMAN OF THE FINANCIAL
ACCOUNTING STANDARDS BOARD.
MR. KIRK IS A DIRECTOR OF GENERAL RE
CORPORATION (REINSURANCE), AND HE
PREVIOUSLY SERVED AS A DIRECTOR OF
VALUATION RESEARCH CORP.
(APPRAISALS AND VALUATIONS,
1993-1995). IN ADDITION, HE SERVES
AS CHAIRMAN OF THE BOARD OF
DIRECTORS OF THE 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
(55) PRIOR TO MAY 31, 1990, HE WAS A
DIRECTOR OF FMR AND EXECUTIVE VICE
PRESIDENT OF FMR (A POSITION HE
HELD UNTIL MARCH 31, 1991); VICE
PRESIDENT OF FIDELITY MAGELLAN FUND
AND FMR GROWTH GROUP LEADER;
AND MANAGING DIRECTOR OF FMR
CORP. MR. LYNCH WAS ALSO VICE
PRESIDENT OF FIDELITY INVESTMENTS
CORPORATE SERVICES (1991-1992). IN
ADDITION, HE SERVES AS A TRUSTEE OF
BOSTON COLLEGE, MASSACHUSETTS EYE
& EAR INFIRMARY, HISTORIC DEERFIELD
(1989) AND SOCIETY FOR THE
PRESERVATION OF NEW ENGLAND
ANTIQUITIES, AND AS AN OVERSEER OF
THE MUSEUM OF FINE ARTS OF BOSTON.
WILLIAM O. MCCOY VICE PRESIDENT OF FINANCE FOR THE 1997
(65) UNIVERSITY OF NORTH CAROLINA
(16-SCHOOL SYSTEM, 1995). PRIOR TO
HIS RETIREMENT IN DECEMBER 1994,
MR. MCCOY WAS VICE CHAIRMAN OF THE
BOARD OF BELLSOUTH CORPORATION
(TELECOMMUNICATIONS, 1984) AND
PRESIDENT OF BELLSOUTH ENTERPRISES
(1986). HE IS CURRENTLY A DIRECTOR OF
LIBERTY CORPORATION (HOLDING
COMPANY, 1984), WEEKS CORPORATION
OF ATLANTA (REAL ESTATE, 1994),
CAROLINA POWER AND LIGHT COMPANY
(ELECTRIC UTILITY, 1996) AND THE KENAN
TRANSPORT CO. (1996). PREVIOUSLY, HE
WAS A DIRECTOR OF FIRST AMERICAN
CORPORATION (BANK HOLDING COMPANY,
1979-1996). IN ADDITION, MR. MCCOY
SERVES AS A MEMBER OF THE BOARD OF
VISITORS FOR THE UNIVERSITY OF NORTH
CAROLINA AT CHAPEL HILL (1994) AND FOR
THE KENAN-FLAGER BUSINESS SCHOOL
(UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL, 1988).
GERALD C. MCDONOUGH CHAIRMAN OF G.M. MANAGEMENT 1989
(70) GROUP (STRATEGIC ADVISORY SERVICES).
MR. MCDONOUGH IS A DIRECTOR OF
YORK INTERNATIONAL CORP. (AIR
CONDITIONING AND REFRIGERATION),
COMMERCIAL INTERTECH CORP.
(HYDRAULIC SYSTEMS, BUILDING
SYSTEMS, AND METAL PRODUCTS,
1992), CUNO, INC. (LIQUID AND GAS
FILTRATION PRODUCTS, 1996), AND
ASSOCIATED ESTATES REALTY
CORPORATION (A REAL ESTATE
INVESTMENT TRUST, 1993). MR.
MCDONOUGH SERVED AS A DIRECTOR OF
ACME-CLEVELAND CORP. (METAL
WORKING, TELECOMMUNICATIONS, AND
ELECTRONIC PRODUCTS) FROM
1987-1996 AND BRUSH-WELLMAN INC.
(METAL REFINING) FROM 1983-1997).
MARVIN L. MANN CHAIRMAN OF THE BOARD, OF LEXMARK 1993
(65) INTERNATIONAL, INC. (OFFICE MACHINES,
1991). PRIOR TO 1991, HE HELD THE
POSITIONS OF VICE PRESIDENT OF
INTERNATIONAL BUSINESS MACHINES
CORPORATION ("IBM") AND PRESIDENT
AND GENERAL MANAGER OF VARIOUS IBM
DIVISIONS AND SUBSIDIARIES. MR. MANN
IS A DIRECTOR OF M.A. HANNA
COMPANY (CHEMICALS, 1993) AND
IMATION CORP. (IMAGING AND
INFORMATION STORAGE, 1997).
*ROBERT C. POZEN SENIOR VICE PRESIDENT, IS ALSO 1997
(52) PRESIDENT AND A DIRECTOR OF FMR
(1997); AND PRESIDENT AND A
DIRECTOR OF FIDELITY INVESTMENTS
MONEY MANAGEMENT, INC. (1998),
FIDELITY MANAGEMENT & RESEARCH
(U.K.) INC. (1997), AND FIDELITY
MANAGEMENT & RESEARCH (FAR EAST)
INC. (1997). PREVIOUSLY, MR. POZEN
SERVED AS GENERAL COUNSEL,
MANAGING DIRECTOR, AND SENIOR VICE
PRESIDENT OF FMR CORP.
THOMAS R. WILLIAMS PRESIDENT OF THE WALES GROUP, INC. 1989
(70) (MANAGEMENT AND FINANCIAL ADVISORY
SERVICES). PRIOR TO RETIRING IN 1987,
MR. WILLIAMS SERVED AS CHAIRMAN OF
THE BOARD OF FIRST WACHOVIA
CORPORATION (BANK HOLDING
COMPANY), AND CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF THE FIRST
NATIONAL BANK OF ATLANTA AND FIRST
ATLANTA CORPORATION (BANK HOLDING
COMPANY). HE IS CURRENTLY A 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 August 31, 1998 the nominees, Trustees and officers of
the Trust and each fund owned, in the aggregate, less than 1% of each
fund's outstanding shares.
If elected, the Trustees will hold office without limit in time
except that (a) any Trustee may resign; (b) any Trustee may be removed
by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal; (c) any Trustee who requests to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees; and (d) a Trustee may be removed at any Special Meeting of
shareholders by a two-thirds vote of the outstanding voting securities
of the trust. In case a vacancy shall for any reason exist, the
remaining Trustees will fill such vacancy by appointing another
Trustee, so long as, immediately after such appointment, at least
two-thirds of the Trustees have been elected by shareholders. If, at
any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly
call a shareholders' meeting for the purpose of electing a Board of
Trustees. Otherwise, there will normally be no meeting of shareholders
for the purpose of electing Trustees.
The trust's Board of Trustees, which is currently composed of 3
interested and 9 non-interested Trustees, met eleven times during the
twelve months ended December 31, 1997. 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,
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 December 31, 1997, 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 December 31, 1997, 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 December 31,
1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
COMPENSATION TABLE
TRUSTEES AND AGGREGATE AGGREGATE AGGREGATE AGGREGATE TOTAL
MEMBERS OF THE COMPENSATIO COMPENSATIO COMPENSATIO COMPENSATIO COMPENSATION
ADVISORY BOARD N FROM N FROM N FROM N FROM FROM THE
SPARTAN SPARTAN SPARTAN OHIO SPARTAN FUND
MICHIGAN MINNESOTA MUNICIPAL PENNSYLVANIA COMPLEX*,A
MUNICIPAL MUNICIPAL INCOMEB MUNICIPAL
INCOMEB INCOMEB INCOMEB
J. GARY BURKHEAD**,# $ 0 $ 0 $ 0 $ 0 $ 0
RALPH F. COX $ 189 $ 123 $ 159 $ 111 $ 214,500
PHYLLIS BURKE DAVIS $ 184 $ 120 $ 156 $ 109 $ 210,000
ROBERT M. GATES *** $ 156 $ 101 $ 132 $ 92 $ 176,000
EDWARD C. JOHNSON 3D** $ 0 $ 0 $ 0 $ 0 $ 0
E. BRADLEY JONES $ 186 $ 121 $ 157 $ 109 $ 211,500
DONALD J. KIRK $ 186 $ 121 $ 157 $ 109 $ 211,500
PETER S. LYNCH** $ 0 $ 0 $ 0 $ 0 $ 0
WILLIAM O. MCCOY **** $ 193 $ 126 $ 163 $ 114 $ 214,500
GERALD C. MCDONOUGH $ 232 $ 151 $ 196 $ 137 $ 264,500
MARVIN L. MANN $ 189 $ 123 $ 159 $ 111 $ 214,500
ROBERT C. POZEN** $ 0 $ 0 $ 0 $ 0 $ 0
THOMAS R. WILLIAMS $ 189 $ 123 $ 159 $ 111 $ 214,500
</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.
*** Mr. Gates was appointed to the Board of Trustees of Fidelity
Municipal Trust effective March 1, 1997 .
**** Mr. McCoy was appointed to the Board of Trustees of Fidelity
Municipal Trust effective January 1, 1997.
# 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.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds including funds in each major investment discipline and
representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF THE FUNDS.
By a vote of the non-interested Trustees, the firm of
PricewaterhouseCoopers LLP has been selected as independent
accountants for each fund to sign or certify any financial statements
of each fund required by any law or regulation to be certified by an
independent accountant and filed with the Securities and Exchange
Commission (SEC) or any state. Pursuant to the 1940 Act, such
selection requires the ratification of shareholders. In addition, as
required by the 1940 Act, the vote of the Trustees is subject to the
right of each fund, by vote of a majority of its outstanding voting
securities at any meeting called for the purpose of voting on such
action, to terminate such employment without penalty.
PricewaterhouseCoopers LLP has advised each fund that it has no direct
or material indirect ownership interest in each fund.
For the funds' most recently completed fiscal year, the firm of
Coopers & Lybrand L.L.P. acted as each fund's independent accountant.
Effective July 1, 1998, Coopers & Lybrand L.L.P. and Price Waterhouse
LLP combined their businesses and practices and began doing business
as PricewaterhouseCoopers LLP.
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. In
recommending the selection of each fund's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such
services would affect the accountants' independence. Representatives
of PricewaterhouseCoopers LLP are not expected to be present at the
Meeting, but have been given the opportunity to make a statement if
they so desire and will be available should any matter arise requiring
their presence.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST.
The Board of Trustees has approved and recommends that the
shareholders of the trust authorize them to adopt and execute an
Amended and Restated Declaration of Trust for the trust and the funds
of the trust in the form attached to this Proxy Statement as Exhibit 1
(New Declaration of Trust). The attached New Declaration of Trust has
been marked to show changes from the trust's existing Declaration of
Trust (Current Declaration of Trust). The New Declaration of Trust is
a more modern form of trust instrument for a Massachusetts business
trust, and, going forward, will be used as the standard Declaration of
Trust for all new Fidelity Massachusetts business trusts.
The New Declaration of Trust gives the Trustees more flexibility and,
subject to applicable requirements of the 1940 Act and Massachusetts
law, broader authority to act. This increased flexibility may allow
the Trustees to react more quickly to changes in competitive and
regulatory conditions and, as a consequence, may allow the funds to
operate in a more efficient and economical manner. ADOPTION OF THE NEW
DECLARATION OF TRUST WILL NOT ALTER IN ANY WAY THE TRUSTEES' EXISTING
FIDUCIARY OBLIGATIONS TO ACT WITH DUE CARE AND IN THE SHAREHOLDERS'
INTERESTS. BEFORE UTILIZING ANY NEW FLEXIBILITY THAT THE NEW
DECLARATION OF TRUST MAY AFFORD, THE TRUSTEES MUST FIRST CONSIDER THE
SHAREHOLDERS' INTERESTS AND THEN ACT IN ACCORDANCE WITH SUCH
INTERESTS.
Adoption of the New Declaration of Trust will NOT result in any
changes in the funds' Trustees or officers or in the investment
policies and shareholder services described in the funds' current
prospectuses.
Generally, a majority of the Trustees may amend the Current
Declaration of Trust when authorized by a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the trust. On
October 16, 1997, the Trustees approved the form of the New
Declaration of Trust. On December 18, 1997, the Board approved several
additional changes to the form of the New Declaration of Trust, which
changes have been incorporated into the form attached to this Proxy
Statement. On October 16, 1997, the Board authorized the submission of
the New Declaration of Trust to the trust's shareholders for their
authorization at this Meeting.
The New Declaration of Trust amends the Current Declaration of Trust
in a number of significant ways. The following discussion summarizes
some of the more significant amendments to the Current Declaration of
Trust effected by the New Declaration of Trust.
IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER
SUBSTANTIVE AND STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF
TRUST AND THE CURRENT DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE NEW DECLARATION OF TRUST
ITSELF, WHICH IS ATTACHED AS EXHIBIT 1 TO THIS PROXY STATEMENT.
SIGNIFICANT CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
REORGANIZATION OR TERMINATION OF THE TRUST OR ITS SERIES. Unlike the
Current Declaration of Trust, the New Declaration of Trust generally
permits the Trustees, subject to applicable Federal and state law, to
reorganize or terminate the trust or any of its series. The Current
Declaration of Trust requires shareholder approval in order to
reorganize or terminate the trust or any of its series.
Under certain circumstances, it may not be in the shareholders'
interest to require a shareholder meeting to permit the trust or a
fund to reorganize into another entity. For example, in order to
reduce the cost and scope of state regulatory constraints or to take
advantage of a more favorable tax treatment offered by another state,
the Trustees may determine that it would be in the shareholders'
interests to reorganize a fund to domicile it in another state or to
change its legal form. Under the Current Declaration of Trust, the
Trustees cannot effectuate such a potentially beneficial
reorganization without first conducting a shareholder meeting and
incurring the attendant costs and delays. In contrast, the New
Declaration of Trust gives the Trustees the flexibility to reorganize
the trust or any of its series and achieve potential shareholder
benefits without incurring the delay and potential costs of a proxy
solicitation. Such flexibility should help to assure that the trust
and its funds operate under the most appropriate form of organization.
Similarly, under certain circumstances, it may not be in the
shareholders' interest to require a shareholder meeting to permit the
Trustees to terminate a fund. For example, a fund may have
insufficient assets to invest effectively or excessively high expense
levels due to operational needs. Under such circumstances, absent
viable alternatives, the Trustees may determine that terminating the
fund is in the shareholders' interest and the only appropriate course
of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the
fund's liquidation and termination and, in general, will increase the
costs associated with the termination. In such a case, it may be in
the shareholders' interest to permit fund termination without
incurring the costs and delays of a shareholder meeting.
As discussed above, before allowing a trust or fund reorganization or
termination to proceed without shareholder approval, the Trustees have
a fiduciary responsibility to first determine that the proposed
transaction is in the shareholders' interest. Any exercise of the
Trustees' increased authority under the New Declaration of Trust is
also subject to any applicable requirements of the 1940 Act and
Massachusetts law. Of course, in all cases, the New Declaration of
Trust would require that shareholders receive written notification of
any proposed transaction.
The New Declaration of Trust does NOT give the Trustees the authority
to merge a fund with another operating mutual fund or sell all of a
fund's assets to another operating mutual fund without first seeking
shareholder approval. Under the New Declaration of Trust, shareholder
approval is still required for these transactions.
FUTURE AMENDMENTS OF THE DECLARATION OF TRUST. The New Declaration of
Trust permits the Trustees, with certain exceptions, to amend the
Declaration of Trust without shareholder approval. Under the New
Declaration of Trust, shareholders generally have the right to vote on
any amendment affecting their right to vote, on any amendment altering
the maximum number of permitted Trustees, on any amendment affecting
the New Declaration of Trust's amendment provisions, on any amendment
required by law or the trust's registration statement, and on any
matter submitted to shareholders by the Trustees. The Current
Declaration of Trust, on the other hand, generally gives shareholders
the exclusive power to amend the Declaration of Trust. By allowing
amendment of the Declaration of Trust without shareholder approval,
the New Declaration of Trust gives the Trustees the necessary
authority to react quickly to future contingencies. As mentioned
above, such increased authority remains subordinate to the Trustees'
continuing fiduciary obligations to act with due care and in the
shareholders' interest.
MASTER FEEDER FUND STRUCTURE. The New Declaration of Trust clarifies
that the Trustees may authorize the investment of all of the fund's
assets in another open-end investment company (Master Feeder Fund
Structure). The current Declaration of Trust does not specifically
provide the Trustees the ability to authorize the Master Feeder Fund
Structure. The purpose of a Master Feeder Fund Structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. In order
to implement a Master Feeder Fund Structure, both the Declaration of
Trust and the funds' policies must permit the structure. Currently,
each fund's policies do not allow for such investments. Proposal 4 on
page seeks the approval of each fund's shareholders to adopt a
fundamental investment policy to permit investment in another open-end
investment company with substantially the same investment objective
and policies. For more information on the Master Feeder Fund
Structure, see Proposal 4 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 each fund to adopt such a structure at a
future date. If approved, the New Declaration of Trust would provide
the Trustees with the power to authorize a fund to invest all of its
assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Master Feeder Fund Structure is
permitted under the fund's investment policies (see Proposal 4), 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
each 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, see "Modification of Management Contract Amendment
Provisions" on pages and .
2. The New Declaration of Trust clarifies that the Trustees may
impose other fees (for example, purchase fees) in addition to sales
charges upon investment in a fund and clarifies that deferred sales
charges and other fees (for example, redemption fees) may be imposed
upon redemption of a fund's shares.
3. The New Declaration of Trust confirms and clarifies various
existing Trustee powers. For example, the New Declaration of Trust
clarifies that the Trustees may employ as fund custodians, in addition
to banks and trust companies, companies that are members of a national
securities exchange or other entities permitted under the 1940 Act;
delegate authority to investment advisers and other agents; adopt and
offer dividend reinvestment and related plans; operate and carry on
the business of an investment company; and interpret the investment
policies, practices, and limitations of any fund.
4. The New Declaration of Trust clarifies that no shareholder of a
trust series shall have a claim on the assets of another series and
further clarifies that, by virtue of investing in a fund, a
shareholder is deemed to have assented to and agreed to be bound by
the terms of the New Declaration of Trust.
5. The New Declaration of Trust deletes various technical and/or
antiquated requirements from the Current Declaration of Trust,
including existing requirements that a Trustee vacancy be deemed to
occur when a Trustee is absent from his or her state of residence,
that Trustee vacancies must be filled within six calendar months, and
that portfolio securities be held pursuant to safeguards prescribed by
usual Massachusetts practice.
6. As a general matter, the New Declaration of Trust modifies the
Current Declaration of Trust to incorporate appropriate references to
classes of shares.
7. Lastly, the New Declaration of Trust generally expands various
1940 Act defined terms to encompass SEC modifications and
interpretations. Specific references to discrete sections of the 1940
Act that are contained in the New Declaration of Trust have likewise
been expanded to include SEC modifications and interpretations.
CONCLUSION. The Board of Trustees has concluded that the proposed
adoption of the New Declaration of Trust is in the best interests of
the trust's shareholders. Accordingly, the Trustees unanimously
recommend that the shareholders vote FOR the proposal to authorize
them to adopt and execute the New Declaration of Trust. If the
proposal is not approved, the Current Declaration of Trust will remain
unchanged and in effect.
4. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND
PERMITTING 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 each 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 each 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 fund
to combine its assets with other funds having substantially the same
investment objective and policies, but differing distribution or
servicing arrangements. By combining its assets in a central "Master
Fund" with other participating "Feeder Funds," 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 th a n three), but still offer three distinct
products, each having different servicing features and pricing (e.g.,
one distinct product for retail investors, a second for institutional
investors and a third for foreign investors). The purpose of a Master
Feeder Fund Structure would be to allow FMR to manage only one fund in
each investment discipline (Master Fund), but still be able to offer
that investment discipline with a variety of different servicing
features and pricing (Feeder Funds). The Master Feeder Fund
Structure is explained in more detail below. A diagram comparing a
typical "stand alone" fund structure to a Master Feeder Fund Structure
is attached to this Proxy Statement as Exhibit 2.
If the proposal is approved by shareholders, THE TRUSTEES WILL ONLY
AUTHORIZE INVESTING 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
th r ough 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 each fund's limitations on concentration,
diversification and underwriting. To avoid the costs associated with a
subsequent shareholder meeting, the Trustees recommend that
shareholders approve the proposal to permit each fund to invest its
assets in a single Master Fund, without a further vote of
shareholders. If shareholders approve this proposal, the
above-mentioned restrictive policies would no longer preclude 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 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, each fund, if required by applicable law
or its policies, would hold a meeting of its shareholders to vote on
the matters to be considered at the Master Fund shareholder meeting.
Each fund would cast its votes at the Master Fund meeting in the same
proportion as each 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.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR SPARTAN MICHIGAN
MUNICIPAL INCOME FUND, SPARTAN MINNESOTA MUNICIPAL INCOME FUND AND
SPARTAN OHIO MUNICIPAL INCOME FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of each fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies the management fee that FMR
receives from each fund to provide for lower fees when FMR's assets
under management exceed certain levels. In addition, the Amended
Contract allows FMR and the trust, on behalf of each fund, to modify
the Management Contract subject to the requirements of the 1940 Act.
The existing Management Contract (Present Contract) currently requires
the vote of a majority of each fund's outstanding voting securities to
authorize all amendments. See "Modification of Management Contract
Amendment Provisions" on page for more details. THE AMENDED CONTRACT
WILL RESULT IN A MANAGEMENT FEE THAT IS THE SAME AS, OR LOWER THAN,
THE FEE PAYABLE UNDER THE PRESENT CONTRACT. (For information on FMR,
see the section entitled "Activities and Management of FMR" on page .)
PROPOSED AMENDMENTS TO THE PRESENT MANAGEMENT CONTRACT. A copy of
the form of Amended Contract, marked to indicate the proposed
amendments, is supplied as Exhibit 3 on page . Except for
the material modifications discussed in this proposal ,
it is substantially the same as the Present Contract. (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, the Amended Contract will take effect on
January 1, 1999 (or, if later, the first day of the first month
following approval) and will remain in effect through June 30, 1999
and thereafter, but only as long as its continuance is approved at
least annually by (i) the vote, cast in person at a meeting called for
the purpose, of a majority of the Independent Trustees and (ii) the
vote of either a majority of the Trustees or by the vote of a majority
of the outstanding shares of the fund. If the Amended Contract is not
approved, the Present Contract will continue in effect through June
30, 1999, and thereafter only as long as its continuance is approved
at least annually as above.
The management fee is an annual percentage of each fund's average net
assets (the management fee rate), calculated and paid monthly. The
management fee rate is the sum of two components: a Group Fee Rate,
which varies according to assets under management by FMR, and a fixed
Individual Fund Fee Rate. The Amended Contract modifies the Group Fee
Rate by providing for lower fee rates if FMR's assets under management
remain above $156 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon
the monthly average of the aggregate net assets of all registered
investment companies having management contracts with FMR (assets
under management by FMR). For example, as assets under management by
FMR increase, the Group Fee Rate declines. The Amended Contract would
not change the group fee calculation for assets under management by
FMR of $156 billion or less. Above $156 billion in assets under FMR's
management, the Group Fee Rate declines under both the Present
Contract and the Amended Contact, but under the Amended Contract, it
declines faster. Group Fee Rates that are lower than those contained
in each fund's Present Contract have been voluntarily implemented by
FMR on August 1, 1994 and January 1, 1996.
The Group Fee Rate is calculated according to a graduated schedule
providing for different rates for different levels of assets under
management by FMR. The rate at which the Group Fee Rate declines is
determined by fee "breakpoints" that provide for lower fee rates when
assets increase. The Amended Contract adds twelve new fee breakpoints
for assets under FMR's management above $156 billion as illustrated in
the following table. (For an explanation of how the Group Fee Rate is
used to calculate the management fee, see the section entitled
"Present Management Contracts" beginning on page .)
GROUP FEE RATE BREAKPOINTS
PRESENT CONTRACT AMENDED CONTRACT
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT* ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
120 - 174 .1450% 120 - 156 .1450%
174 - 228 .1400% 156 - 192 .1400%
228 - 282 .1375% 192 - 228 .1350%
282 - 336 .1350% 228 - 264 .1300%
OVER 336 .1325% 264 - 300 .1275%
300 - 336 .1250%
336 - 372 .1225%
372 - 408 .1200%
408 - 444 .1175%
444 - 480 .1150%
480 - 516 .1125%
OVER 516 .1100%
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 .1736% .1736%
200 .1658% .1652%
250 .1606% .1587%
300 .1572% .1536%
350 .1547% .1494%
400 .1529% .1459%
450 .1515% .1427%
500 .1503% .1399%
550 .1494% .1372%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
Average assets under FMR's management for August 1998 were
approximately $619 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended August 1998,
average assets under management by FMR were approximately $619
billion. Each fund's management fee rate under the Amended Contract,
for the month ended August 1998, would have been 0.38%, compared to
0.40% under the Present Contract. The management fee rate remains the
same under both the Present Contract and the Amended Contract until
assets under FMR's management exceed $156 billion, at which point the
management fee rate under the Amended Contract begins to decline
relative to the Present Contract.
The following chart compares each fund's management fee as calculated
under the terms of the Present Contract for the fiscal year ended
December 31, 1997 to the management fee each fund would have incurred
if the Amended Contract had been in effect.
PRESENT CONTRACT AMENDED CONTRACT
FUND MANAGEMENT MANAGEMENT PERCENTAGE
FEE* FEE DIFFERENCE
SPARTAN MICHIGAN $ 1,793,730 $ 1,745,102 (2.71)%
MUNICIPAL INCOME FUND
SPARTAN MINNESOTA $ 1,164,917 $ 1,133,351 (2.71)%
MUNICIPAL INCOME FUND
SPARTAN OHIO $ 1,516,432 $ 1,474,962 (2.73)%
MUNICIPAL INCOME FUND
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on 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 August
31, 1998 to the management fee each fund would have incurred if the
Amended Contract had been in effect.
PRESENT CONTRACT AMENDED CONTRACT
FUND MANAGEMENT MANAGEMENT PERCENTAGE
FEE* FEE DIFFERENCE
SPARTAN MICHIGAN $ 1,822,308 $ 1,761,557 (3.33)%
MUNICIPAL INCOME
FUND
SPARTAN MINNESOTA $ 1,185,053 $ 1,145,534 (3.33)%
MUNICIPAL INCOME
FUND
SPARTAN OHIO $ 1,540,363 $ 1,489,023 (3.33)%
MUNICIPAL INCOME
FUND
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of each 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 each 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 each 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 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 the Amended Contract to shareholders was
approved by the Board of Trustees of each fund, including all of the
Independent Trustees, on October 16, 1997. The Board of Trustees
considered and approved the modifications to the Group Fee Rate
schedule during the two month period from November to December 1995,
and June to July 1994. The Board of Trustees received materials
relating to the Amended Contract in advance of the meeting at which
the Amended Contract was considered, and had the opportunity to ask
questions and request further information in connection with such
consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings the Trustees received materials that relate to the
Amended Contract. These materials included (i) information on the
investment performance of each fund, a peer group of funds and an
appropriate index or combination of indices, (ii) sales and redemption
data in respect of each fund, (iii) the economic outlook and the
general investment outlook in the markets in which each fund invests,
and (iv) notable changes in each fund's investments. The Board of
Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of each fund's shares, (3)
the procedures employed to determine the value of each fund's assets,
(4) the allocation of each fund's brokerage, if any, including
allocations to brokers affiliated with FMR, (5) FMR's management of
the relationships with each fund's custodian and subcustodians, (6)
the resources devoted to and the record of compliance with each fund's
investment policies and restrictions and with policies on personal
securities transactions and (7) the nature, cost and character of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the choice of performance indices and benchmarks, (c) the
composition of peer groups of funds, (d) transfer agency and
bookkeeping fees paid to affiliates of FMR, (e) investment
performance, (f) investment management staffing, (g) the potential for
achieving further economies of scale, (h) operating expenses paid to
third parties, and (i) the information furnished to investors,
including each fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether each fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly each fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees at least annually review the background of each
fund's portfolio manager and each fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations and the
senior management of Fidelity's fixed-income group. Among other things
they considered the size, education and experience of FMR's investment
staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory
and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the Amended
Contract and under separate agreements covering transfer agency
functions and pricing, bookkeeping and securities lending services, if
any. The Board of Trustees and the Independent Trustees have also
considered the nature and extent of FMR's supervision of third party
service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered each fund's expense ratios 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 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, credit card, insurance,
publishing, real estate, international research and investment funds,
and others. The Board of Trustees and the Independent Trustees
considered the intangible benefits that accrue to FMR and its
affiliates by virtue of their relationship with each fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee
structure, that is the reduction of the Group Fee Rate schedule and
the proposed modification to the Present Contract's amendment
provisions, are in the best interest of each fund's shareholders. The
Board of Trustees, including the Independent Trustees, voted to
approve the submission of the Amended Contract to shareholders of each
fund and recommends that shareholders of each fund vote FOR the
Amended Contract. If approved, the Amended Contract will take effect
on the first day of the first month following shareholder approval.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR SPARTAN PENNSYLVANIA
MUNICIPAL INCOME FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract changes the fund's current
"all-inclusive" management fee arrangement to a "group fee"
arrangement that is standard for other Fidelity municipal bond funds.
The change in the fund's management fee structure is discussed in more
detail below. In addition, the Amended Contract allows FMR and the
trust, on behalf of the fund, to modify the Management Contract
subject to the requirements of the 1940 Act. The existing Management
Contract currently requires the vote of a majority of the fund's
outstanding voting securities to authorize all amendments. See
"Modification of Management Contract Amendment Provisions" on page
for more details.
MODIFICATION OF MANAGEMENT FEE STRUCTURE. The proposed management fee
structure differs significantly from the fund's current management fee
structure. Under the terms of the fund's existing management contract
("Present Contract"), the fund pays an all-inclusive management fee to
FMR that covers substantially all fund expenses. Specifically, under
the Present Contract, FMR pays the fund's operating expenses, with
limited exceptions. In contrast, under the terms of the Amended
Contract, the fund would pay its management fee and other expenses
separately. FMR would no longer pay the fund's expenses.
If approved, the proposed group fee structure w ill result in a
lower management fee. Under the proposed group fee structure, the
fund's total operating expense ratio may exceed, however, its current
rate of 0.55%. I f the Amended Contract is approved, FMR has
voluntarily agreed to limit the fund's total operating expense ratio
to 0.53% of the fund's average net assets through December 31, 2000.
See "Comparison of Management Fees and Total Expenses" on page for
more detail ed information on the financial effects of changing to
the proposed group fee structure .
The fund's current management fee is an annual percentage of the
fund's average net assets and is calculated and paid monthly. Under
the Present Contract, the fund pays FMR a management fee at an annual
rate of 0.55% of the fund's average daily net assets. Under the terms
of the Present Contract, FMR not only provides the fund with
investment advisory and research services, but also pays all of the
fund's expenses, with the exception of fees and expenses of all
Trustees of the trust who are not "interested persons" of the trust or
FMR; interest on borrowings; taxes; brokerage fees and commissions (if
any); and such nonrecurring expenses as may arise, including costs of
any litigation to which the fund may be a party, and any obligation it
may have to indemnify the officers and Trustees with respect to
litigation. The management fee that the fund pays FMR is reduced by an
amount equal to the fees and expenses paid by the fund to the
non-interested Trustees.
The Amended Contract replaces the fund's existing all-inclusive
management fee structure with a group fee structure that is standard
for other Fidelity municipal bond funds. Under the terms of the
contract, the fund would pay a management fee as well as its other
expenses.
Under the Amended Contract, the fund's management fee would be
calculated by adding a Group Fee Rate to an Individual Fund Fee Rate
and multiplying the result by the fund's average net assets. The Group
Fee Rate varies based upon the monthly average of the net assets of
all registered investment companies having management contracts with
FMR (assets under management by FMR). For example, as assets under
management by FMR increase, the Group Fee Rate declines. The
Individual Fund Fee Rate is a fixed rate specific to the fund. Under
the Amended Contract, the fund's Individual Fund Fee Rate would equal
0.25%.
The fund's proposed Group Fee Rate would be calculated according to
the graduated schedule below. The schedule provides for different fee
rates for different levels of assets under management by FMR. As
illustrated in the table, the rate at which the Group Fee Rate
declines is determined by fee "breakpoints" that provide for lower fee
rates when the total assets managed by FMR increase.
GROUP FEE RATE SCHEDULE
Average Group Annualized
Assets Rate
$0 - 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
372 - 408 .1200
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
Average assets under FMR's management for August 1998 were
approximately $619 billion.
Under the Amended Contract, in addition to the management fee, the
fund will pay all of its other operating expenses, including (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trustees other
than those who are "interested persons" of the trust or FMR; (iv)
legal and audit expenses; (v) custodian, registrar and transfer agent
fees and expenses; (vi) fees and expenses related to the registration
and qualification of the trust and the fund's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders;
(viii) all other expenses incidental to holding meetings of
shareholders, including proxy solicitations; (ix) a pro rata share,
based on relative net assets of the fund and other registered
investment companies having Advisory and Service or Management
Contracts with FMR, of 50% of insurance premiums for fidelity and
other coverage; (x) its proportionate share of association membership
dues; (xi) expenses of typesetting for printing prospectuses and
statements of additional Information and supplements thereto; (xii)
expenses of printing and mailing prospectuses and statements of
additional Information and supplements thereto sent to existing
shareholders; and (xiii) such non-recurring or extraordinary expenses
as may arise, including those relating to actions, suits or
proceedings to which the fund is a party and the legal obligation
which the fund may have to indemnify the Trustees and officers with
respect thereto.
Lastly, under the fund's current all-inclusive management fee
arrangements, shareholders currently have the right to vote on any
expense increases over 0.55% of average net assets. Under the Amended
Contract, shareholders would also have the right to vote on any
increases in FMR's management fee; however, because the management fee
would not be all-inclusive, shareholders would not have the right to
vote on other expense increases.
COMPARISON OF MANAGEMENT FEES AND TOTAL EXPENSES. As indicated below,
if the Amended Contract is approved, the fund's management fee will
decrease ; although, the fund's total operating expense ratio may
increase. If the Amended Contract is approved, FMR has voluntarily
agreed to limit the fund's total operating expense ratio to 0.53% of
its average net assets through December 31, 2000 (excluding interest,
taxes, brokerage commissions and extraordinary expenses). This expense
limitation would result in a 0.02% lower total operating expense ratio
for the fund's shareholders beginning with the effective date of the
Amended Contract (the first day of the month following shareholder
approval - see "Effective Date of Amended Contract" on page ) through
December 31, 2000. After December 31, 2000, the fund's total
expense ratio could increase and could exceed the fund's
current 0.55% all-inclusive management fee. At FMR's level of assets
under management for August 1998 ($619 billion), changing from the
fund's current 0.55% all-inclusive management fee rate to the proposed
group fee structure (without any expense reimbursement) would result
in a total operating expense ratio for the fund of 0.57%.
The following chart compares the fund's management fee under the
terms of the Present Contract for the fiscal year ended December 31,
1997 to the management fee that the fund would have incurred under the
Amended Contract if it had been in effect during that period.
Present Contract Amended Contract Percentage Difference*
Management Fee* Management Fee*
$1,444,292 $1,023,754 (29.12%)
* Under the Present Contract, FMR pays substantially all fund expenses
from the 0.55% management fee it receives from the fund. Under the
Amended Contract, FMR is not responsible for paying the fund's
expenses; the fund pays its operating expenses separately from the
management fee. See "Modification of Management Fee Structure" on page
16 for more details.
COMPARATIVE EXPENSE TABLE
The following table provides data concerning the fund's management
fees and expenses as a percentage of average net assets for the fiscal
year ended December 31, 1997 under the Present Contract and if the
Amended Contract had been in effect during the same period.
The following figures are based on historical expenses adjusted to
reflect current fees and are calculated as a percentage of average net
assets.
PRESENT CONTRACT AMENDED CONTRACT*
Management Fee 0.55% 0.3 5 %
(after reimbursement)
Rule 12b-1 Fee none none
Other Expenses 0.00% 0.18%
Total Operating Expenses 0.55% 0.53%
* If the Amended Contract is approved, FMR has voluntarily agreed to
limit the fund's total operating expenses to 0.53% of its average net
assets (excluding interest, taxes, brokerage commissions and
extraordinary expenses) through December 31, 2000. The figures shown
for the Amended Contract are after FMR's reimbursement of fund
expenses. Without such reimbursement, the management fee, other
expenses, and total operating expenses, as a percentage of average net
assets, would be 0.39%, 0.1 8 % and 0.5 7 %, respectively.
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 $6 $18 $31 $69
Amended Contract $5 $17 $30 $66
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of
the fund. The example above should not be considered a representation
of past or future expenses of the fund. Actual expenses may vary from
year to year and may be higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote if the 1940 Act permits them to do so. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
EFFECTIVE DATE OF AMENDED CONTRACT. If approved by shareholders, the
Amended Contract will take effect on January 1, 1999 (or, if later,
the first day of the first month following approval) and will remain
in effect through June 30, 1999 and thereafter, but only as long as
its continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the
Independent Trustees and (ii) the vote of either a majority of the
Trustees or by the vote of a majority of the outstanding shares of the
fund. If the Amended Contract is not approved, the Present Contract
will continue in effect through June 30, 1999, and thereafter only as
long as its continuance is approved at least annually as above. A copy
of the form of Amended Contract, marked to indicate the
proposed amendments, is supplied as Exhibit 4 on page . Except
for the material modifications discussed in this proposal, the
Amended Contract is substantially the same as the Present
Contract. (For a detailed discussion of the fund's Present Contract,
refer to the section entitled "Present Management Contract of
Spartan Pennsylvania Municipal Income Fund " beginning on page
.)
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 June 18, 1998. The Board of Trustees received
materials relating to the Amended Contract in advance of the meeting
at which the Amended Contract was considered, and had the opportunity
to ask questions and request further information in connection with
such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings, the Trustees received materials 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 (5) FMR's management of the
relationships with the fund's custodian and subcustodians, (6) the
resources devoted to and the record of compliance with the fund's
investment policies and restrictions and with policies on personal
securities transactions and (7) the nature, cost and character of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the choice of performance indices and benchmarks, (c) the
composition of peer groups of funds, (d) transfer agency and
bookkeeping fees paid to affiliates of FMR, (e) investment
performance, (f) investment management staffing, (g) the potential for
achieving further economies of scale, (h) operating expenses paid to
third parties, and (i) the information furnished to investors,
including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent 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 at least annually review the background of the
fund's portfolio manager and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations and the
senior management of Fidelity's fixed-income group. Among other things
they considered the size, education and experience of FMR's investment
staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory
and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the Amended
Contract and under separate agreements covering transfer agency
functions and pricing, bookkeeping and securities lending services, if
any. The Board of Trustees and the Independent Trustees have also
considered the nature and extent of FMR's supervision of third party
service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately 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.
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, credit card, insurance,
publishing, real estate, international research and investment funds,
and others. The Board of Trustees and the Independent Trustees
considered the intangible benefits that accrue to FMR and its
affiliates by virtue of their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
that the proposed modifications to the management fee structure, that
is the implementation of the Group Fee Rate structure and the proposed
modification to the Present Contract's amendment provisions, are in
the best interest of the fund's shareholders. The Board of Trustees,
including the Independent Trustees, voted to approve the submission of
the Amended Contract to shareholders of the fund and recommends that
shareholders of the fund vote FOR the Amended Contract. If approved,
the Amended Contract will take effect on the first day of the first
month following shareholder approval.
7. TO REPLACE EACH FUND'S FUNDAMENTAL 80% INVESTMENT POLICY WITH A
NON-FUNDAMENTAL POLICY.
The Board of Trustees has approved, and recommends that the
shareholders of each fund approve, a proposal to replace each fund's
fundamental 80% investment policy with a comparable non-fundamental
policy that is standard for other Fidelity municipal bond funds. If
shareholders approve this proposal, the Trustees intend to replace
each fund's fundamental 80% investment policy with a non-fundamental
policy that uses an 80% "asset test" rather than an "income test."
Fundamental policies can be changed or eliminated only with
shareholder approval, while non-fundamental policies may be changed
without shareholder approval. It is anticipated that the adoption of
the proposed non-fundamental policy will have no material impact on
the way each fund is managed.
The current fundamental 80% investment policy for each fund (except
Spartan Pennsylvania Municipal Income Fund) is as follows:
"The fund will normally invest so that at least 80% of its income is
exempt from federal and state income taxes."
The current fundamental 80% investment policy for Spartan
Pennsylvania Municipal Income Fund is as follows:
"The fund will normally invest so that at least 80% of its income is
exempt from federal and Pennsylvania income taxes."
If the proposal is approved, the Trustees intend to replace each
fund's fundamental 80% investment policy with the following
non-fundamental policy:
"The fund will normally invest at least 80% of its assets in
municipal securities whose interest is exempt from federal
and state income taxes."
DISCUSSION OF PROPOSED MODIFICATION. Replacing each fund's
fundamental 80% investment policy with the proposed non-fundamental
policy will allow the Trustees to modify the funds' 80% policies, as
necessary, to comply with the SEC's proposed "name test rule" (Name
Test Rule) without having to incur the potential costs and delays of
conducting a shareholder meeting.
The SEC first proposed the Name Test Rule in February 1997. The Name
Test Rule governs the use of mutual fund names and, when eventually
adopted by the SEC, may apply to the funds. When a definitive version
of the rule is ultimately adopted, the funds' 80% policies may require
modification to comply with the requirements of the definitive rule.
Briefly stated, replacing the funds' fundamental 80% investment
policies with the proposed non-fundamental policy will give the
Trustees the flexibility to comply more quickly with the definitive
Name Test Rule.
In addition, because the proposed asset-based test can be efficiently
monitored, converting each fund's 80% investment policy to an
asset-based limit may facilitate the funds' compliance efforts.
As noted above, fundamental investment policies can be changed or
eliminated only with shareholder approval, while non-fundamental
policies can be changed or eliminated without shareholder approval.
Changes in non-fundamental policies are still subject, however, to the
supervision of the Board of Trustees. Therefore, any future changes to
the funds' proposed non-fundamental 80% policies, while not requiring
shareholder approval, would require approval of the Board.
In sum, it is not expected that approval of the proposal will
materially alter the manner in which each fund is currently managed.
Rather, approval of the proposal will provide the Trustees with
additional flexibility to respond to future regulatory changes and
changes in market conditions.
CONCLUSION. The Board of Trustees believes that approving the
proposed non-fundamental investment policy will benefit each fund and
its shareholders. The Trustees recommend voting FOR the proposal. Upon
shareholder approval, the changes will become effective when the
funds' disclosure is revised to reflect the changes. If the proposal
is not approved by the shareholders of a fund, that fund's current
fundamental policy will remain unchanged.
8. TO ELIMINATE EACH FUND'S FUNDAMENTAL INVESTMENT POLICY REGARDING
INVESTMENT IN BELOW INVESTMENT-GRADE DEBT SECURITIES.
The Board of Trustees has approved, and recommends that the
shareholders of each fund approve, a proposal that would eliminate
each fund's current fundamental investment policy regarding investment
in below investment-grade debt securities. The elimination of these
policies will allow each fund to more clearly communicate its
investment strategy in conformity with the requirements of newly
revised Form N-1A (the form used by open-end investment companies,
like the funds, to register under the Investment Company Act of 1940
and the Securities Act of 1933). The elimination of these investment
policies is not expected to materially affect the way in which each
fund is managed.
The current fundamental investment policy regarding investment in
below investment-grade debt securities for each fund (except Spartan
Pennsylvania Municipal Income Fund) reads as follows:
"The fund may invest up to one-third of its assets in bonds judged by
FMR to be of equivalent quality to those rated lower than BBB or Baa
but not lower than B."
The current fundamental investment policy regarding investment in
below investment-grade debt securities for Spartan Pennsylvania
Municipal Income Fund reads as follows:
"The fund invests primarily in municipal bonds judged by FMR to be of
investment-grade quality, although it may invest up to one-third of
its assets in lower quality bonds. The fund may not purchase bonds
that are judged by FMR to be of equivalent quality to those rated
lower than B."
Because the foregoing policies are fundamental, they cannot be
modified or eliminated without shareholder approval.
DISCUSSION OF PROPOSED MODIFICATION. Eliminating the foregoing
fundamental policies will allow the funds to comply with the
requirements of revised Form N-1A for concise, understandable
descriptions of their investment policies and will allow the funds to
more clearly communicate their investment strategy to shareholders.
Eliminating the fundamental policies will not affect each
fund's general objective of seeking a high level of current income
exempt from federal and state income taxes.
If the proposal is approved, each fund will continue to rely on its
existing, more restrictive non-fundamental debt quality policy. Each
fund's non-fundamental policy states that the fund "normally invests
in investment-grade securities, but reserves the right to invest up to
5% of its assets in below investment-grade securities (sometimes
called `junk bonds')."
As mentioned, it is anticipated that approval of the proposal will
have no material effect on the way each fund is managed.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies regarding
investment in below investment-grade debt securities will benefit each
fund and its shareholders. The Trustees recommend voting FOR the
proposal. If approved by shareholders, the elimination of the policies
will become effective when disclosure is revised to reflect the
changes. If the proposal is not approved by shareholders of a fund,
that fund's current fundamental policy will remain in effect.
9. TO ELIMINATE THE FUNDAMENTAL 20% INVESTMENT POLICY FOR SPARTAN
MICHIGAN MUNICIPAL INCOME FUND, SPARTAN MINNESOTA MUNICIPAL INCOME
FUND AND SPARTAN OHIO MUNICIPAL INCOME FUND.
The Board of Trustees has approved, and recommends that the
shareholders of each fund named above approve, a proposal to eliminate
each fund's current fundamental 20% investment policy (described
below). The elimination of this policy will allow each fund to more
clearly communicate its investment strategy in conformity with the
requirements of newly revised Form N-1A (the form used by open-end
investment companies, like the funds, to register under the Investment
Company Act of 1940 and the Securities Act of 1933). The elimination
of this fundamental investment policy is not expected to
materially affect the way in which each fund is managed.
The current fundamental 20% investment policy for each fund reads as
follows:
"During periods when FMR believes that state tax-free obligations
that meet the fund's standards are not available, the fund may invest
up to 20% of its assets in obligations whose interest payments are
only federally tax-exempt."
Because the foregoing policy is fundamental, it cannot be modified or
eliminated without a vote of each fund's shareholders.
DISCUSSION OF PROPOSED MODIFICATION. Eliminating the foregoing
fundamental policy will allow the funds to comply with the
requirements of revised Form N-1A for concise, understandable
descriptions of their investment policies and will allow the funds to
more clearly communicate their investment strategy to shareholders.
Eliminating the fundamental policy will not affect each fund's
general objective of seeking a high level of current income exempt
from federal and state income taxes.
It is anticipated that approval of the proposal will have no material
effect on the way each fund is managed, the investment performance of
each fund, or the securities or instruments in which each fund
invests. As a general matter, the investment restrictions contained in
each fund's current fundamental 20% investment policy are
reflected in the proposed non-fundamental 80% investment policy
discussed in Proposal 7 on page 19.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policy will
benefit each fund and its shareholders. The Trustees recommend voting
FOR the proposal. If approved by shareholders, the elimination of the
policy will become effective when disclosure is revised to reflect the
changes. If the proposal is not approved by shareholders of a fund,
that fund's current fundamental policy will remain in effect.
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 Spartan Michigan Municipal Income Fund, Spartan
Minnesota Municipal Income Fund, Spartan Ohio Municipal Income Fund
and Spartan Pennsylvania Municipal Income Fund and advised by FMR is
contained in the Table of Average Net Assets and Expense Ratios in
Exhibit 5 beginning on page .
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, John H. Costello, Eric D.
Roiter, Stanley N. Griffith, Thomas Simpson, Richard A. Silver,
Leonard M. Rush, Fred L. Henning, Jr., Dwight D. Churchill, George A.
Fischer, Norman Lind and Christine J. Thompson are currently officers
of the trust and officers or employees of FMR or FMR Corp. With the
exception of Mr. Costello and Mr. Silver, 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 December 31, 1997 through August 31, 1998, no
transactions were entered into by Trustees and nominees as Trustee of
the trust involving more than 1% of the voting common, non-voting
common and equivalent stock, or preferred stock of FMR Corp.
PRESENT MANAGEMENT CONTRACTS OF
SPARTAN MICHIGAN MUNICIPAL INCOME FUND, SPARTAN MINNESOTA MUNICIPAL
INCOME FUND, AND SPARTAN OHIO MUNICIPAL INCOME FUND
Each fund employs FMR to furnish investment advisory and other
services. Under its management contract with each fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of each fund in accordance with its
investment objective, policies, and limitations. FMR also provides
each fund with all necessary office facilities and personnel for
servicing each fund's investments, compensates all officers of each
fund and all Trustees who are "interested persons" of the trust or of
FMR, and all personnel of each fund or FMR performing services
relating to research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal and state laws;
developing management and shareholder services for each fund; and
furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees. Services provided by affiliates of FMR will continue
under the proposed management contract described in proposal 5.
In addition to the management fee payable to FMR, each fund
reimburses UMB Bank, n.a. (UMB) for its services as the funds'
custodian, transfer agent, and service 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 UMB, pursuant to which UMB 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 the fund may be a party, and any obligation it may have to
indemnify the trust's officers and Trustees with respect to
litigation.
UMB has entered into a sub-agreement with Fidelity Service Company,
Inc. (FSC), an affiliate of FMR, under the terms of which FSC performs
the processing activities associated with providing transfer agency,
dividend disbursing and shareholder servicing functions for each fund.
Under the sub-agreement, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, except proxy statements. FSC also pays all out-of-pocket
expenses associated with transfer agent services. Transfer agent fees
and pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid to FSC by UMB on behalf of Spartan
Michigan Municipal Income Fund, Spartan Minnesota Municipal Income
Fund and Spartan Ohio Municipal Income Fund for the fiscal year ended
December 31, 1997 were $ 743,240 , $ 479,270 , and
$ 616,918 , respectively.
Each fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. Each
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
FMR is each fund's manager pursuant to a management contract dated
January 1, 1994, which was approved by shareholders on December 15,
1993. For the services of FMR under each management contract, each
fund pays FMR a monthly management fee which has two components: a
group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown below on the left. The schedule
below on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $550 billion of group net assets - the approximate level for
December 31, 1997 - was 0 .1372%, which is the weighted average
of the respective fee rates for each level of group net assets up to
$550 billion.
On January 1, 1996 and August 1, 1994, FMR voluntarily modified the
breakpoints in the group fee rate schedules. The revised group fee
rate schedule, depicted below, provides 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 .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350 425 .1443
228 - 264 .1300 450 .1427
264 - 300 .1275 475 .1413
300 - 336 .1250 500 .1399
336 - 372 .1225 525 .1385
372 - 408 .1200 550 .1372
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
The individual fund fee rate for each of Spartan Michigan Municipal
Income Fund, Spartan Minnesota Municipal Income Fund and Spartan Ohio
Municipal Income Fund is 0.25%. Based on the average group net assets
of the funds advised by FMR for December 31,1997, each fund's annual
management fee rate would be calculated as follows:
Fund Group Fee Individual Fund Management
Rate Fee Rate Fee Rate
Spartan Michigan 0.1372% 0.25% 0.3872%
Municipal Income Fund
Spartan Minnesota 0.1372% 0.25% 0.3872%
Municipal Income Fund
Spartan Ohio 0.1372% 0.25% 0.3872%
Municipal Income Fund
One-twelfth of this annual management fee rate is applied to each
fund's net assets averaged for the most recent month, giving a dollar
amount, which is the fee for that month.
During fiscal 1997, FMR received $ 1,745,102, $1,133,351, and
$1,474,962 for its services as investment adviser to Spartan
Michigan Municipal Income Fund, Spartan Minnesota Municipal Income
Fund and Spartan Ohio Municipal Income Fund, respectively. This fee
was equivalent to 0.3 9 %, 0.3 9 % and 0.3 9 %,
respectively, of the average net assets of Spartan Michigan Municipal
Income Fund, Spartan Minnesota Municipal Income Fund and Spartan Ohio
Municipal Income Fund.
FMR may, from time to time, agree to reimburse all or a portion of
each fund's total operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
FMR has voluntarily agreed to reimburse Spartan Michigan Municipal
Income Fund, Spartan Minnesota Municipal Income Fund and Spartan Ohio
Municipal Income Fund to the extent that total operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) exceed 0.55% of their average net assets, respectively.
PRESENT MANAGEMENT CONTRACT OF
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
The fund employs FMR to furnish investment advisory and other
services. Under its management contract with the fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of the fund in accordance with its
investment objective, policies, and limitations. FMR also provides the
fund with all necessary office facilities and personnel for servicing
the fund's investments, compensates all officers of the fund and all
Trustees who are "interested persons" of the trust or of FMR, and all
personnel of the fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include
providing facilities for maintaining the fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with the fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal and state laws;
developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees. Services provided by affiliates of FMR will continue
under the proposed management contracts described in proposal 6.
FMR is responsible for the payment of all operating expenses of the
fund with certain exceptions. Specific expenses payable by FMR include
expenses for typesetting, printing, and mailing proxy materials to
shareholders; legal expenses, fees of the custodian, auditor, and
interested Trustees; the fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal securities laws and making necessary
filings under state securities laws. The fund's management contract
further provides that FMR will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices
and reports to shareholders; however, under the terms of the fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. FMR also pays all
fees associated with transfer agency, dividend disbursing, shareholder
services, and pricing and bookkeeping services.
FMR pays all other expenses of the fund with the following
exceptions: fees and expenses of all Trustees of the trust who are not
"interested persons" of the trust or FMR (the non-interested
Trustees), interest, taxes, brokerage commissions (if any), and such
nonrecurring expenses as may arise, including costs of any litigation
to which the fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated
August 1, 1990, which was approved by shareholders on July 18, 1990.
The management fee paid to FMR is reduced by an amount equal to the
fees and expenses paid by the fund to the non-interested Trustees.
For the services of FMR under the management contract, the fund pays
FMR a monthly management fee at the annual rate of 0.55% of its
average net assets throughout the month. Fees received by FMR, after
reduction of fees and expenses paid by the fund to the non-interested
trustees, for the fiscal year ended December 31, 1997 from the fund
were $1,444,292.
The fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. The
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
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.
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) an indirect subsidiary of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions
charged by non-affiliated, qualified brokerage firms for similar
services.
During fiscal 1997, the funds paid no brokerage commissions to
affiliated brokers.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to
the Secretary of the Trust, 82 Devonshire Street, Boston,
Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Service Company, Inc. at
1-800-544-8888, 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
((UNDERLINED)) DISCLOSURE WILL BE ADDED
[BRACKETED] DISCLOSURE WILL BE DELETED.
FORM OF AMENDED AND RESTATED DECLARATION OF TRUST
(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 September 10, 1976 by
Edward C. Johnson 3d, Caleb Loring, Jr., William L. Byrnes, Dwight D.
Allison, Jr., Eugene H. Clapp 2nd, Robert L. Johnson, George K.
McKenzie, and William R. Spaulding [inorder]((in order)) to establish
a trust fund for the investment and reinvestment of funds contributed
thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in
[T]((t))rust under this ((Amended and Restated)) Declaration of Trust
as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "Fidelity Municipal
Trust((.))"[.]
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the
context or specifically provided:
(a) The [T]((t))erms "Affiliated Person((,))"[,] "Assignment((,))"[,]
"Commission((,))"[,] "Interested Person((,))"[,] "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable)((,)) and
"Principal Underwriter" shall have the meanings given them in the 1940
Act, as [amended from time to time] ((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, ((including such
Class or Classes of Shares as the Trustees may from time to time
create and establish)) and [includes] ((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 Municipal Trust and
reference to the Trust, when applicable to one or more Series of the
Trust, shall refer to any such Series;
[(e)](((j))) [The]"Trustees" refer to the individual trustees in
their capacity as trustees hereunder of the Trust and their successor
or successors for the time being in office as such trustee or
trustees; ((and))
[(g)](((k)))[The]"1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose 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. [e]((E))ach Share
shall be without par value and shall be fully paid and nonassessable.
The Trustees shall have full power and authority, in their sole
discretion((,)) and without obtaining any prior authorization or vote
of the Shareholders ((of any Series or Class)) of the Trust (((a))) to
create and establish (and to change in any manner) Shares ((or any
Series or Classes thereof)) with such preferences, voting powers,
rights((,)) and privileges as the Trustees may((,)) from time to
time((,)) determine((;)) (((b))) to divide or combine the Shares ((or
any Series or Classes thereof)) into a greater or lesser
number((;))[,] (((c))) to classify or reclassify any issued Shares
into one or more Series ((or Classes)) of Shares((;))[,] (((d))) to
abolish any one or more Series ((or Classes)) of Shares((;))[,] and
(((e))) to take such other action with respect to the Shares as the
Trustees may deem desirable.
[ESTABLISHMENT OF SERIES]
((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 trust for the benefit of the holders of Shares
of that Series.
The assets belonging to each particular Series shall be charged with
the liabilities of that Series and all expenses, costs, charges, and
reserves attributable to that Series((, except that liabilities and
expenses may, in the Trustees' discretion, be allocated solely to a
particular Class and, in which case, shall be borne by that Class)).
Any general liabilities, expenses, costs, charges((,)) or reserves of
the Trust [which] ((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. ((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 the Article IV.]
TERM OF OFFICE OF TRUSTEES
SECTION 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a)
that any Trustee may resign his trust by written instrument signed by
him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds (((2/3))) of the number of Trustees
prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and [(ii)](((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 pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 8. The assets of the Trust shall be held separate and apart
from any assets now or hereafter held in any capacity other than as
Trustee hereunder by the Trustees or any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in
the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
SECTION 1. The Trustees((,)) in all instances((,)) shall act as
principals[,] and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and
instruments that they may consider necessary or appropriate in
connection with the management of the Trust. ((Except as otherwise
provided herein or in the 1940 Act,)) [T]((t))he Trustees shall not in
any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power
to make any and all investments [which] ((that)) they, in their
[uncontrolled] discretion, shall deem proper to accomplish the purpose
of this Trust. Subject to any applicable limitation in [the] ((this))
Declaration of Trust or the Bylaws of the Trust, ((if any,)) the
Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested[,] without((,)) in any event((,)) being
bound or limited by any present or future law or custom in regard to
investments by Trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on((,)) and lease any or all of
the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to
the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ ((one or more)) [a] bank((s)), [or] trust [company]
((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 custodian((s)) 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 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,)) [T]((t))he 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
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
provision((s)) 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 contract((s)) whereby the other party shall
undertake to furnish the Trustees with transfer agency and Shareholder
services. [The]((Such)) contract((s)) 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 or any
rules or regulations adopted or interpretative releases of the
Commission)) ([including any amendments thereof] 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
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")] or any [S]((s))tate, as the Trustees
may consider desirable.
On any matter submitted to a vote of the Shareholders, all
[s]((S))hares shall be voted by individual Series, ((except as
provided in the following sentence and)) except [(i)](((a))) when
required by the 1940 Act, Shares shall be voted in the aggregate and
not by individual Series; and [(ii)](((b))) when the Trustees have
determined that the matter affects only the interests of one or more
Series, then only the Shareholders of such Series shall be entitled to
vote thereon. ((The Trustees may also determine that a matter affects
only the interests of one or more Classes of a Series, in which case,
any such matter shall be voted on by such Class or Classes.)) A
Shareholder of each [s]((S))eries ((or Class thereof)) shall be
entitled to one vote for each dollar of net asset value (number of
[s]((S))hares owned times net asset value per share) of such
[s]((S))eries[,] ((or Class thereof)) on any matter on which such
[s]((S))hareholder is entitled to vote((,)) and each fractional dollar
amount shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may
be voted in person or by proxy. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action
required or permitted by law, this Declaration of Trust or any Bylaws
of the Trust((, if any,)) to be taken by Shareholders.
MEETINGS
SECTION 2. The first Shareholders' meeting shall be held as specified
in Section 2 of Article IV at the principal office of the Trust or
such other place as the Trustees may designate. Special meetings of
the Shareholders of any Series may be called by the Trustees and shall
be called by the Trustees upon the written request of Shareholders
owning at least one-tenth (((1/10))) of the outstanding Shares
entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the 1940 Act, as
((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 ))[or
trust] company ((that is a member of a national securities exchange,
trust company, or other entity permitted under the 1940 Act, as
modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted or interpretative
releases of the Commission thereunder, having capital, surplus, and
undivided)) profits of at least two million dollars ($2,000,000), or
such other amount [or such other entity] as shall be allowed by the
Commission or by the 1940 Act, as custodian with authority as its
agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Bylaws of the
Trust((, if any)):
(1) to hold the securities owned by the Trust and deliver the same
upon written order or oral order, if ((confirmed)) in writing, or by
such electro-mechanical or electronic devices as are agreed to by the
Trust and the custodian, if such procedures have been authorized in
writing by the Trust;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(2) to compute((,)) if authorized to do so((,)) the Net Asset Value
of any Series ((or Class thereof)) in accordance with the
[P]((p))rovisions hereof; all upon such basis of compensation as may
be agreed upon between the Trustees and the custodian.
[If so directed by a Majority Shareholder Vote, the custodian shall
deliver and pay over all 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)) [or trust] company ((that is a
member of a national securities exchange, trust company, or other
entity permitted)) [organized] under the [laws of the United States or
one of the states thereof and] ((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 [person] ((amount)) as [may] ((shall)) be [permitted]((allowed))
by the Commission[,] or [otherwise in accordance with] ((by)) the 1940
[a]((A))ct [as from time to time amended].
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,)) Section3[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 principal underwriter of the
Series shall purchase his said Shares, but only at the Net Asset Value
thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series((,)) and payment for such
Shares ((less any applicable deferred sales charges and/or fees))
shall be made by the Series or the principal underwriter of the Series
to the Shareholder of record within seven (7) days after the date upon
which the request is effective.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
SECTION 3. The term "Net Asset Value" of any Series ((or Class))
shall mean that amount by which the assets of that Series[,] ((or
Class)) exceed its liabilities, all as determined by or under the
direction of the Trustees. Such value per Share shall be determined
separately for each Series ((or Class)) of Shares and shall be
determined on such days and at such times as the Trustees may
determine. Such determination shall be made with respect to securities
for which market quotations are readily available, at the market value
of such securities; and with respect to other securities and assets,
at the fair value as determined in good faith by the Trustees,
provided, however, that the Trustees, without Shareholder approval,
may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the rules, regulations((,)) and
interpretations thereof promulgated or issued by the Commission or
insofar as permitted by any [O]((o))rder of the Commission applicable
to the Series. The Trustees may delegate any of its powers and duties
under this Section 3 with respect to appraisal of assets and
liabilities. At any time((,)) the Trustees may cause the value per
Share last determined to be determined again in ((a)) similar manner
and may fix the time when such redetermined value shall become
effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
SECTION 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940
Act. Such suspension shall take effect at such time as the Trustees
shall specify((,)) but not later than the close of business on the
business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment until the
Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the
Net Asset Value per Share existing after the termination of the
suspension. ((In the event that any Series is divided into Classes,
the provisions of this Section, to the extent applicable as determined
in the discretion of the Trustees and consistent with applicable law,
may be equally applied to each such Class.))
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
SECTION 1. Provided they have exercised reasonable care and have
acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees shall not be responsible for or
liable in any event for neglect or wrongdoing of them or any officer,
agent, employee((,)) or investment adviser of the Trust, but nothing
contained herein shall protect any Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence((,)) or reckless disregard of the duties
involved in the conduct of his office.
[INDEMNIFICATION]
((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 [and not a
partnership] is created hereby ((and not a partnership, joint stock
association, corporation, bailment, or any form of a legal
relationship other than a trust)). No Trustee hereunder shall have any
power to ((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 GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY]
((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 dividend((s)), 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
COMPARISON OF STAND ALONE FUNCTION STRUCTURE
TO
MASTER FEEDER FUND STRUCTURE
STAND ALONE FUND STRUCTURE
The "Stand Alone Fund Structure" diagram contains three circles
labeled "Individual Fund A-1 (Managed by FMR)," "Individual Fund A-2
(Managed by FMR)," and "Individual Fund A-3 (Managed by FMR),"
respectively. Above each circle attached by a line is a single
rectangular box. The three rectangular boxes are labeled "Retail
Investors," "Institutional Investors," and "Retirement Investors,"
respectively.
MASTER FEEDER FUND STRUCTURE
The "Master Feeder Fund Structure" diagram contains a single circle
labeled "Master Fund (Managed by FMR)." Surrounding the circle
attached by lines are three square boxes labeled "Feeder Fund A-1,"
"Feeder Fund A-2," and "Feeder Fund A-3," respectively. Attached to
each square box a line is a single rectangular box. The three
rectangular boxes are labeled "Retail Investors," "Institutional
Investors," and Retirement Investors," respectively.
EXHIBIT 3
((UNDERLINED)) DISCLOSURE WILL BE ADDED;
[BRACKETED] DISCLOSURE WILL BE DELETED.
FORM OF MANAGEMENT CONTRACT
MANAGEMENT CONTRACT
BETWEEN
FIDELITY MUNICIPAL TRUST:
{NAMES OF EACH PORTFOLIO OMITTED}
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION made] ((AGREEMENT AMENDED and RESTATED as of)) this
[1st day of January, 1994] ((day of_____________1999,)) by and between
Fidelity Municipal Trust, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of {NAMES OF EACH PORTFOLIO OMITTED}
(hereinafter called the "Portfolio")((,)) and 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
[Fidelity Management & Research Company] ((the Adviser)) hereby
consent, pursuant to Paragraph 6 of the existing Management Contract
dated [March 1, 1989] ((January 1, 1994)) 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 January 1,
1994 or the first day of the month following approval]
((______________)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser [, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Group Fee
[Rate] 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 .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
[120 - 174] [.1450]
[174 - 228] [.1400]
[228 - 282] [.1375]
[282 - 336] [.1350]
[Over 336] [.1325]
((120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
372 - 408 .1200
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over - 516 .1100))
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
((0)).25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate 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
[r]((R))ate shall be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration
of Trust or other organizational document) determined as of the close
of business on each business day throughout the month.
(c) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect, and the fee
[is] 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 fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument)).
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until June
30, [1994] ((1999)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract((,)) without
payment of any penalty, by action of its Trustees or Board of
Directors, as the case may be, or with respect to the Portfolio by
vote of a majority of the outstanding voting securities of the
Portfolio. This Contract shall terminate automatically in the event of
its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation[s] 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
obligation((s)) 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 [a]((A))greement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[signature lines omitted]
EXHIBIT 4
((UNDERLINED)) DISCLOSURE WILL BE ADDED;
[BRACKETED] DISCLOSURE WILL BE DELETED.
FORM OF MANAGEMENT CONTRACT
MANAGEMENT CONTRACT
BETWEEN
FIDELITY MUNICIPAL TRUST:
SPARTAN PENNSYLVANIA MUNICIPAL [HIGH YIELD PORTFOLIO] ((INCOME FUND))
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
((AGREEMENT)) [made] ((AMENDED and RESTATED as of)) this [1st day of
August, 1990] ((day of ___________ 1999,)) by and between Fidelity
Municipal Trust, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Spartan Pennsylvania Municipal [High Yield
Portfolio] ((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 5 of the existing
Management Contract dated August 1, 1990, 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 ________________.))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
[ (c) The Adviser undertakes to pay all expenses involved in the
operation of the Portfolio, except the following, which shall be paid
by the Portfolio: (i) taxes; (ii) the fees and expenses of all
Trustees of the Fund who are not "interested persons" of the Fund or
of the Adviser; (iii) brokerage fees and commissions; (iv) interest
expenses with respect to borrowings by the Portfolio; and (v) such
non-recurring and extraordinary expenses as may arise, including
actions, suits or proceedings to which the Portfolio is or is
threatened to be a party and the legal obligation that the Portfolio
may have to indemnify the Fund's Trustees and officers with respect
thereto. It is understood that service charges billed directly to
shareholders of the Portfolio, including charges for exchanges,
redemptions, or other services, shall not be payable by the Adviser,
but may be received and retained by the Adviser or its affiliates.]
[(d)](((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. For the services and facilities to be furnished hereunder, the
Adviser shall receive a monthly management fee, payable monthly as
soon as practicable after the last day of each month, at the annual
rate of .55% of the average net assets of the Portfolio (computed in
the manner set forth in the Fund's Declaration of Trust) determined as
of the close of business on each day throughout the month; provided
that the fee, so computed, shall be reduced by the compensation,
including reimbursement of expenses, paid by the Portfolio to those
Trustees who are not "interested persons" of the Fund or the Adviser.
In the case of initiation or termination of this Contract during any
month, the fee shall be reduced proportionately based on 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.]
((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.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the fund's Declaration of
Trust or other organizational document) determined as of the close of
business on each business day throughout the month. The Group Fee Rate
shall be determined on a cumulative basis pursuant to the following
schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
372 - 408 .1200
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over - 516 .1100
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
0.25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute
the Annual Management Fee Rate. One-twelfth of the Annual Management
Fee Rate shall be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration
of Trust or other organizational document) determined as of the close
of business on each business day throughout the month.
(c) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect, and the fee
computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses,
which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and
other costs in connection with the purchase or sale of securities and
other investment instruments; (iii) fees and expenses of the Fund's
Trustees other than those who are "interested persons" of the Fund or
the Adviser; (iv) legal and audit expenses; (v) custodian, registrar
and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Fund and the Portfolio's
shares for distribution under state and federal securities laws; (vii)
expenses of printing and mailing reports and notices and proxy
material to shareholders of the Portfolio; (viii) all other expenses
incidental to holding meetings of the Portfolio's shareholders,
including proxy solicitations therefor; (ix) a pro rata share, based
on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management
Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.))
[4.] ((5.)) The services of the Adviser to the Portfolio are not to
be deemed exclusive, the Adviser being free to render services to
others and engage in other activities, provided, however, that such
other services and activities do not, during the term of this
Contract, interfere, in a material manner, with the Adviser's ability
to meet all of its obligations with respect to rendering services to
the Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument)).
[5.] ((6.)) (a) Subject to prior termination as provided in
sub-paragraph (d) of this paragraph [5] ((6)), this Contract shall
continue in force until [May 31, 1991] ((June 30, 1999)) and
indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of
the Trustees of the Fund or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph [5] ((6)), the terms of any continuance or modification
of this Contract must have been approved by the vote of a majority of
those Trustees of the Fund who are not parties to the Contract or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
[6.] ((7.)) The Adviser is hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Fund's
Declaration of Trust ((or other organizational document)) and agrees
that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other
Portfolios of the Fund. In addition, the Adviser shall not seek
satisfaction of any such obligations from the Trustees or any
individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust ((or other
organizational document)) are separate and distinct from those of any
and all other Portfolios.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[signature lines omitted]
EXHIBIT 5
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C>
MUNICIPAL INCOME
Spartan Arizona Municipal Income 8/31/97 $ 22.0 0.55%
Spartan Maryland Municipal Income 8/31/97 44.2 0.55
Spartan Short-Intermediate Municipal 8/31/97 736.9 0.55
Income
Advisor Municipal Income (#)
Class A 10/31/97 1.9 0.39
Class T 10/31/97 424.8 0.39
Class B 10/31/97 39.9 0.39
Class C ((dagger)) 10/31/98** 2.4 0.39
Institutional Class 10/31/97 1.1 0.39
Advisor Intermediate Municipal
Income (#)
Class A 11/30/97 0.4 0.39
Class T 11/30/97 50.8 0.39
Class B 11/30/97 7.5 0.39
Class C 11/30/97 0.0 0.39
Institutional Class 11/30/97 6.8 0.39
Spartan Connecticut Municipal 11/30/97 332.2 0.55
Income
Spartan Florida Municipal Income 11/30/97 393.4 0.55
Spartan Municipal Income 11/30/97 1,829.4 0.39
Spartan New Jersey Municipal 11/30/97 354.3 0.55
Income
Advisor Municipal Bond (#)
Class A 12/31/97 0.1 0.39
Class T 12/31/97 4.6 0.39
Class B 12/31/97 1.2 0.39
Initial Class 12/31/97 929.2 0.39
Institutional Class 12/31/97 1.2 0.39
Spartan Agressive Municipal Income 12/31/97 885.9 0.38*
Spartan Insured Municipal Income 12/31/97 320.5 0.36*
Spartan Intermediate Municipal 12/31/97 890.1 0.38
Income
Spartan Michigan Municipal Income 12/31/97 446.9 0.37*
Spartan Minnesota Municipal 12/31/97 291.0 0.37*
Income
Spartan Ohio Municipal Income 12/31/97 $ 378.9 0.37%*
Spartan Pennsylvania Municipal 12/31/97 262.7 0.55
Income
Spartan Massachusetts Municipal 1/31/98 1,151.8 0.39
Income
Spartan New York Municipal Income 1/31/98 445.9 0.37*
Spartan California Municipal Income 2/28/98 867.6 0.38*
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of July 31, 1998, if fiscal year end figures are not available.
(b) Average net assets are computed on the basis of average net assets
of each fund or class at the close of business on each business day
throughout its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*). For multiple class funds, the ratio
of net advisory fees to average net assets is presented gross of
reductions for certain classes, for presentation purposes. Funds so
affected are indicated by (#).
((dagger)) 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.
** Less than a complete fiscal year
MUNI-pxs-1098 CUSIP#316412204/FUND#081
1.707787.100 CUSIP#316412303/FUND#082
CUSIP#316412105/FUND#088
CUSIP#316344209/FUND#402
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 MUNICIPAL TRUST: SPARTAN MICHIGAN MUNICIPAL INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric D. Roiter, and Ralph F. Cox, or any one or more of
them, attorneys, with full power of substitution, to vote all shares
of Fidelity Municipal Trust: Spartan Michigan Municipal Income Fund
which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on December 16, 1998 at 9:00 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 # 316412204/fund# 081
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 twelve 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, and 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 adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
fund permitting the fund to invest all of its assets in
another open-end investment company managed by
Fidelity Management & Research Company or an
affiliate with substantially the same investment
objective and policies.
5. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
fund.
7. To replace the fund's fundamental 80% investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
policy with a non-fundamental policy.
8. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
policy regarding investment in below
investment-grade debt securities.
9. To eliminate the fund's fundamental 20% investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
policy.
</TABLE>
MIF-PXC-1098 cusip # 316412204/fund# 081
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 MUNICIPAL TRUST: SPARTAN MINNESOTA MUNICIPAL INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric D. Roiter, and Ralph F. Cox, or any one or more of
them, attorneys, with full power of substitution, to vote all shares
of Fidelity Municipal Trust: Spartan Minnesota Municipal Income Fund
which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on December 16, 1998 at 9:00 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 # 316412303/fund# 082
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 twelve 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, and 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 adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
fund permitting the fund to invest all of its assets in
another open-end investment company managed by
Fidelity Management & Research Company or an
affiliate with substantially the same investment
objective and policies.
5. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
fund.
7. To replace the fund's fundamental 80% investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
policy with a non-fundamental policy.
8. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
policy regarding investment in below
investment-grade debt securities.
9. To eliminate the fund's fundamental 20% investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
policy.
</TABLE>
MNF-PXC-1098 cusip # 316412303/fund# 082
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 MUNICIPAL TRUST: SPARTAN OHIO MUNICIPAL INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric D. Roiter, and Ralph F. Cox, or any one or more of
them, attorneys, with full power of substitution, to vote all shares
of Fidelity Municipal Trust: Spartan Ohio Municipal Income Fund which
the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on December 16, 1998 at 9:00 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 # 316412105/fund# 088
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 twelve 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, and 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 adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
fund permitting the fund to invest all of its assets in
another open-end investment company managed by
Fidelity Management & Research Company or an
affiliate with substantially the same investment
objective and policies.
5. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
fund.
7. To replace the fund's fundamental 80% investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
policy with a non-fundamental policy.
8. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
policy regarding investment in below
investment-grade debt securities.
9. To eliminate the fund's fundamental 20% investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
policy.
</TABLE>
OFR-PXC-1098 cusip # 316412105/fund# 088
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 MUNICIPAL TRUST: SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric D. Roiter, and Ralph F. Cox, or any one or more of
them, attorneys, with full power of substitution, to vote all shares
of Fidelity Municipal Trust: Spartan Pennsylvania Municipal Income
Fund which the undersigned is entitled to vote at the Special Meeting
of Shareholders of the fund to be held at the office of the trust at
82 Devonshire St., Boston, MA 02109, on December 16, 1998 at 9:00 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 # 316344209/fund# 402
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 twelve 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, and 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 adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
fund permitting the fund to invest all of its assets in
another open-end investment company managed by
Fidelity Management & Research Company or an
affiliate with substantially the same investment
objective and policies.
6. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund.
7. To replace the fund's fundamental 80% investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
policy with a non-fundamental policy.
8. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
policy regarding investment in below
investment-grade debt securities.
</TABLE>
PFL-PXC-1098 cusip # 316344209/fund# 402
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
SPARTAN MINNESOTA MUNICIPAL INCOME FUND
SPARTAN OHIO MUNICIPAL INCOME FUND
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
Dear Shareholder:
I am writing to let you know that a special meeting of shareholders of
the Fidelity funds mentioned above will be held in December. The
purpose of the meeting is to vote on several important proposals that
affect the funds and your investment in them. As a shareholder, you
have the opportunity to voice your opinion on the matters that affect
your fund(s). This package contains information about the proposals
and the materials to use when voting by mail.
Please read the enclosed materials and cast your vote on the proxy
card(s). PLEASE VOTE AND RETURN YOUR CARD(S) PROMPTLY. YOUR VOTE IS
EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE.
All of the proposals have been carefully reviewed by the Board of
Trustees. The Trustees, most of whom are not affiliated with
Fidelity, are responsible for protecting your interests as a
shareholder. The Trustees believe these proposals are in the best
interest of shareholders. They recommend that you vote for each
proposal.
The following Q&A is provided to assist you in understanding the
proposals. Each of the proposals is described in greater detail in
the enclosed proxy statement.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
To cast your vote, simply complete the proxy card(s) enclosed in this
package. Be sure to sign the card(s) before mailing it in the
postage-paid envelope.
If you have any questions before you vote, please call Fidelity at
1-800-544-8888. We'll be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposals
PLEASE READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT. BELOW IS A
BRIEF OVERVIEW OF THE PROPOSALS TO BE VOTED UPON. YOUR VOTE IS
IMPORTANT. WE APPRECIATE YOU PLACING YOUR TRUST IN FIDELITY AND LOOK
FORWARD TO HELPING YOU ACHIEVE YOUR FINANCIAL GOALS.
WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
You may be asked to vote on the following proposals:
1. To elect a Board of Trustees.
(v) To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the funds.
(w) To authorize the Trustees to adopt an Amended and Restated
Declaration of Trust.
(x) To adopt a new fundamental investment policy for each fund
permitting each fund to invest all of its assets in another open-end
investment company managed by Fidelity Management & Research Company
or an affiliate with substantially the same investment objective and
policies.
(y) To approve an amended management contract for Spartan Michigan
Municipal Income Fund, Spartan Minnesota Municipal Income Fund and
Spartan Ohio Municipal Income Fund.
(z) To approve an amended management contract for Spartan Pennsylvania
Municipal Income Fund.
(aa) To replace each fund's fundamental 80% investment policy with a
non-fundamental policy.
(ab) To eliminate each fund's fundamental investment policy regarding
investment in below investment-grade debt securities.
(ac) To eliminate the fundamental 20% investment policy for Spartan
Michigan Municipal Income Fund, Spartan Minnesota Municipal Income
Fund and Spartan Ohio Municipal Income Fund.
WHAT ROLE DOES THE BOARD PLAY? (PROPOSAL 1)
The Trustees oversee the investment policies of each fund. Members of
the Board are fiduciaries and have an obligation to serve the best
interests of shareholders, including approving policy changes such as
those proposed in the proxy statement. In addition, the Trustees
review fund performance, oversee fund activities, and review
contractual arrangements with companies that provide services to the
funds.
WHAT IS THE ROLE OF THE INDEPENDENT ACCOUNTANTS? (PROPOSAL 2)
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. They also
sign or certify any financial statements of the funds that are
required by law to be independently certified and filed with the
Securities and Exchange Commission (SEC).
WHY ARE THE FUNDS PROPOSING TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST? (PROPOSAL 3)
The new Declaration of Trust is a more modern form of trust instrument
for a Massachusetts business trust. It gives the Trustees more
flexibility, and, subject to the applicable requirements of federal
and state law, broader authority to act. This increased flexibility
may allow the Trustees to react more quickly to changes in competitive
and regulatory conditions.
Adoption of the new Declaration of Trust will not alter the Trustees'
existing fiduciary obligations to act in the best interests of the
funds' shareholders. Before utilizing any new flexibility that the
new Declaration of Trust may afford, the Trustees must first consider
the shareholders' interests and act in accordance with such interests.
The new Declaration of Trust amends the current Declaration of Trust
in a number of significant ways. Please review the proxy statement
for specific details.
WHAT ARE THE BENEFITS OF PERMITTING EACH FUND TO INVEST THEIR ASSETS
IN ANOTHER OPEN-END INVESTMENT COMPANY MANAGED BY FIDELITY MANAGEMENT
& RESEARCH COMPANY (FMR) OR AN AFFILIATE WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE AND POLICIES? (PROPOSALS 3 AND 4)
FMR and the Board of Trustees continually review methods of
structuring mutual funds to take maximum advantage of potential
efficiencies. A number of mutual fund companies have developed
"master-feeder" fund structures under which several "feeder" funds
invest all of their assets in a single pooled investment, or "master"
fund. The purpose of the master-feeder fund structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. An
example would be funds with the same investment objective but
different minimum investments due to the servicing of individual
shareholders versus institutional clients.
These proposals would enable the funds to invest all of their assets
in another open-end investment company, managed by FMR or an
affiliate, with substantially the same investment objective and
policies. In order to implement the master-feeder structure, both the
Declaration of Trust and the funds' policies must permit the
structure. Proposal 3 would amend the Declaration of Trust to permit
the structure and Proposal 4 would amend the policy at the fund level.
The master-feeder fund structure could generate operational
efficiencies and the opportunity to reduce costs. However, no such
plans are being contemplated at this time and the Trustees would only
allow it in the future if they determined that it would be in the best
interest of the fund and its shareholders.
WHY ARE SPARTAN MICHIGAN MUNICIPAL INCOME FUND, SPARTAN MINNESOTA
MUNICIPAL INCOME FUND AND SPARTAN OHIO MUNICIPAL INCOME FUND PROPOSING
TO ADOPT AN AMENDED MANAGEMENT CONTRACT? (PROPOSAL 5)
The amended management contract for each fund principally modifies the
fund's current contract to provide for lower management fees to be
paid to FMR when FMR's assets under management exceed certain levels.
Each fund's amended management contract also allows FMR and the trust,
on behalf of each fund, to modify the funds' management contracts
subject to the requirements of the Investment Company Act of 1940.
The amended management contract will result in a management fee that
is the same as or lower than the fee payable under the present
contract. Please refer to the proxy statement for specific details of
each fund's amended management contract proposal.
WHY IS SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND PROPOSING TO ADOPT
AN AMENDED MANAGEMENT CONTRACT? (PROPOSAL 6)
The amended management contract for the fund changes the fund's
current "all-inclusive" management fee arrangement to a "group fee"
arrangement that is standard for other Fidelity municipal bond funds.
The fund's amended management contract also allows FMR and the trust,
on behalf of the fund, to modify the fund's management contract
subject to the requirements of the Investment Company Act of 1940.
Under the present management contract, the fund pays an all-inclusive
fee to FMR which covers substantially all fund expenses; FMR pays the
fund's operating fees, with limited exceptions. Under the proposed
amended management contract, the fund would pay its management fees
and other expenses separately. FMR would no longer pay the fund's
expenses. The group fee rate varies according to the monthly average
net assets of all funds having management contracts with FMR, and
provides for lower management fees to be paid to FMR when FMR's assets
under management exceed certain levels.
Please refer to the proxy statement for specific details of the fund's
amended management contract proposal.
WHAT IS THE BENEFIT OF REPLACING EACH FUND'S CURRENT FUNDAMENTAL 80%
INVESTMENT POLICY WITH A NON-FUNDAMENTAL POLICY? (PROPOSAL 7)
By making each fund's fundamental (cannot be changed without
shareholder approval) 80% investment policy non-fundamental (future
changes to the policy would only require approval by the Board of
Trustees, not shareholders), the Trustees will be able to comply more
quickly when the SEC adopts a definitive version of its proposed name
test rule (Name Test Rule). In addition, if the proposal is
approved, the fundamental 80% "income test" will be replaced with a
non-fundamental "asset test. " An asset-based test can be monitored
more efficiently than an income-based test, which may facilitate the
fund's compliance efforts.
The Trustees propose that each fund's existing 80% fundamental policy
be made non-fundamental. Thus, when the SEC adopts a definitive Name
Test Rule, the Trustees will have the flexibility to modify each
fund's policy to conform to the new rule without the delay and expense
of a shareholder meeting. The Trustees anticipate that the approval
of the proposal will have no material effect on the funds or their
investment operations.
WHY IS THE BOARD PROPOSING TO ELIMINATE CERTAIN INVESTMENT LIMITATIONS
AND POLICIES? (PROPOSALS 8 & 9)
The primary purpose of these proposals is to allow the funds to more
clearly communicate their investment strategies in conformity with
newly revised Form N-1A (the form used by open-end investment
companies, like the funds, to register under the Investment Company
Act of 1940 and the Securities Act of 1933). Form N-1A requires
concise, understandable descriptions of a fund's investment policies.
Compliance with this newly revised rule will also allow the funds to
more clearly communicate their investment strategies to shareholders.
The elimination of these investment policies is not expected to
materially affect the way each fund is managed.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED EACH PROPOSAL?
Yes. The Board of Trustees has unanimously approved all of the
proposals and recommends that you vote to approve them.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of a fund on the record date. The record date is
October 19, 1998.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage-paid envelope. If you
need any assistance, or have any questions regarding the proposals or
how to vote your shares, please call Fidelity at 1-800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."
