SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[X] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(e) or Sec. 240.14a-12
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(Name of Registrant as Specified In Its Charter) Fidelity
Charles Street Trust
(Name of Person(s) Filing Proxy Statement) Arthur S.
Loring, Secretary
Payment of Filing Fee (Check the appropriate box):
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[X] $125 per Exchange Act Rules 0-11(c)(ii), 14a-6(j) (1), or 14a-6(j) (2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(j) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(j) (4) and 0-11.
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(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:
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<S> <C>
[ ] 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.
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(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
FIDELITY U. S. GOVERNMENT RESERVES
FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND
SPARTAN(Registered trademark) SHORT-TERM INCOME FUND
SPARTAN(Registered trademark) INVESTMENT GRADE BOND FUND
FUNDS OF
FIDELITY CHARLES STREET TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity U.S. Government Reserves, Fidelity Short-Intermediate
Government Fund, Spartan Short-Term Income Fund, and Spartan Investment
Grade Bond Fund (the funds), will be held at the office of Fidelity Charles
Street Trust (the trust), 82 Devonshire Street, Boston, Massachusetts 02109
on September 21, 1994, 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 Price Waterhouse as independent accountants
of the trust.
3. To amend the Declaration of Trust to provide dollar-based voting rights
for shareholders of the trust.
4. To amend the Declaration of Trust regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to provide each fund with the ability
to invest all of its assets in another open-end investment company with
substantially the same investment objective and policies.
6. To adopt a new fundamental investment policy for each fund permitting a
fund to invest all of its assets in another open-end investment company
with substantially the same investment objective and policies.
7. To approve an Agreement and Plan providing for the conversion of
Fidelity U.S. Government Reserves into a separate fund of a Delaware
business trust.
8. To approve an amended management contract for Fidelity U.S. Government
Reserves.
9. To approve an amended management contract for Fidelity
Short-Intermediate Government Fund.
10. To approve a new Sub-Advisory Agreement with FMR Far East for Spartan
Short-Term Income Fund and Spartan Investment Grade Bond Fund.
11. To approve a new Sub-Advisory Agreement with FMR U.K. for for Spartan
Short-Term Income Fund and Spartan Investment Grade Bond Fund.
12. To eliminate Fidelity U.S. Government Reserves' fundamental investment
limitation concerning writing or purchasing put or call options.
The Board of Trustees has fixed the close of business on July 25, 1994 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 the order of the Board of Trustees,
ARTHUR S. LORING, Secretary
July 25, 1994
YOUR VOTE IS IMPORTANT
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help you avoid the time 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 U. S. GOVERNMENT RESERVES
FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND
SPARTAN SHORT-TERM INCOME FUND
SPARTAN INVESTMENT GRADE BOND FUND
TO BE HELD SEPTEMBER 21, 1994
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity
Charles Street Trust (the trust) to be used at the Special Meeting of
Shareholders of Fidelity U.S. Government Reserves, Fidelity
Short-Intermediate Government Fund, Spartan Short-Term Income Fund, and
Spartan Investment Grade Bond Fund (the funds) and at any adjournments
thereof (the Meeting), to be held September 21, 1994, at 9:00 a.m. at 82
Devonshire Street, Boston, Massachusetts 02109, the principal executive
office of the trust. Shareholders of the trust's other funds (Fidelity
Asset Manager, Fidelity Asset Manager: Growth, and Fidelity Asset Manager:
Income) will also participate and have been mailed a separate notice and
proxy statement relating to proposals to be voted upon by the trust or only
by the shareholders of those funds. The purpose of the Meeting is set forth
in the accompanying Notice. The solicitation is made primarily by the
mailing of this Proxy Statement and the accompanying proxy card on or about
July 25, 1994. Supplementary solicitations may be made by mail, telephone,
telegraph, or by personal interview by representatives of the trust. The
expenses in connection with preparing this Proxy Statement and its
enclosures and of all solicitations will be paid by the funds (except for
Spartan Short-Term Income Fund and Spartan Investment Grade Bond Fund,
whose expenses will be borne by Fidelity Management and Research Company
(FMR)). The funds (FMR for Spartan Short-Term Income Fund and Spartan
Investment Grade Bond Fund) will reimburse brokerage firms and others for
their reasonable expenses in forwarding solicitation material to the
beneficial owners of shares.
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, or by attending
the Meeting and voting in person. All proxy cards solicited by the Board of
Trustees that are properly executed and received by the Secretary prior to
the Meeting, and which are not revoked, will be voted at the Meeting.
Shares represented by such proxies will be voted in accordance with the
instructions thereon. If no specification is made on a proxy card, it will
be voted FOR the matters specified on the proxy card. All proxies not
voted, including broker non-votes, will not be counted toward establishing
a quorum. 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.
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 proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a
majority of those shares present at the Meeting or represented by proxy.
When voting on a proposed adjournment, the persons named as proxies will
vote for the proposed adjournment all shares that they are entitled to vote
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. A copy of each fund's
annual report for the fiscal year ended September 30, 1993 has been mailed
or delivered to shareholders of the respective fund entitled to vote at the
meeting.
Shares of each fund in the trust issued and outstanding as of May 31, 1994
are indicated in the following table:
Fidelity Asset Manager 765,881,432.809
Fidelity Asset Manager: Growth 208,926,683.651
Fidelity Asset Manager: Income 46,504,773.690
Fidelity U. S. Government Reserves 1,110,404,663.090
Fidelity Short-Intermediate Government Fund 14,300,379,058
Spartan Short-Term Income Fund 96,637,591.089
Spartan Investment Grade Bond Fund 11,297,149.382
To the knowledge of the trust, no shareholder owned of record or
beneficially more than ___% of the outstanding shares of any of the funds
on that date. Shareholders of record at the close of business on July 25,
1994 will be entitled to vote at the Meeting. Each such shareholder will be
entitled to one vote for each share held on that date.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS SUFFICIENT
TO APPROVE PROPOSALS 1 AND 2. APPROVAL OF PROPOSAL 3 REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF OUTSTANDING VOTING SECURITIES OF EACH
FUND OF THE TRUST AND, IN THE CASE OF PROPOSALS 4 AND 5, A MAJORITY OF
OUTSTANDING SHARES OF THE ENTIRE TRUST. APPROVAL OF PROPOSALS 6 THROUGH 10
REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES'' OF EACH RESPECTIVE FUND. UNDER THE INVESTMENT COMPANY ACT OF
1940 (THE 1940 ACT), A "MAJORITY VOTE OF THE OUTSTANDING VOTING
SECURITIES'' MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR MORE OF
THE SHARES PRESENT AT THE MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF
MORE THAN 50% OF THE OUTSTANDING SHARES ARE PRESENT OR REPRESENTED BY PROXY
OR (B) MORE THAN 50% OF THE OUTSTANDING SHARES.
1. TO ELECT A BOARD OF TRUSTEES.
Pursuant to the provisions of the Declaration of Trust of Fidelity Charles
Street 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.
Except for Mrs. Davis and Mr. Mann, all nominees named below are currently
Trustees of Fidelity Charles Street Trust and have served in that capacity
continuously since originally elected or appointed. Mr. Cox, Mr. Jones, Mr.
Lynch, and Mr. McDonough were selected by the trust's Nominating and
Administration Committee (see page __) and were appointed to the Board in
November 1991, May 1990, April 1990, and August 1989, respectively. None of
the nominees is 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, Fidelity Management & Research Company (FMR, or the
Adviser), or the funds' distribution agent, Fidelity Distributors
Corporation (FDC). Each of the nominees is currently a Trustee or General
Partner, as the case may be, of other funds 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.
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Nominee Principal Occupation(s) Year of
(Age) Election or
Appointme
nt
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*J. Gary Burkhead Senior Vice President, is 1987
82 Devonshire Street President of FMR; and President
Boston, MA and a Director of FMR Texas
(53) Inc. (1989), Fidelity
Management & Research
(U.K.) Inc., and Fidelity
Management & Research
(Far East) Inc.
Ralph F. Cox Consultant to Western Mining 1991
200 Rivercrest Drive Corporation (1994). Prior to
Fort Worth, TX February 1994, he was
(62) President of Greenhill Petroleum
Corporation (petroleum
exploration and production,
1990). Until March 1990, Mr.
Cox was President and Chief
Operating Officer of Union
Pacific Resources Company
(exploration and production). He
is a Director of Bonneville Pacific
Corporation (independent power,
1989), Sanifill Corporation
(non-hazardous waste, 1993),
and CH2M Hill Companies
(engineering). In addition, he
served on the Board of Directors
of the Norton Company
(manufacturer of industrial
devices, 1983-1990) and
continues to serve on the Board
of Directors of the Texas State
Chamber of Commerce, and 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 --
P.O. Box 264 September 1991, Mrs. Davis
Bridgehampton, NY was the Senior Vice President of
(62) 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, 1990), and
previously served as a Director
of Hallmark Cards, Inc.
(1985-1991) and Nabisco
Brands, Inc. In addition, she
serves as a Director of the New
York City Chapter of the National
Multiple Sclerosis Society, and is
a member of the Advisory
Council of the International
Executive Service Corps. and
the President's Advisory Council
of The University of Vermont
School of Business
Administration.
Richard J. Flynn Financial consultant. Prior to 1982
77 Fiske Hill September 1986, Mr. Flynn was
Sturbridge, MA Vice Chairman and a Director of
(70) the Norton Company
(manufacturer of industrial
devices). He is currently a
Director of Mechanics Bank and
a Trustee of College of the Holy
Cross and Old Sturbridge
Village, Inc.
*Edward C. Johnson President, is Chairman, Chief 1981
3d Executive Officer and a Director
82 Devonshire Street of FMR Corp.; a Director and
Boston, MA Chairman of the Board and of
(64) the Executive Committee of
FMR; Chairman and a Director
of FMR Texas Inc. (1989),
Fidelity Management &
Research (U.K.) Inc., and
Fidelity Management &
Research (Far East) Inc.
E. Bradley Jones Prior to his retirement in 1984, 1990
3881-2 Lander Road Mr. Jones was Chairman and
Chagrin Falls, OH Chief Executive Officer of LTV
(66) Steel Company. Prior to May
1990, he was a Director of
National City Corporation (a
bank holding company) and
National City Bank of Cleveland.
He is a Director of TRW Inc.
(original equipment and
replacement products),
Cleveland-Cliffs Inc (mining),
NACCO Industries, Inc. (mining
and marketing), Consolidated
Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale
Materials Handling, Inc. (1989)
and RPM Inc. (manufacturer of
chemical products, 1990). In
addition, he serves as a Trustee
of First Union Real Estate
Investments, Chairman of the
Board of Trustees and a
member of the Executive
Committee of the Cleveland
Clinic Foundation, a Trustee and
a member of the Executive
Committee of University School
(Cleveland), and a Trustee of
Cleveland Clinic Florida.
Donald J. Kirk Professor at Columbia University 1987
680 Steamboat Road Graduate School of Business
Apartment #1-North and a financial consultant. Prior
Greenwich, CT to 1987, he was Chairman of the
(61) Financial Accounting Standards
Board. Mr. Kirk is a Director of
General Re Corporation
(reinsurance) and Valuation
Research Corp. (appraisals and
valuations, 1993). In addition, he
serves as Vice Chairman of the
Board of Directors of the
National Arts Stabilization Fund
and Vice Chairman of the Board
of Trustees of the Greenwich
Hospital Association.
*Peter S. Lynch Vice Chairman of FMR (1992). 1990
82 Devonshire Street Prior to his retirement on May
Boston, MA 31, 1990, he was a Director of
(51) FMR (1989) 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). He is a Director of
W.R. Grace & Co.
(chemicals, 1989) and Morrison
Knudsen Corporation
(engineering and construction).
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 (1990).
Gerald C. McDonough Chairman of G.M. Management 1989
135 Aspenwood Drive Group (strategic advisory
Cleveland, OH services). Prior to his retirement
(65) in July 1988, he was Chairman
and Chief Executive Officer of
Leaseway Transportation Corp.
(physical distribution services).
Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal
working, telecommunications
and electronic products),
Brush-Wellman Inc. (metal
refining), York International
Corp. (air conditioning and
refrigeration, 1989), Commercial
Intertech Corp. (water treatment
equipment, 1992), and
Associated Estates Realty
Corporation (a real estate
investment trust, 1993).
Edward H. Malone Prior to his retirement in 1985, 1989
5601 Turtle Bay Drive Mr. Malone was Chairman,
#2104 General Electric Investment
Naples, FL Corporation and a Vice
(69) President of General Electric
Company. He is a Director of
Allegheny Power Systems, Inc.
(electric utility), General Re
Corporation (reinsurance), and
Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee
of Corporate Property Investors,
the EPS Foundation at Trinity
College, the Naples
Philharmonic Center for the Arts,
and Rensselaer Polytechnic
Institute, and he is a member of
the Advisory Boards of Butler
Capital Corporation Funds and
Warburg, Pincus Partnership
Funds.
Marvin L. Mann Chairman of the Board, --
55 Railroad Avenue President, and Chief Executive
Greenwhich, CT Officer of Lexmark International,
(61) Inc. (office machines, 1991).
Prior to 1991, he held 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 Infomart (marketing
services, 1991), a Trammell
Crow Co. In addition, he serves
as the Campaign Vice Chairman
of the Tri-State United Way
(1993) and is a member of the
University of Alabama
President's Cabinet (1990).
Thomas R. Williams President of The Wales Group, 1989
21st Floor Inc. (management and financial
191 Peachtree Street, advisory services). Prior to
N.E. retiring in 1987, Mr. Williams
Atlanta, GA served as Chairman of the
(66) Board of First Wachovia
Corporation (bank holding
company), and Chairman and
Chief Executive Officer of The
First National Bank of Atlanta
and First Atlanta Corporation
(bank holding company). He is
currently a Director of BellSouth
Corporation
(telecommunications), ConAgra,
Inc. (agricultural products),
Fisher Business Systems, Inc.
(computer software), Georgia
Power Company (electric utility),
Gerber Alley & Associates,
Inc. (computer software),
National Life Insurance
Company of Vermont, American
Software, Inc. (1989), and
AppleSouth, Inc. (restaurants,
1992).
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_______________
** 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 May 31, 1994, the nominees and officers of the trust owned, in the
aggregate ___% of any of the funds' outstanding shares.
If elected, the Trustees will hold office without limit in time except
that (a) any Trustee may resign; (b) any Trustee may be removed by written
instrument, signed by at least two-thirds of the number of Trustees prior
to such removal; (c) any Trustee who requests to be retired or who has
become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees; and (d) a Trustee
may be removed at any Special Meeting of shareholders by a two-thirds vote
of the outstanding voting securities of the trust. In case a vacancy shall
for any reason exist, the remaining Trustees will fill such vacancy by
appointing another Trustee, so long as, immediately after such appointment,
at least two-thirds of the Trustees have been elected by shareholders. If,
at any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly call
a shareholders' meeting for the purpose of electing a Board of Trustees.
Otherwise, there will normally be no meeting of shareholders for the
purpose of electing Trustees.
The trust's Board, which is currently composed of three interested and
seven non-interested Trustees, met eleven times during the twelve months
ended September 30, 1993. It is expected that the Trustees will meet at
least ten times a year at regularly scheduled meetings.
As a group, the non-interested Trustees received fees and expenses of
$_____ from the trust in their capacities as Trustees of the funds for the
fiscal year ended September 30, 1993. The non-interested Trustees also
served in similar capacities for other funds advised by FMR (see page __ ),
and received additional compensation for such services.
The Board of Trustees has adopted a policy whereby non-interested
Trustees, upon reaching their 72nd birthday will resign. Under a defined
benefit retirement program, non-interested Trustees, upon reaching age 72,
are entitled to payments during their lifetime based on their basic Trustee
fees and their length of service.
The trust's Audit Committee is composed entirely of Trustees who are not
interested persons of the trust, of 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), Cox, and Jones are members of
the Committee. This Committee oversees and monitors the financial reporting
process, including recommending to the Board the independent accountants to
be selected for the trust (see Proposal 2), reviewing internal controls and
the auditing function (both internal and external), reviewing the
qualifications of key personnel performing audit work, and overseeing
compliance procedures. During the twelve months ended September 30, 1993,
the Committee held five meetings.
The trust's Nominating and Administration Committee is currently composed
of Messrs. Flynn (Chairman), McDonough, and Williams. The Committee members
confer periodically and hold meetings as required. The Committee is charged
with the duties of reviewing the composition and compensation of the Board
of Trustees, proposing additional non-interested Trustees, monitoring the
performance of legal counsel employed by the funds and the non-interested
Trustees, and acting as administrative committee under the Retirement Plan
for non-interested Trustees. During the twelve months ended September 30,
1993, the Committee held five 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.
2. TO RATIFY THE SELECTION OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS
OF THE TRUST.
By a vote of the non-interested Trustees, the firm of Price Waterhouse has
been selected as independent accountants for the trust to sign or certify
any financial statements of the trust 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 the trust, 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. Price Waterhouse has advised the trust
that it has no direct or material indirect ownership interest in the trust.
The services provided to the trust include (1) audit of annual financial
statements and, if requested, an audit of semiannual financial statements;
(2) assistance and consultation in connection with SEC filings; and (3) if
requested, review of the federal income tax returns filed on behalf of the
trust. In recommending the selection of the trust'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 Price
Waterhouse 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 AMEND THE DECLARATION OF TRUST TO PROVIDE DOLLAR-BASED VOTING RIGHTS
FOR SHAREHOLDERS OF THE TRUST.
The Board of Trustees has approved, and recommends that shareholders of
the trust approve, a proposal to amend Article VIII, Section 1 of the
Declaration of Trust. The amendment would provide voting rights based on a
shareholder's total dollar interest in a fund (dollar-based voting), rather
than on the number of shares owned, for all shareholder votes for a fund.
As a result, voting power would be allocated in proportion to the value of
each shareholder's investment.
BACKGROUND. Fidelity U.S. Government Reserves, Fidelity Short-Intermediate
Government Fund, Spartan Short-Term Income Fund, and Spartan Investment
Grade Bond Fund are funds of Fidelity Charles Street Trust, an open-end
management investment company organized as a Massachusetts business trust.
Currently, there are three other funds in the trust: Fidelity Asset
Manager, Fidelity Asset Manager: Growth, and Fidelity Asset Manager:
Income. Shareholders of each fund vote separately on matters concerning
only that fund and vote on a trust-wide basis on matters that affect the
trust as a whole, such as electing trustees or amending the Declaration of
Trust. Currently, under the Declaration of Trust, each share is entitled to
one vote, regardless of the relative value of the shares of each fund in
the trust.
The original intent of the one-share, one-vote provision was to provide
equitable voting rights as required by the 1940 Act. In the case where a
trust has several series or funds, such as Fidelity Charles Street Trust,
voting rights may have become disproportionate since the net asset value
per share (NAV) of the separate funds diverge over time. The Staff of the
SEC has issued a "no-action" letter permitting a trust to seek shareholder
approval of a dollar-based voting system. The proposed amendment will
comply with the conditions stated in the no-action letter.
REASON FOR PROPOSAL. If approved, the amendment would provide a more
equitable distribution of voting rights than the one-share, one-vote system
currently in effect for certain votes. The voting power of shareholders
would be commensurate with the value of the shareholders' dollar investment
rather than with the number of shares held.
Under the current voting provisions, an investment in a fund with a lower
NAV may have significantly greater voting power than the same dollar amount
invested in a fund with a higher NAV. The table below shows each fund's net
asset value.
Fund Net Asset Value $1,000
as of May 31, investment in
1994 terms of shares
on May 31,1994
Fidelity U.S. Government Reserves $ 1.00 1,000.00
Fidelity Short-Intermediate $ 9.42 106.16
Government Fund
Spartan Short-Term Income Fund $ 9.50 105.26
Spartan Investment Grade Bond $ 9.72 102.88
Fund
Fidelity Asset Manager: Income $ 10.75 93.02
Fidelity Asset Manager: Growth $ 13.72 72.89
Fidelity Asset Manager $ 14.64 68.31
For example, Fidelity U.S. Government Reserves shareholders would have
approximately ____% greater voting power than Fidelity Asset Manager
shareholders because at current NAVs, a $1,000 investment in Fidelity U.S.
Government Reserves would equal 1,000.000 shares, whereas a $1,000
investment in Fidelity Asset Manager would equal _______ shares.
Accordingly, a one share, one-vote system may provide certain shareholders
with a disproportionate ability to affect the vote relative to shareholders
of other funds in the trust. If dollar-based voting had been in effect,
each shareholder would have had 1,000 voting shares. Their voting power
would be proportionate to their economic interest, which FMR believes is a
more equitable result, and is the result in a typical corporation where
each voting share generally has an equal market price.
On matters requiring trust-wide votes where all funds are required to
vote, shareholders who own shares with a lower NAV than other funds in the
trust would be giving other shareholders in the trust more voting "power"
than they currently have. On matters affecting only one fund, only
shareholders of that fund vote on the issue. In this instance, under both
the current Declaration of Trust and an amended Declaration of Trust, all
shareholders of the fund would have the same voting rights, since the NAV
is the same for all shares in a single fund.
AMENDMENT TO THE DECLARATION OF TRUST. Article VIII, Section I
determines the method of calculating voting rights for all shareholder
votes for a fund. If approved, Article VIII, Section I will be amended as
follows (material to be added is underlined and material to be deleted is
[bracketed]):
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section I. The Shareholders shall have power to vote... On any matter
submitted to a vote of the Shareholders, all shares shall be voted by
individual Series, except (i) when required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual Series; and (ii) when the
Trustees have determined that the matter affects only the interests of one
or more Series, then only the Shareholders of such Series shall be entitled
to vote thereon. [Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote.] A shareholder of each series
shall be entitled to one vote for each dollar of net asset value (number of
shares owned times net asset value per share) per share of such series, on
any matter on which such shareholder is entitled to vote and each
fractional dollar amount shall be entitled to a proportionate fractional
vote. There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required or permitted by law, this Declaration of Trust or any Bylaws of
Trust to be taken by Shareholders.
If approved by shareholders, the above amendment will be made to the
Declaration of Trust for the Massachusetts business trust. Proposal 7 on
page ____ presents to Fidelity U.S. Government Reserves shareholders, a
proposal for their approval to convert the fund to a fund of Fidelity
Phillips Street Trust, a Delaware business trust. If the conversion is
approved, the fund will be a fund of Fidelity Phillips Street Trust, whose
Trust Instrument does provide for dollar-based voting rights.
CONCLUSION. If approved, the amendment will take effect immediately after
the shareholder meeting or after any adjournments thereof. The Trustees
believe the proposed amendment will benefit the trust by bringing greater
equality in voting rights among all shareholders of the trust. The Trustees
recommend that shareholders vote FOR the proposed amendment to the
Declaration of Trust. If the amendment is not approved, the Declaration of
Trust will remain unchanged.
4. TO AMEND THE DECLARATION OF TRUST REGARDING SHAREHOLDER NOTIFICATION OF
APPOINTMENT OF TRUSTEES.
The trust's Declaration of Trust provides that in the case of a vacancy on
the Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion see fit, consistent with the
limitations of the 1940 Act. Section 16 of the 1940 Act states that a
vacancy may be filled by the Trustees, if after filling the vacancy, at
least two-thirds of the Trustees then holding office were elected by the
outstanding shareholders of the trust. It also states that if at any time
less than 50% of the Trustees were elected by shareholders, a shareholder
meeting must be called within 60 days for the purposes of electing Trustees
to fill the existing vacancies.
The Declaration of Trust currently requires that within three months of a
Trustee appointment, notification of such be mailed to each shareholder of
the trust. Trustees also may appoint a Trustee in anticipation of a
current Trustee's retirement or resignation, or in the event of an increase
in the number of Trustees. An appointment in this case currently requires
shareholder notification within three months of the appointment under the
current Declaration of Trust.
Subject to shareholder approval, the Trustees intend to eliminate the
notification requirement from the Trust's Declaration of Trust. The
language to be deleted from the Declaration of Trust is [bracketed].
ARTICLE IV
THE TRUSTEES
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, 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 1940 Act. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office or by
recording in the records of the Trust, whereupon the appointment shall take
effect. [Within three months of such appointment the Trustees shall cause
notice of such appointment to be mailed to each Shareholder at his address
as recorded on the books of the trust.] An appointment of a Trustee may be
made by the Trustees then in office [and notice thereof mailed to
Shareholders as aforesaid] in anticipation of a vacancy to occur by reason
of retirement, resignation or increase in number of Trustees effective at a
later date, provided that said appointment shall become effective only at
or after the effective date of said retirement, resignation or increase in
number of Trustees. As soon as any Trustee so appointed shall have accepted
this trust, the trust 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 power of
appointment is subject to the provisions of Section 16 (a) of the 1940 Act.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification to
all shareholders of a trust would be costly to the funds of the trust. If
the proposal is approved, shareholders will be notified of Trustee
appointments in the next financial report for the fund. Other than
eliminating the notification requirement, this proposal does not amend any
other aspect of Trustee resignation or appointment.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the Declaration of Trust's shareholder notification
requirement in the event of an appointment of a Trustee is in the best
interests of the trust's shareholders. The Trustees recommend voting FOR
the proposed amendment. If the proposal is not approved, the Declaration
of Trust's current section entitled "Resignation and Appointment of
Trustees" will remain unchanged.
5. TO AMEND THE DECLARATION OF TRUST TO PROVIDE EACH FUND WITH THE ABILITY
TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY WITH
SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
the funds approve, a proposal to amend Article V, Section 1 of the
Declaration of Trust to clarify that the Trustees may authorize the
investment of all of a fund's assets in another open-end investment company
with substantially the same investment objective and policies ("Pooled Fund
Structure"). The purpose of the Pooled Fund Structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. In order to
implement a Pooled 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 6 on page __ seeks each fund's
shareholder approval to adopt a fundamental investment policy to permit
investment in another open-end investment company. This proposal, which
amends the Declaration of Trust, clarifies the Board's ability to implement
the Pooled Fund Structure if a fund's policies permit it.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single pooled investment, or "master" fund. For
example, a money market fund offering institutional services for large
investors might pool its investments with another money market fund that
offers checkwriting for individuals. This structure allows several feeder
funds with substantially the same objective but different distribution and
servicing features to combine their investments and manage them as one
master pool instead of managing them separately. The feeder funds combine
their investments by investing all of their assets in one master pooled
fund which would be organized as an open-end management investment company
(mutual fund). (Each feeder fund invested in a single master pooled
investment retains its own characteristics, but is able to achieve
operational efficiencies through investing together with the other feeder
funds in the Pooled Fund Structure.) The current Declaration of Trust does
not specifically provide the Trustees the ability to authorize the Pooled
Fund Structure.
REASON FOR THE PROPOSAL. 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 Pooled Fund, the Trustees believe it could be in
the best interest of each fund to adopt such a structure at a future date.
If this proposal is approved, the Declaration of Trust amendment 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 Pooled Fund Structure is permitted
under the fund's investment policies (see Proposal 6), if they determine
that a Pooled 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 the fund or its shareholders. The
Trustees will specifically consider the impact, if any, on fees paid by the
fund as a result of adopting a Pooled Fund structure. Although the current
Declaration of Trust does not contain any explicit prohibition against
implementing a Pooled Fund Structure, the specific authority is being
sought in the event the Trustees deem it appropriate to adopt a Pooled Fund
Structure in the future.
AMENDMENT TO THE DECLARATION OF TRUST. If the proposal is approved,
Article V, Section 1 of the Declaration of Trust will be amended as
follows: (material to be added is underlined):
"Subject to any applicable limitation in the Declaration of Trust or the
Bylaws of the Trust, the Trustees shall have power and authority:
(t) 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;"
CONCLUSION. The Trustees believe the proposed amendment will benefit the
funds by providing the Trustees with the flexibility to adopt a Pooled Fund
Structure in the future if permitted by a fund's investment policies and if
the Trustees determine it to be in the best interest of the fund. The
Trustees recommend that shareholders vote FOR the proposed amendment to the
Declaration of Trust. If approved, the amendment to the Declaration of
Trust will take effect immediately after the shareholder meeting or any
adjournments thereof. If the proposal is not approved, Article V, Section 1
of the Declaration of Trust will remain unchanged.
6. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND PERMITTING A
FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY
WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
the 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 with substantially the same investment objective and
policies ("Pooled Fund Structure"). The purpose of pooling would be to
achieve operational efficiencies by consolidating portfolio management
while maintaining different distribution and servicing structures.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single pooled "master" fund. In order to
implement a Pooled Fund Structure, an amendment to the Declaration of Trust
is proposed, as is the adoption of a new fundamental investment policy.
Proposal (5) proposes to amend the Declaration of Trust, and if approved,
would allow the Trustees to authorize the conversion to a Pooled Fund
Structure when permitted by a fund's policies. This proposal would add a
fundamental policy for each fund that permits a Pooled Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take advantage of potential
efficiencies. While neither the Board nor FMR has determined that a fund
should invest in a master fund, the Trustees believe it could be in the
best interests of 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 a fund from investing all of its assets in
another investment company, and would require a vote of shareholders before
such a structure could be adopted. To avoid the costs associated with a
subsequent shareholder meeting, the Trustees recommend that shareholders
vote to permit each fund's assets to be invested in a single Pooled Fund,
without a further vote of shareholders, if the Trustees determine that
action to be in the best interests of a fund and its shareholders.
Approval of Proposal (5) provides the Trustees with explicit authority to
approve a Pooled Fund Structure. If shareholders approve this proposal,
certain fundamental and non-fundamental policies and limitations of each
fund that currently prohibit investment in shares of one investment company
would be modified to permit the investment in a Pooled Fund. These
policies include Fidelity U.S. Government Reserves' limitation on
diversification, and each fund's limitations regarding concentration and
underwriting.
DISCUSSION. FMR may manage a number of mutual funds with similar
investment objectives, policies, and limitations but with different
features and services (Comparable Funds). Were these Comparable Funds to
pool their assets, operational efficiencies could be achieved, offering the
opportunity to reduce costs. Similarly, FMR anticipates that a Pooled 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 Pooled Fund, except that the
assets of a fund would be managed as part of a larger pool. Were a fund to
invest all of its assets in a Pooled Fund, it would hold only a single
investment security, and the Pooled Fund would directly invest in
individual securities pursuant to its investment objective. The Pooled
Fund would be managed by FMR or an affiliate, such as FMR Texas in the case
of a money market fund. The Trustees would retain the right to withdraw a
fund's investments from a Pooled Fund at any time and would do so if the
Pooled Fund's investment objective and policies were no longer appropriate
for the fund. The fund would then resume investing directly in individual
securities as it does currently. Whenever a fund is asked to vote at a
shareholder meeting of the Pooled Fund, the fund will hold a meeting of its
shareholders if required by applicable law or the fund's policies to vote
on the matters to be considered at the Pooled Fund shareholder meeting.
The fund will cast its votes at the Pooled Fund meeting in the same
proportion as the fund's shareholders voted at theirs. The fund would
otherwise continue its normal operations.
At present, the Trustees have not considered any specific proposal to
authorize pooling of assets. The Trustees will authorize investing each
fund's assets in a Pooled Fund only if they determine that pooling is in
the best interests of the fund and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to the fund or its shareholders. In determining whether to
invest in a Pooled 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 Pooled Fund if doing so
would materially increase costs (including fees) to shareholders.
FMR intends to seek federal and state regulatory approval in order to
allow the Fidelity funds to invest in Pooled Funds. There is, of course,
no assurance that all necessary regulatory approvals will be obtained, or
that cost reductions or increased efficiencies will be achieved.
FMR may benefit from the use of a Pooled Fund if overall assets 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 Pooled 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 Pooled Fund Structure is
implemented.
PROPOSED FUNDAMENTAL POLICY. To allow each fund to invest in a Pooled
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 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 which states:
"The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
CONCLUSION. The Board of Trustees recommends that each fund's
shareholders vote to adopt a new fundamental policy that would permit each
fund, subject to future review by the Board of Trustees as described above,
to invest all of its assets in an open-end investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund. If the proposal is not adopted, each fund's
current fundamental investment policies will remain unchanged with respect
to potential investment in Pooled Funds.
7. TO APPROVE AN AGREEMENT AND PLAN PROVIDING FOR THE CONVERSION OF
FIDELITY U.S. GOVERNMENT RESERVES INTO A SEPARATE FUND OF A DELAWARE
BUSINESS TRUST.
The Trustees have approved an Agreement and Plan of Conversion and
Termination (the Plan of Conversion) in the form attached to this Proxy
Statement as Exhibit 1. The Plan of Conversion provides for a
conversion (the Conversion) of Fidelity U.S. Government Reserves (the
current fund) from a separate series of Fidelity Charles Street Trust, a
Massachusetts business trust (the Massachusetts Trust), to a separate
series (the successor fund) of Fidelity Phillips Street Trust, a Delaware
business trust (the Delaware Trust).
The investment objective, policies, and limitations of the current fund
will not change except as approved by shareholders and as described in this
proxy statement. The successor fund will carry on the business of the
current fund following the Conversion. The successor fund will have an
investment objective, and policies and limitations identical to those of
the current fund (except as they may be modified pursuant to a vote of the
shareholders as proposed in this proxy statement). For a discussion of the
principal differences between the Massachusetts and Delaware business trust
forms of organization, see "Certain Comparative Information About the
Massachusetts Trust and the Delaware Trust" on page __.
FMR, the current fund's investment manager, will be responsible for the
investment management of the successor fund, subject to the supervision of
the Trustees, under a management contract substantially identical to the
contract currently in effect between FMR and the current fund (the Present
Management Contract); similarly, FMR Texas Inc. (FMR Texas), the current
fund's sub-adviser, will have primary responsibility for providing
portfolio investment advisory services to the successor fund under a
Sub-Advisory Agreement substantially identical to the agreement currently
in effect between FMR Texas and FMR (the Present Sub-Advisory Agreement).
For a discussion of the Present Management Contract and the Present
Sub-Advisory Agreement see pages ___ through ____.
The fund's distribution agent, Fidelity Distributors Corporation (FDC),
will distribute shares of the successor fund under a General Distribution
Agreement substantially identical to the contract currently in effect
between FDC and the current fund. For a discussion of the terms of that
contract see "Contracts with Companies Affiliated with FMR" on page ___.
It should be noted that the location and legal domicile of FMR, FMR Texas,
and FDC will not be affected by this proposal.
REASON FOR THE PROPOSED CONVERSION. The current fund is presently
organized as a fund of a Massachusetts business trust with seven series of
shares or funds. The Trustees unanimously recommend conversion of the
current fund to a separate series of the Delaware Trust (i.e., into the
successor fund) which will succeed to the business of the current fund. The
Trustees have determined that Delaware law affords advantages to the
operations of a mutual fund in addition to those available under
Massachusetts law.
Delaware law provides that the shareholders of a Delaware business trust
shall not be subject to liability for obligations of the trust. Under
Massachusetts law, current fund shareholders are potentially liable for
obligations of the current fund; although the risk of such liability is
remote, the Trustees have determined that Delaware law affords greater
protection against potential shareholder liability. Similarly, Delaware law
provides that, should the Delaware Trust issue multiple series of shares,
each series shall not be liable for the debts of any other series; another
potential, although remote, risk in the case of a Massachusetts business
trust.
The Trustees believe that the Delaware business trust form will enable the
Delaware Trust to adopt new methods of operation and employ new
technologies that are expected to reduce costs of operation when, and if,
implemented. Delaware law, for example, explicitly authorizes electronic or
telephonic communications between shareholders and the Delaware Trust. The
Trustees hope to take advantage of this provision to improve shareholder
voting procedures and reduce costs. It is anticipated that under Delaware
law and the Delaware Trust Instrument, the Delaware Trust will be required
to have fewer shareholder meetings, potentially further reducing costs.
Neither Massachusetts nor Delaware business trusts are required to hold
annual shareholder meetings, affording significant cost savings. In
addition, Delaware law affords to the Trustees the ability to adapt the
Delaware Trust to future contingencies; for example, the Trustees have the
power to incorporate the Trust, to merge or consolidate with another
entity, to cause each series to become a separate trust, and to change the
Trust's domicile without shareholder vote. Any exercise of this authority
by the Trustees will be subject to applicable federal law. This flexibility
should help to assure that the Delaware Trust always operates under the
most advanced form of organization, and is intended to reduce the expense
and frequency of future shareholder meetings for non-investment related
operational issues. Of course, the investment objective and many of the
investment limitations of both the current fund and successor fund remain
fundamental, and may only be changed by shareholder vote. For a proposed
amendment to certain of the current fund's fundamental investment
limitations, see Proposal 12.
For a more detailed comparison of the Massachusetts Trust's current
Massachusetts Declaration of Trust (the Declaration of Trust) and the
proposed Delaware Trust Instrument, see "Certain Comparative Information
About the Massachusetts Trust and the Delaware Trust" on page __.
SUMMARY OF THE PLAN OF CONVERSION. The following discussion summarizes the
important terms of the Plan of Conversion. This summary is qualified in its
entirety by reference to the Plan of Conversion itself, which is included
as Exhibit __ to this Proxy Statement.
The Delaware Trust was formed as a Delaware business trust pursuant to a
Trust Instrument dated September 17, 1992 (the Trust Instrument). On the
closing date of the Conversion (Closing Date), the current fund will
transfer all of its assets to the successor fund, a series of shares of the
Delaware Trust established for the purpose of effecting the Conversion, in
exchange for the assumption by the successor fund of all of the liabilities
of the current fund and the issuance of shares of beneficial interest of
the successor fund (Delaware Trust Shares) equal to the value (as
determined by using the procedures set forth in the current fund's
prospectus) on the date of the exchange of the current fund's net assets
divided by $1.00, the anticipated net asset value per share of the
successor fund. Immediately thereafter, the current fund will distribute
the Delaware Trust Shares to the current fund's shareholders pro rata, in
proportion to the current fund's shareholders respective beneficial
interest in the current fund (Massachusetts Fund Shares), in liquidation of
such Massachusetts Fund Shares. Immediately after this distribution of the
Delaware Trust Shares, the current fund will be terminated and, as soon as
practicable thereafter, will be wound up and liquidated. UPON COMPLETION OF
THE CONVERSION, EACH OF THE CURRENT FUND'S SHAREHOLDERS WILL BE THE OWNER
OF FULL AND FRACTIONAL DELAWARE TRUST SERIES SHARES EQUAL IN NUMBER,
DENOMINATION, AND AGGREGATE NET ASSET VALUE TO HIS OR HER MASSACHUSETTS
FUND SHARES.
The Plan of Conversion authorizes the current fund as the then sole
initial shareholder of the successor fund to approve (i) the management
contract with FMR for the successor fund (the New Management Contract),
(ii) the Sub-Advisory Agreement between FMR and FMR Texas with respect to
the successor fund (the New Sub-Advisory Agreement), and (iii) the
Distribution and Service Plan (the New Plan) under Rule 12b-1 with respect
to the successor fund identical to the contract or plan, as the case may
be, currently in effect with the current fund.
The Delaware Trust 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
removal; (c) any Trustee who requests to be retired by written instrument
signed by a majority of the other Trustees or who is unable to serve due to
physical or mental incapacity by reason of disease or otherwise, death, or
for any other reason, may be retired; and (d) a Trustee may be removed at
any Special Meeting of the shareholders by a vote of two-thirds of the
outstanding shares of 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 shareholders, the Trustees then in office will promptly call a
shareholders' meeting for the purpose of electing a Board of Trustees.
Otherwise, there will normally be no meeting of shareholders for the
purpose of electing Trustees.
The New Management Contract, the New Sub-Advisory Agreement, and the New
Plan will take effect on the Closing Date. The New Management Contract, the
New Sub-Advisory Agreement, and the New Plan will continue in force until
May 31, 1995. The New Management Contract and the New Sub-Advisory
Agreement will continue in force thereafter from year to year so long as
its continuance is approved at least annually (i) by the vote of a majority
of the Trustees who are not "interested persons" of the Delaware Trust,
FMR, or FMR Texas, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Trustees or
by the vote of a majority of the outstanding shares of the successor fund.
The New Plan will continue in effect only if approved annually by a vote of
the Trustees and of those Trustees who are not interested persons, cast in
person at a meeting called for that purpose. The New Management Contract,
New Sub-Advisory Agreement, and New Plan will be terminable without penalty
on sixty days' written notice either by the Delaware Trust, FMR, or FMR
Texas, as the case may be, and will terminate automatically in the event of
its assignment.
Assuming the Plan of Conversion is approved, it is currently contemplated
that the Conversion will become effective at the close of business on ____,
199_. However, the Conversion may become effective at another time and date
if circumstances warrant.
The obligations of the Massachusetts Trust and the Delaware Trust under
the Plan of Conversion are subject to various conditions as stated therein.
Notwithstanding the approval of the Plan of Conversion by the current
fund's shareholders, the Plan of Conversion may be terminated or amended at
any time prior to the Conversion by action of the Trustees to provide
against unforeseen events, if (1) there is a material breach by the other
party of any representation, warranty or agreement contained in the Plan of
Conversion or (2) it reasonably appears that a party cannot meet a
condition of the Plan of Conversion. The Massachusetts Trust and the
Delaware Trust may at any time waive compliance with any of the covenants
and conditions contained in, or may amend, the Plan of Conversion, provided
that such waiver or amendment does not materially adversely affect the
interests of the current fund's shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS AND PLANS. The Delaware Trust's
transfer agent will establish an account for the successor fund's
shareholders containing the appropriate number and denominations of
Delaware Trust Shares to be received by each shareholder under the Plan of
Conversion. Such accounts will be identical in all material respects to the
accounts currently maintained by the current fund's transfer agent for the
current fund's shareholders. Current fund shareholders who are receiving
payment under a withdrawal plan with respect to Massachusetts Fund Shares
will retain the same rights and privileges as to Delaware Trust Shares
under the Plan of Conversion. Similarly, no further action will be
necessary in order to continue any automatic investment plan or retirement
plan currently maintained by a fund shareholder with respect to
Massachusetts Fund Shares.
EXPENSES. The current fund and the successor fund shall each be
responsible for all of their respective expenses of the Conversion,
estimated at $______ in the aggregate.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS. Certain fundamental
investment restrictions of the current fund, which prohibit the current
fund from acquiring more than a stated percentage of ownership of another
company, might be construed as restricting the current fund's ability to
carry out the Conversion. By approving the Plan of Conversion, current fund
shareholders will be agreeing to waive, only for the purpose of the
Conversion, those fundamental investment restrictions that could prohibit
or otherwise impede the transaction.
TAX CONSEQUENCES OF THE CONVERSION. The Massachusetts Trust and the
Delaware Trust have received an opinion from their counsel, Kirkpatrick
& Lockhart, that no gain or loss will be recognized for federal income
tax purposes by the current fund, the Delaware Trust or the current fund's
shareholders upon (1) the transfer of the current fund's assets in exchange
solely for the Delaware Trust Shares and the assumption by the Delaware
Trust on behalf of the successor fund of the current fund's liabilities or
(2) the distribution of Delaware Trust Shares to the current fund's
shareholders in liquidation of their Massachusetts Fund Shares. The opinion
further provides, among other things, that (a) the basis for federal income
tax purposes of the Delaware Trust Shares to be received by each of the
current fund's shareholders will be the same as that of his or her
Massachusetts Fund Shares; and (b) the current fund's shareholder's holding
period for his or her Massachusetts Fund Shares will include the current
fund's shareholder's holding period for his or her Massachusetts Fund
Shares, provided that said Massachusetts Fund Shares were held as capital
assets on the date of the exchange.
CONCLUSION. The Board of Trustees has concluded that the proposed
agreement and plan to convert the fund into a separate series of a Delaware
business trust is in the best interest of the fund's shareholders. The
Trustees recommend that the current fund's shareholders vote FOR the
approval of the Plan of Conversion as described above. Such a vote
encompasses approval of the conversion of the current fund to a separate
series of a Delaware business trust; temporary waiver of certain investment
limitations of the current fund to permit the Conversion (see "Temporary
Waiver of Investment Restrictions" on page __); authorization of the
current fund, as sole shareholder of the Delaware Trust series, to approve
(i) a Management Contract for the successor fund between the Trust and FMR,
(ii) a Sub-Advisory Agreement for the successor fund between FMR and FMR
Texas, and (iii) a Distribution and Service Plan under Rule 12b-1,
identical to the contract or plan, as the case may be, currently in effect
with the current fund. If approved, the Plan of Conversion will take
effect on the fund's closing date. If the Plan of Conversion is not
approved, the current fund will continue to operate as a fund of a
Massachusetts business trust.
CERTAIN COMPARATIVE INFORMATION ABOUT THE
MASSACHUSETTS TRUST AND THE DELAWARE TRUST
SUMMARY OF THE TRUST INSTRUMENT. The Delaware Trust has been established
pursuant to the Trust Instrument under the laws of the State of Delaware.
The investment objective, policies, and limitations of the successor fund
will be the same as those of the current fund, including the revised
policies and limitations, if approved, adopted by shareholders pursuant to
Proposal 10. The Delaware Trust's fiscal year end is November 30, which is
different than that of the Massachusetts Trust. The Trustees may change the
fiscal year end of the Delaware Trust at their discretion in the future.
Prior to the Conversion, the successor fund will not have any assets or
liabilities. During the Conversion, the current fund will be the sole
shareholder of the successor fund immediately prior to the distribution of
Delaware Trust Shares to current fund shareholders.
As a Delaware business trust, the Delaware Trust's operations will be
governed by the Trust Instrument, the Bylaws, and applicable Delaware law
rather than by the Massachusetts Declaration of Trust, and Massachusetts
law. The operations of the Delaware Trust will continue to be subject to
the provisions of the 1940 Act, the rules and regulations of the SEC
thereunder, and applicable state securities laws.
TRUSTEES AND OFFICERS OF THE TRUST. Subject to the provisions of the Trust
Instrument, the business of the Delaware Trust is supervised by its
Trustees, who serve indefinite terms and who have all powers necessary or
convenient to carry out that responsibility. The responsibilities, powers,
and fiduciary duties of the Trustees of the Delaware Trust will be
substantially the same as those of the Trustees of the current fund. The
Trustees of the Delaware Trust would be those persons who currently serve
as Trustees of the Massachusetts Trust.
The present Trustees of the Delaware Trust will serve as Trustees of the
successor fund which may not be identical to the Trustees elected as a
result of Proposal 1.
SERIES OR FUNDS OF SHARES OF THE MASSACHUSETTS TRUST AND THE DELAWARE
TRUST. The Delaware Trust's Trust Instrument permits the Trustees to
create one or more series or funds of the Delaware Trust and, with respect
to each series or fund, to issue an unlimited number of full or fractional
shares of that series or fund or of one or more of that series' or fund's
classes. The Massachusetts Trust's Trustees have identical rights under the
Massachusetts Declaration of Trust. After the Conversion, the Delaware
Trust will have two series. Each share of a fund of the Delaware Trust,
like each share of a fund of the Massachusetts Trust, represents an equal
proportionate interest with each other share in that series or fund, none
having priority or preference over another. While additional series or
classes thereof may be added in the future, none are currently
contemplated.
DELAWARE TRUST SHAREHOLDER AND MASSACHUSETTS TRUST SHAREHOLDER LIABILITY.
One area of difference between the two forms of organizations is the
potential liability of shareholders. Generally, Delaware Trust shareholders
are not personally liable for obligations of the Delaware Trust under
Delaware law. The Delaware Business Trust Act (the Delaware Act) provides
that a shareholder of a Delaware business trust shall be entitled to the
same limitation of liability extended to shareholders of private
corporations for profit. However, no similar statutory or other authority
limiting business trust shareholder liability exists in many other states,
including Texas, the location of the fund's sub-adviser. As a result, to
the extent that the Delaware Trust or a shareholder is subject to the
jurisdiction of courts in those states, the courts may not apply Delaware
law, and may thereby subject the Delaware Trust shareholders to liability.
To guard against this risk, the Trust Instrument (i) contains an express
disclaimer of shareholder liability for acts or obligations of the Delaware
Trust and requires that notice of such disclaimer be given in each
agreement, obligation, and instrument entered into as executed by the
Delaware Trust or its Trustees and (ii) provides for indemnification out of
series or fund property of any shareholder held personally liable for the
obligations of the Delaware Trust. Thus, the risk of a Delaware Trust
shareholder incurring financial loss beyond his or her investment because
of shareholder liability is limited to circumstances in which (1) a court
refused to apply Delaware law, (2) no contractual limitation of liability
was in effect, and (3) the series or fund itself would be unable to meet
its obligations. In light of Delaware law, the nature of the Delaware
Trust's business, and the nature of its assets, FMR believes that the risk
of personal liability to a Delaware Trust shareholder is extremely remote.
Shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable under Massachusetts law for the
obligations of the Massachusetts Trust. The Massachusetts Declaration of
Trust, like the Delaware Trust Instrument, contains an express disclaimer
of shareholder liability and requires that notice of such disclaimer be
given in each agreement entered into or executed by the Massachusetts Trust
or the Trustees. The Declaration of Trust also provides for indemnification
out of Trust property. Thus, FMR believes the risk of Massachusetts Trust
shareholder liability is also remote for shareholders of Massachusetts
business trusts.
VOTING RIGHTS OF MASSACHUSETTS TRUST AND DELAWARE TRUST SHAREHOLDERS.
Neither the Massachusetts Trust nor the Delaware Trust holds annual
meetings. The Declaration of Trust and Trust Instrument each, in substance,
provides that a special meeting of shareholders may be called by the
holders of 10% or more of the shares, and that 10 or more holders of
$25,000 (who have been such for six months), or 1% of the shares, whichever
is greater, may apply to the Trustees stating that they wish to communicate
with shareholders in order to obtain the call by 10% of the outstanding
shares, in which case the Trustees shall cooperate with such shareholders
as required under Section 16(c) of the 1940 Act.
The Delaware Trust, like the Massachusetts Trust, will operate as an
open-end management investment company registered with the SEC under the
1940 Act. Shareholders of the successor fund will, therefore, have the
power to vote at special meetings with respect to, among other things,
changes in fundamental investment policies and limitations of the successor
fund; ratification of the selection by the Trustees of the independent
accountants for the Delaware Trust; and such additional matters relating to
the Delaware Trust as may be required by law, or which the Trustees
consider desirable. If, at any time, less than a majority of the Trustees
holding office have been elected by shareholders, the Trustees then in
office will promptly call a meeting of shareholders of the Delaware Trust
for the purpose of electing a Board of Trustees. The Massachusetts Trust
intends to notify the SEC that the Delaware Trust will succeed to the
shares registered by the Massachusetts Trust under the Securities Act of
1933 on behalf of the fund.
The Trust Instrument provides that shareholders shall have the power to
vote only with respect to the election of Trustees, the removal of
Trustees, the approval of investment advisory or management contracts, and
with respect to such additional matters as may be required by law or the
Trustees may consider desirable. The Trust Instrument also permits the
Trustees to amend the Trust Instrument, except that shareholders shall have
the right to vote on any amendment affecting their right to vote, on any
amendment required by law or the Trust's registration statement, or on any
matter submitted to shareholders by the Trustees. The Massachusetts
Declaration of Trust, on the other hand, generally gives shareholders
exclusive power to amend the Declaration of Trust in addition to the voting
rights granted by the Trust Instrument. The Trust Instrument provides that
one-third of the shares shall constitute a quorum; the Massachusetts
Declaration of Trust requires a majority of shares to establish quorum for
a meeting. The Massachusetts Declaration of Trust and the Delaware Trust
Instrument provide for different methods of calculating voting rights. The
Massachusetts Declaration of Trust provides that each share of a fund in a
Trust is entitled to one vote. Proposal 3 on page __ amends the voting
rights of the Massachusetts Trust. The amendment, if approved, would
provide for voting rights to be calculated based on a shareholder's total
dollar interest in a fund rather than on the number of shares owned. This
is the method by which shareholders' voting rights are calculated under the
Delaware Trust Instrument. If Proposal 3 and this Proposal to convert the
fund to a fund of a Delaware Trust are passed by shareholders, the
Massachusetts Trust and the Delaware Trust will provide for calculating
voting rights in the same manner.
LIABILITY OF TRUSTEES. The Trust Instrument provides that the Trustees
shall not be liable to any person other than the Delaware Trust or a
shareholder and that a Trustee shall not be liable for any act as a
Trustee; but nothing in the Trust Instrument protects a Trustee against any
liability to the Trust or its shareholders to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.
The Declaration of Trust provides that its Trustees shall not be liable for
errors of judgment or mistakes of fact or law, subject to substantially
similar provisions concerning willful misfeasance, bad faith, gross
negligence, and reckless disregard as those described above.
8. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY U.S. GOVERNMENT
RESERVES.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal to amend the fund's management contract with
FMR (the Amended Contract). The proposal would modify the management fee
that FMR receives from the fund to lower two components of the fund's fee
and add another component based on the fund's gross income. THE AMENDED
CONTRACT WILL RESULT IN A MANAGEMENT FEE WHICH IS LOWER THAN THE FEE
PAYABLE UNDER THE PRESENT MANAGEMENT CONTRACT (THE PRESENT CONTRACT).
SUMMARY OF THE PROPOSAL. A copy of the Amended Contract, marked to
indicate the proposed amendment, is supplied as Exhibit 2 on page __. In
addition to the amendment to the management fee, this proposal adds a
provision which discusses FMR's ability to use broker-dealers on behalf of
the fund. The fund's current management fee is composed of a fixed
individual fund fee rate of 0.28% and a group fee rate that varies
according to FMR's assets under management. The fund's current management
fee for the period ending ___ 1994 is 0.__%. The proposed management fee
structure would lower the individual fund fee rate from 0.28% to 0.03%, add
an income-based component to the fund's fee, and add additional breakpoints
to the group fee rate in order to make it consistent with other taxable
Fidelity money market funds. The income-based fee is a percentage of the
fund's gross income, calculated and paid monthly, and varies according to
the fund's yield. The management fee under the Amended Contract would
provide for lower management fees than under the Present Contract at all
yield levels.
At current yields and assets under management, the fund's management fee
rate would decrease from 0.__% to 0.__%. The median management fee rate for
taxable retail money market funds is ___%.
Effective September 1, 1993, FMR agreed to voluntarily adopt the proposed
management fee structure. If approved by shareholders, the Amended Contract
will take effect on October 1, 1994 (or, if later, the first day of the
first month following approval) and will remain in effect through May 31,
1995 and thereafter subject to continuation by the fund's Board of
Trustees. If the Amended Contract is not approved, the Present Contract
will continue in effect through May 31, 1995, and thereafter subject to
continuation by the fund's Board of Trustees.
PRESENT MANAGEMENT FEE. The fund's management fee under the Present
Contract is an annual percentage of the fund's average net assets,
calculated and paid monthly. The percentage is a sum of two components: a
group fee rate, which varies according to FMR's aggregate assets under
management and ranges from 0.13% to 0.37%, and a fixed individual fund fee
rate of 0.28%. As of the period ending __, 1994, the fund's management fee
was 0.__%. More information concerning the Present Contract is included
under the section "Present Management Contracts" on page __.
PROPOSED MANAGEMENT FEE. The proposed management fee is composed of three
components: an individual fund fee, a group fee, and an income-based fee.
The proposed management fee structure would lower the individual fund fee
rate from 0.28% to 0.03%, add five new "breakpoints" to the group fee rate
schedule, as shown on page 27, and add an income-based component of the
fund's fee that varies according to the fund's yield.
The income-based fee equals 6% of that portion of the fund's gross income
that represents a gross yield of more than 5% per year. The maximum
income-based component is 0.24% of average net assets, at a fund gross
yield of 9%.
For the services of FMR under the proposed contract, the fund will pay FMR
a monthly management fee calculated by adding the group fee rate to th
individual fund fee rate (.03%). The result is then added to the
income-based fee rate component of 6% of the fund's gross yield in excess
of a 5% yield, resulting in the management fee rate for that month.
For ____, 1994, at current yields, the fund's management fee under the
Amended Contract would have been 0.__%, compared to 0.__% under the Present
Contract. The following table compares the fund's present and proposed
management fee rates at current group assets of $___ billion at various
fund gross yields for the month ended ____, 1994.
1994
Gross Present Fee Rate* Proposed Fee Rate
Yields
1% % %
2%
3%
4%
5%
6%
7%
8%
9%
* Does not reflect voluntary adoption of the proposed management fee
structure by FMR on September 1, 1993.
MODIFICATION TO GROUP FEE RATE. In addition, the proposal would modify
the group fee rate by providing for lower fee rates if assets under
management by FMR remain above $84 billion and change certain terms of the
contract relating to portfolio transactions.
The group fee rate varies based on the aggregate net assets of all
registered investment companies having management contracts with FMR. As
group net assets increase, the group fee rate declines. The Amended
Contract would not change the group fee calculation for group net assets of
$84 billion or less. Above $84 billion in group net assets, the group fee
rate does not decline under the Present Contract, but under the Amended
Contract, it declines as indicated in the table on the next page. These
lower fee rates were voluntarily implemented by FMR on January 1, 1992 and
November 1, 1993.
The group fee rate is calculated according to a graduated fee schedule
providing for different rates for different levels of group net assets. The
rate at which the fee declines is determined by fee "breakpoints" that
provide for lower fees when assets increase. The Amended Contract would add
five new fee breakpoints for group asset levels above $84 billion as
illustrated in the table below. (For an explanation of how these
breakpoints are factored into the fee calculation, see the section entitled
"Present Management Contracts" beginning on page ___.)
Average Group
Assets Present* Amended
($ billions) Contract Contract
84-120 .1500% .1500%
120-174 .1500% .1450%
174-228 .1500% .1400%
228-282 .1500% .1375%
282-336 .1500% .1350%
Over 336 .1500% .1325%
The result at various levels of group net assets is illustrated by the
table below.
EFFECTIVE ANNUAL GROUP FEE RATES
Group Net
Assets Present* Amended
($ billions) Contract Contract
215 .1646% .1646%
250 .1606% .1604%
300 .1572% .1565%
350 .1547% .1533%
400 .1529% .1507%
* Does not reflect voluntary adoption of extended group fee rate schedules
by FMR on January 1, 1992 and November 1, 1993.
Average group net assets for ____, 1994 were approximately $___ billion.
COMPARISON OF MANAGEMENT FEES AND TOTAL EXPENSES. For ____, 1994, at
average group net assets of $___ billion, the fund's management fee under
the Amended Contract would have been .___%, compared to .___%. The
following chart compares the fund's management fees and total expense ratio
under the terms of the Present Contract for the fiscal years ended
September 30, 1993, 1992 and 1991, and the fees and expenses the fund would
have incurred if the Proposed Contract had been in effect:
(000
Omitted)
1993 1992 1991
Average Net Assets: $ $ $
FEES UNDER PRESENT CONTRACT:*
Management Fee $ $ $
Total($) $ $ $
Total (%) % % %
FEES IF PROPOSED CONTRACT HAD BEEN IN EFFECT:
Management Fee $ $ $
Total ($) $ $ $
Total (%) % % %
RATIO OF TOTAL EXPENSES TO AVERAGE NET ASSETS:
Current Contract* % % %
Proposed Contract % % %
* Figures are annualized and do not reflect voluntary adoption of the
proposed management fee structure by FMR on September 1, 1993 and
voluntary adoption of extended group fee rate schedules by FMR on January
1, 1992 and November 1, 1993.
Over the periods shown above, the group fee rate declined from 0.__% in
October 1990 to 0.__% in September 1993.
TRANSACTIONS WITH BROKER-DEALERS. The fund may execute portfolio
transactions with broker-dealers who provide research and execution
services to the fund or other accounts over which FMR or its affiliates
exercise investment discretion. The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund and to its other clients, and conversely, such
research provided by broker-dealers who execute transaction orders on
behalf of other FMR clients may be useful to FMR in carrying out its
obligations to the fund. The receipt of such research has not reduced FMR's
normal independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
The fund has already been authorized by the Board of Trustees, consistent
with the federal securities laws and the rules and regulations of the SEC,
to place portfolio transactions through broker-dealers who are affiliated
with FMR and through broker-dealers who provide research. The Amended
Management Contract expressly recognizes this authority.
MATTERS CONSIDERED BY THE BOARD. In June 1993, FMR presented to the Board
a proposal seeking approval for the fund to reduce its individual fund fee
rate and to adopt an income-based management fee structure similar to other
Fidelity money market funds. The Trustees determined that the proposal
provides for a fee reduction at all yield levels and furthers the goal of
standardizing the management fee of retail taxable money market funds
advised by FMR.
In addition, the non-interested Trustees recommended in 1991, and again in
1993, that the existing group fee be reconsidered in light of the
significant growth in the assets of funds advised by FMR. FMR believes
that varying management fee rates according to group assets is more
appropriate than basing the fee entirely on assets of any single fund.
The Board of Trustees has determined that the compensation to be paid to
FMR under the Modified Contract is fair and reasonable. In unanimously
approving the Modified Contract and recommending its approval by
shareholders, the Trustees of the fund, including the Independent Trustees,
considering the best interests of shareholders of the fund, took into
account all factors they deemed relevant. The factors considered by the
Trustees included the nature, quality, and extent of the services furnished
by FMR to the fund; the necessity of FMR maintaining and enhancing its
ability to retain and attract high caliber personnel to serve the fund; the
increasing complexity of the domestic and international securities markets;
the investment record of FMR in managing the fund; extensive financial,
personnel, and structural information as to the Fidelity organization,
including the revenues and expenses of FMR and Fidelity Service Co. (FSC,
the fund's transfer, shareholder servicing, and pricing and bookkeeping
agent) relating to their mutual fund activities and pro forma profitability
data giving effect to the proposed change to the management fee structure;
the effect of the proposed management fee structure change on the total
expense ratio of the fund; whether economies of scale were demonstrated in
connection with FMR's provision of investment management and shareholder
services as assets increase; data on investment performance, management
fees and expense ratios of competitive funds and other Fidelity funds;
FMR's expenditures in developing enhanced shareholder services for the
fund; enhancements in the quality and scope of the shareholder services
provided to the fund's shareholders; the fees charged and the services
offered by an affiliate of FMR for providing investment management services
to non-investment company accounts; and possible "spin-off" benefits to FMR
from serving as manager and from affiliates of FMR serving as principal
underwriter and transfer agent of the fund.
With regard to the section of the proposed contract describing the changes
to portfolio transactions, the Trustees considered the value of research
provided by the broker-dealers, the quality of the execution services
provided, and the level of commissions paid. While the fund does not
generally purchase securities through a broker-dealer by paying
commissions, the Board of Trustees determined that amending the management
contract to expressly recognize the authority of FMR to use affiliated
broker-dealers and broker-dealers who provide research services furthers
the goal of standardizing management contracts for Fidelity funds, and that
explicitly permitting all Fidelity funds to utilize certain broker-dealers
is beneficial to the fund.
CONCLUSION, ACTION OF THE BOARD OF TRUSTEES, AND RECOMMENDED SHAREHOLDER
ACTION. Based on its evaluation of the extensive materials presented and
assisted by the advice of independent counsel, the Board of Trustees
concluded (i) that the proposed management fee rate structure was fair and
reasonable and (ii) that the proposed reduction in the group fee rate
structure was in the best interest of the fund's shareholders. The Board of
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.
9. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY
SHORT-INTERMEDIATE GOVERNMENT FUND.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal to amend the fund's management contract with
FMR (the Amended Contract). The proposal would modify the management fee
that FMR receives from the fund to provide for lower fees when FMR's assets
under management exceed certain levels. THE AMENDED CONTRACT WILL RESULT IN
A MANAGEMENT FEE THAT IS THE SAME AS, OR LOWER THAN, THE FEE PAYABLE UNDER
THE PRESENT MANAGEMENT CONTRACT (THE PRESENT CONTRACT).
PROPOSED AMENDMENT TO THE PRESENT MANAGEMENT CONTRACT. A copy of the
Amended Contract, marked to indicate the proposed amendment, is supplied as
Exhibit __ on page __. Except for the amendment to the management fee, it
is substantially identical to the Present Contract. (For a detailed
discussion of the fund's Present Contract, refer to the section entitled
"Present Management Contract" beginning on page __.) If approved by
shareholders, the Amended Contract will take effect on October 1, 1994 (or,
if later, the first day of the first month following approval) and will
remain in effect through June 30, 1995 and thereafter subject to
continuation by the fund's Board of Trustees. If the Amended Contract is
not approved, the Present Contract will continue in effect through June 30,
1995, and thereafter subject to continuation by the fund's Board of
Trustees.
The management fee is an annual percentage of the fund's average net
assets, calculated and paid monthly. The percentage is the sum of two
components: a group fee rate, which varies according to FMR's assets under
management, and a fixed individual fund fee rate. The proposal would
modify the group fee by providing for lower fee rates if FMR's assets under
management remain above 174 billion.
MODIFICATION TO GROUP FEE RATE. The group fee rate varies based on the
aggregate net assets of all registered investment companies having
management contracts with FMR. As group net assets increase, the group fee
rate declines. The Amended Contract would not change the group fee
calculation for group net assets of $174 billion or less. Above $174
billion in group net assets, the group fee rate does not decline under the
Present Contract, but under the Amended Contract, it declines as indicated
in the table below. These lower fee rates were voluntarily implemented by
FMR on January 1, 1992 and November 1, 1993.
The group fee rate is calculated according to a graduated fee schedule
providing for different rates for different levels of group net assets. The
rate at which the fee declines is determined by fee "breakpoints" that
provide for lower fees when assets increase. The Amended Contract would add
three new fee breakpoints for group asset levels above $174 billion as
illustrated in the table below. (For an explanation of how these
breakpoints are factored into the fee calculation, see the section entitled
"Present Management Contract" beginning on page ___.)
GROUP FEE RATES
Average Group Present Proposed
Assets Contract* Contract
($ billions)
174 - 228 .1400% .1400%
228 - 282 .1400% .1375%
282 - 336 .1400% .1350%
Over 336 .1400% .1325%
The result at various levels of group net assets is illustrated by the
table below.
EFFECTIVE ANNUAL GROUP FEE RATES
Group Net Present Proposed
Assets Contract* Contract
($ billions)
250 .1606% .1604%
300 .1572% .1565%
350 .1547% .1533%
400 .1529% .1507%
* Does not reflect voluntary adoption of extended group fee rate schedules
by FMR on January 1, 1992 and November 1, 1993.
Average group net assets for May 1994 were approximately $253 billion.
The fund's annual individual fund fee rate is .30%. The sum of the group
fee rate and the individual fund fee rate is referred to as a fund's
management fee rate. One-twelfth (1/12) of this annual management fee rate
is applied to the fund's average net assets for the current month,
resulting in a dollar amount which is the management fee for that month.
COMPARISON OF MANAGEMENT FEES AND TOTAL EXPENSES. For May 1994 average
group net assets of $253 billion, the fund's management fee rate under the
Amended Contract would have been __%, compared to __% under the Present
Contract. The management fee rate will remain the same under both the
Present Contract and the Amended Contract until group net assets exceed
$___ billion, at which point the management fee rate under the Amended
Contract begins to decline. The following chart compares the fund's
management fee and total expense ratio under the terms of the Present
Contract for the fiscal year ended September 30, 1993 to the fees and
expenses the fund would have incurred if the Amended Contract had been in
effect.
Present Contract* Amended Contract
Manageme Total Manageme Total
nt Expense nt Fee Expense
Fee Ratio Ratio
$ % $ %
* Does not reflect voluntary adoption of extended group fee rate schedules.
MATTERS CONSIDERED BY THE BOARD OF TRUSTEES. The non-interested Trustees
recommended in 1991, and again in 1993, that the existing group fee be
reconsidered in light of the significant growth in the assets of funds
advised by FMR.
FMR provided substantial information to the Trustees to assist it in its
deliberations. In addition, the Committee requested and reviewed additional
data, including analyses prepared by independent counsel to both the funds
and the non-interested Trustees. In unanimously approving the proposed
contract and recommending its approval by shareholders, the Trustees of the
fund, including the Independent Trustees, considering the best interests of
shareholders of the fund, took into account all factors they deemed
relevant. The factors considered by the Independent Trustees included the
nature, quality, and extent of the services furnished by FMR to the fund;
the necessity of FMR maintaining and enhancing its ability to retain and
attract high caliber personnel to serve the fund; the increased complexity
of the domestic and international securities markets; the investment record
of FMR in managing the fund; extensive financial, personnel, and structural
information as to the Fidelity organization, including the revenues and
expenses of FMR, and FSC relating to their mutual fund activities; whether
economies of scale were demonstrated in connection with FMR's provision of
investment management and shareholder services as assets increased; data on
investment performance, management fees and expense ratios of competitive
funds and other Fidelity funds; FMR's expenditures in developing enhanced
shareholder services for the fund; enhancements in the quality and scope of
the shareholder services provided to the fund's shareholders; the fees
charged and services offered by an affiliate of FMR for providing
investment management services to non-investment company accounts; and
possible "spin-off" benefits to FMR from serving as manager and from
affiliates of FMR serving as principal underwriter and transfer agent of
the fund.
CONCLUSION, ACTION OF THE BOARD OF TRUSTEES, AND RECOMMENDED SHAREHOLDER
ACTION. Based on its evaluation of the extensive materials presented and
assisted by the advice of independent counsel, the Board of Trustees
concluded (i) that the existing management fee rate structure was fair and
reasonable and (ii) that the proposed reduction in the group fee rate
structure was in the best interest of the fund's shareholders. The Board of
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.
10. TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH FMR FAR EAST FOR SPARTAN
SHORT-TERM INCOME FUND AND SPARTAN INVESTMENT GRADE BOND FUND.
In conjunction with its portfolio management responsibilities on behalf of
Fidelity Short-Term Income Fund and Spartan Investment Grade Bond Fund, FMR
has entered into sub-advisory agreements with affiliates whose offices are
geographically dispersed around the world. To strengthen and coordinate
these relationships, the Board of Trustees proposes that shareholders of
each fund approve a new sub-advisory agreement (the proposed agreement)
between Fidelity Management & Research Far East Inc. (FMR Far East) and
FMR on behalf of each fund to replace FMR's existing agreement with FMR Far
East. The proposed agreement would allow FMR not only to receive investment
advice and research services from FMR Far East, but also would permit FMR
to grant FMR Far East investment management authority, as well as the
authority to buy and sell securities if FMR believes it would be beneficial
to each fund and its shareholders. Because FMR pays all of FMR Far East's
fees, the proposed agreement would not affect the fees paid by each fund to
FMR.
On March 9, 1994, the Board of Trustees agreed to submit the proposed
agreement to shareholders of each fund pursuant to a unanimous vote of both
the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. If approved by shareholders, the proposed
agreement will replace the sub-advisory agreement currently in effect with
respect to each fund (the current agreement). The current agreements, dated
September 17, 1992, were approved by the Board of Trustees prior to each
fund's commencement of operations, and were approved by FMR, then sole
shareholder of the funds on September 23, 1992. A copy of the proposed
agreement is attached to this proxy statement as Exhibit 4.
FMR Far East, with its principal office in Tokyo, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR
with respect to foreign securities. This research complements other
research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR Far East may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as investment
adviser, and to other clients. Currently, FMR Far East's only client other
than FMR is Fidelity International Limited (FIL), an affiliate of FMR
organized under the laws of Bermuda. FIL provides investment advisory
services to non-U.S. investment companies and institutional investors
investing in securities of issuers throughout the world. Edward C. Johnson
3d, President and a Trustee of the trust, is Chairman and a Director of FMR
Far East, Chairman, and a Director of FIL, and a principal stockholder of
both FIL and FMR. For more information on FMR Far East, see the section
entitled "Activities and Management of FMR U.K. and FMR Far East" on
page__.
Under the current agreement, FMR Far East acts as an investment
consultant to FMR and supplies FMR with investment research information and
portfolio management advice as FMR reasonably requests on behalf of each
fund. FMR Far East provides investment advice and research services with
respect to issuers located outside of the United States, focusing primarily
on companies based in the Far East. Under the current agreement with FMR
Far East, FMR, NOT EACH FUND, pays FMR Far East's fee equal to 105% of its
costs incurred in connection with the agreement.
Although FMR employees are expected to consult regularly with FMR Far
East, under the current agreement, FMR Far East has no authority to make
investment decisions on behalf of the funds. Under the proposed agreement,
FMR would continue to receive investment advice from FMR Far East, but it
could also grant investment management authority to FMR Far East with
respect to all or a portion of each fund's assets. If FMR Far East were to
exercise investment management authority on behalf of a fund, it would be
required, subject to the supervision of FMR, to direct the investments of
the fund in accordance with the fund's investment objective, policies, and
limitations as provided in each fund's Prospectus or other governing
instruments and such other limitations as each fund may impose by notice in
writing to FMR or FMR Far East. If FMR grants investment management
authority to FMR Far East with respect to all or a portion of a fund's
assets, FMR Far East would be authorized to buy or sell stocks, bonds, and
other securities for the fund subject to the overall supervision of FMR and
the Board of Trustees. In addition, the proposed agreement would authorize
FMR to delegate other investment management services to FMR Far East,
including, but not limited to, currency management services (including
buying and selling currency options and entering into currency forward and
futures contracts on behalf of each fund), other transactions in futures
contracts and options, and borrowing or lending portfolio securities. If
any of these investment management services were delegated, FMR Far East
would continue to be subject to the control and direction of FMR and the
Board of Trustees and to be bound by the investment objective, policies,
and limitations of each fund. If granted investment management authority,
FMR Far East would also execute orders to purchase and sell securities as
described in the "Portfolio Transactions" section on page ___.
Allowing FMR to grant investment management authority to FMR Far East
would provide FMR increased flexibility in the assignment of portfolio
managers and give each fund access to managers located abroad who may have
more specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders may
benefit from giving FMR, through FMR Far East, the ability to execute
portfolio transactions from points in the Far East that are physically
closer to foreign issuers and the primary markets in which their securities
are traded. Increasing FMR's proximity to foreign markets should enable
each fund to participate more readily in full trading sessions on foreign
exchanges, and to react more quickly to changing market conditions.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY EACH
FUND. The fees paid by FMR to FMR Far East for investment advice as
described above would remain unchanged. However, to the extent that FMR
granted investment management authority to FMR Far East, FMR would pay FMR
Far East 50% of its monthly management fee with respect to the average net
assets managed on a discretionary basis by FMR Far East for investment
management and portfolio execution services.
If approved by shareholders, the proposed agreement would take affect on
October 1, 1994 (or, if later, the first day of the first month following
approval) and would continue in force until June 30, 1995 and from year to
year thereafter, but only as long as its continuance was approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of those Trustees who are not "interested persons"
of the trust or FMR and (ii) the vote of either a majority of the Trustees
or by the vote of a majority of the outstanding shares of each fund.
The proposed agreement could be transferred to a successor of FMR Far East
without resulting in its termination and without shareholder approval, as
long as the transfer did not constitute an assignment under applicable
securities regulations. The proposed agreement would be terminable on 60
days' written notice by either party to the agreement and the proposed
agreement would terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees unanimously recommends that shareholders
of each fund vote FOR the proposed agreement. If the proposed agreement is
not approved by shareholders of a fund, FMR's current agreement on behalf
of that fund will continue in effect.
11. TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH FMR U.K. FOR SPARTAN
SHORT-TERM INCOME FUND AND SPARTAN INVESTMENT GRADE BOND FUND.
In conjunction with its portfolio management responsibilities on behalf of
Spartan Short-Term Income Fund and Spartan Investment Grade Bond Fund, FMR
has entered into sub-advisory agreements with affiliates whose offices are
geographically dispersed around the world. To strengthen and coordinate
these relationships, the Board of Trustees proposes that shareholders of
each fund approve a new sub-advisory agreement (the proposed agreement)
between Fidelity Management & Research U.K. Inc. (FMR U.K.) and FMR on
behalf of each fund to replace FMR's existing agreement with FMR U.K. The
proposed agreement would allow FMR not only to receive investment advice
and research services from FMR U.K., but also would permit FMR to grant FMR
U.K. investment management authority, as well as the authority to buy and
sell securities if FMR believes it would be beneficial to each fund and its
shareholders. Because FMR pays all of FMR U.K.'s fees, the proposed
agreement would not affect the fees paid by each fund to FMR.
On , the Board of Trustees agreed to submit the proposed agreement to
shareholders of [the/ each] fund pursuant to a unanimous vote of both the
full Board of Trustees and those Trustees who were not "interested persons"
of the trust or FMR. If approved by shareholders, the proposed agreement
will replace the sub-advisory agreement currently in effect with respect to
each fund (the current agreement). The current agreements for Spartan
Short-Term Income Fund and Spartan Investment Grade Bond Fund, dated
September 17, 1992, were approved by the Board of Trustees prior to each
fund's commencement of operations, and were approved by FMR, then sole
shareholder of the funds on September 23, 1992. A copy of the proposed
agreement is attached to this proxy statement as Exhibit 5.
FMR U.K., with its principal office in London, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR
with respect to foreign securities. This research complements other
research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR U.K. may also provide investment advisory services to FMR with respect
to other investment companies for which FMR serves as investment adviser,
and to other clients. Currently, FMR U.K.'s only client other than FMR is
Fidelity International Limited (FIL), an affiliate of FMR organized under
the laws of Bermuda. FIL provides investment advisory services to non-U.S.
investment companies and institutional investors investing in securities of
issuers throughout the world. Edward C. Johnson 3d, President and a Trustee
of the trust, is Chairman and a Director of FMR U.K., Chairman, and a
Director of FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR U.K., see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page__.
Under the current agreement, FMR U.K. acts as an investment consultant to
FMR and supplies FMR with investment research information and portfolio
management advice as FMR reasonably requests on behalf of [the/ each] fund.
FMR U.K. provides investment advice and research services with respect to
issuers located outside of the United States focusing primarily on
companies based in Europe. Under the current agreement with FMR U.K., FMR,
NOT EACH FUND, pays FMR U.K.'s fee equal to 110% of its costs incurred in
connection with the agreement.
Although FMR employees are expected to consult regularly with FMR U.K.,
under the current agreement, FMR U.K. has no authority to make investment
decisions on behalf of the funds. Under the proposed agreement, FMR would
continue to receive investment advice from FMR U.K., but it could also
grant investment management authority with respect to all or a portion of
each fund's assets to FMR U.K. If FMR U.K. were to exercise investment
management authority on behalf of a fund, it would be required, subject to
the supervision of FMR, to direct the investments of the fund in accordance
with the fund's investment objective, policies, and limitations as provided
in each fund's Prospectus or other governing instruments and such other
limitations as each fund may impose by notice in writing to FMR or FMR U.K.
If FMR grants investment management authority to FMR U.K. with respect to
all or a portion of a fund's assets, FMR U.K. would be authorized to buy or
sell stocks, bonds, and other securities for the fund subject to the
overall supervision of FMR and the Board of Trustees. In addition, the
proposed agreement would authorize FMR to delegate other investment
management services to FMR U.K., including, but not limited to, currency
management services (including buying and selling currency options and
entering into currency forward and futures contracts on behalf of each
fund), other transactions in futures contracts and options, and borrowing
or lending portfolio securities. If any of these investment management
services were delegated, FMR U.K. would continue to be subject to the
control and direction of FMR and the Board of Trustees and to be bound by
the investment objective, policies, and limitations of each fund. If
granted investment management authority, FMR U.K. would also execute orders
to purchase and sell securities as described in the "Portfolio
Transactions" section on page ___.
Allowing FMR to grant investment management authority to FMR U.K. would
provide FMR increased flexibility in the assignment of portfolio managers
and give each fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders may
benefit from giving FMR, through FMR U.K., the ability to execute portfolio
transactions from points in Europe that are physically closer to foreign
issuers and the primary markets in which their securities are traded.
Increasing FMR's proximity to foreign markets should enable each fund to
participate more readily in full trading sessions on foreign exchanges, and
to react more quickly to changing market conditions.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY EACH
FUND. The fees paid by FMR to FMR U.K. for investment advice as described
above would remain unchanged. However, to the extent that FMR granted
investment management authority to FMR U.K., FMR would pay FMR U.K. 50% of
its monthly management fee with respect to the average net assets managed
on a discretionary basis by FMR U.K. for investment management and
portfolio execution services.
If approved by shareholders, the proposed agreement would take affect on
October 1, 1994 (or, if later, the first day of the first month following
approval) and would continue in force until June 30, 1995 and from year to
year thereafter, but only as long as its continuance was approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of those Trustees who are not "interested persons"
of the trust or FMR and (ii) the vote of either a majority of the Trustees
or by the vote of a majority of the outstanding shares of each fund.
The proposed agreement could be transferred to a successor of FMR U.K.
without resulting in its termination and without shareholder approval, as
long as the transfer did not constitute an assignment under applicable
securities regulations. The proposed agreement would be terminable on 60
days' written notice by either party to the agreement and the proposed
agreement would terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees unanimously recommends that shareholders
of each fund vote FOR the proposed agreement. If the proposed agreement is
not approved by shareholders of a fund, FMR's current agreement on behalf
of that fund will continue in effect.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 12 is to revise one of Fidelity U.S.
Government Reserves' investment limitations to conform to a limitation
which is the standard for similar types of funds managed by FMR. The Board
of Trustees asked FMR to analyze the various fundamental and
non-fundamental investment limitations of the Fidelity funds, and, where
practical and appropriate to a fund's investment objective and policies,
propose to shareholders adoption of standard fundamental limitations and
elimination of certain other fundamental limitations. Generally, when
fundamental limitations are eliminated, Fidelity's standard non-fundamental
limitations replace them. By making these limitation non-fundamental, the
Board of Trustees may amend limitations as they deem appropriate, without
seeking shareholder vote. The Board of Trustees would amend these
limitations to respond, for instance, to developments in the marketplace,
or changes in federal or state law. The costs of shareholder meetings if
called for these purposes are generally borne by the fund and its
shareholders.
It is not anticipated that this proposal will substantially affect the way
the fund is currently managed. However, FMR is presenting it to you for
your approval because FMR believes that increased standardization will help
to promote operational efficiencies and facilitate monitoring of compliance
with fundamental and non-fundamental investment limitations. Although
adoption of the new or revised limitation is not likely to have any impact
on the current investment techniques employed by the fund, it will
contribute to the overall objectives of standardization.
12. TO ELIMINATE FIDELITY U.S. GOVERNMENT RESERVES' FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING WRITING OR PURCHASING PUT OR CALL OPTIONS.
The fund's current fundamental investment limitation concerning put and
call options states that:
"The fund may not write or purchase any put or call option."
The Trustees recommend that shareholders of the fund vote to eliminate the
above fundamental investment limitation. The Trustees believe that the
fund's current limitation unnecessarily restricts the fund from taking
advantage of potential investment opportunities and techniques that are
consistent with the fund's investment objective, and believe that the fund
would benefit from having the flexibility to purchase and sell options in
addition to its direct investment in securities.
If approved, FMR has no current intention of implementing any strategies
involving exchange-traded options contracts. However, some of the fund's
investments may include demand or "put" features, which provide additional
liquidity or protection against loss. In addition, the fund may from time
to time enter into agreements with option-like features, such as standby
commitments or other instruments conveying the right or obligation to buy
or sell securities at a future date. Approval of the proposal would allow
FMR to develop and implement additional strategies in the future, without
the need to seek further shareholder approval. Any such strategies must, of
course, be in accordance with applicable federal and state regulations. In
addition to review by the Trustees, the fund would not engage in such
strategies until they had been described sufficiently in the fund's
Prospectus and Statement of Additional Information.
Options can be used in a variety of strategies aimed at different goals
and having different characteristics of risk and reward. For example,
buying puts or writing calls may hedge against rising interest rates or
other factors that could depress security values. Buying calls or writing
puts may help fix a definite price for securities the fund intends to
purchase, reducing the risk of acquiring the securities at a higher cost at
a later date. The fund would only use such strategies that are consistent
with its investment objective. If the proposal is approved, the Trustees
intend to adopt the following non-fundamental investment limitation:
"The fund does not currently intend to purchase or sell call options. This
limitation does not apply to options attached to, or acquired or traded
together with, their underlying securities, and does not apply to
securities that incorporate features similar to options."
CONCLUSION. After consideration of all relevant factors, the Board of
Trustees has determined that it is in the best interest of shareholders to
eliminate the fund's fundamental limitation concerning investments in put
and call options. Accordingly, the Trustees recommend voting FOR the
proposal. The new non-fundamental limitation, upon shareholder approval,
will become effective immediately. If the proposal is not approved, the
fund's current limitation will remain uncharged.
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 whose net assets as of May 31, 1994, were in
excess of $___ billion. The Fidelity family of funds currently includes a
number of funds with a broad range of investment objectives and permissible
portfolio compositions. The Boards of these funds are substantially
identical to that of this trust. In addition, FMR serves as investment
adviser to certain other funds which are generally offered to limited
groups of investors. Information concerning the advisory fees, net assets,
and total expenses of the funds advised by FMR is contained in the Table of
Average Net Assets and Expense Ratios in Exhibit __.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research information, and may supply portfolio management
services to FMR in connection with certain funds advised by FMR. FMR Texas
Inc., a wholly owned subsidiary of FMR formed in 1989, supplies portfolio
management and research services in connection with certain money market
funds advised by FMR.
FMR, its officers and directors, its affiliated companies and personnel,
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 which 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 Consolidated Statement of Financial Condition of Fidelity Management
& Research Company and subsidiaries as of December 31, 1993 is shown
beginning on page __
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board; J.
Gary Burkhead, President; and Peter S. Lynch, Vice Chairman. Each of the
Directors is also a Trustee of the trust. Messrs. Johnson 3d, Burkhead,
John H. Costello, Leland Barron, Curtis Hollingsworth, Gary L. French,
Arthur S. Loring, Thomas J. Steffanci, and Fred L. Henning, Jr. are
currently officers of the trust and officers or employees of FMR or FMR
Corp. With the exception of Mr. Costello, all of these persons are
stockholders of FMR Corp. FMR's address is 82 Devonshire Street, Boston,
Massachusetts 02109, which is also the address of the Directors of FMR.
All of the stock of FMR is owned by a parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts, which was organized on October
31, 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions, FSC, which is the transfer and
shareholder servicing agent for certain of the retail funds advised by FMR,
Fidelity Investments Institutional Operations Company, which performs
shareholder servicing functions for certain institutional customers, and
Fidelity Investments Retail Marketing Company, which provides marketing
services to various companies within the Fidelity organization. Messrs.
Johnson 3d, Burkhead, William L. Byrnes, James C. Curvey, and Caleb Loring,
Jr. are the Directors of FMR Corp. On March 31, 1994, Messrs. Johnson 3d,
Burkhead, Curvey, and Loring, Jr., and Ms. Abigail Johnson owned
approximately __%, _%, _%, __%, and __%, respectively, of the voting common
stock of FMR Corp. In addition, various Johnson family members and various
trusts for the benefit of Johnson family members, for which Messrs.
Burkhead, Curvey, or Loring, Jr. are Trustees, owned in the aggregate
approximately __% of the voting common stock of FMR Corp. Messrs. Johnson
3d, Burkhead, and Curvey owned approximately _%, _% and _%, respectively,
of the non-voting common stock of FMR Corp. In addition, various trusts for
the benefit of members of the Johnson family, for which Mr. Loring, Jr. is
the sole Trustee, and other trusts for the benefit of Johnson family
members, through limited partnership interest in a partnership the
corporate general partner of which is controlled by Mr. Johnson 3d, Mr.
Loring, Jr., and other Johnson family members, together owned approximately
__% of the non-voting common stock of FMR Corp. Through ownership of voting
common stock, Edward C. Johnson 3d (President and a Trustee of the trust),
Johnson family members, and various trusts for the benefit of the Johnson
family form a controlling group with respect to FMR Corp.
(TO BE UPDATED)
During the period October 1, 1992 through May 30, 1994, the following
transactions were entered into by officers and/or Trustees of the fund or
of FMR Corp. involving more than 1% of the voting common, non-voting common
or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FMR TEXAS
FMR Texas Inc. (FMR Texas) is a wholly-owned subsidiary of FMR formed in
1989 to provide portfolio management services to Fidelity's money market
funds and investment advice with respect to money market instruments. Under
a sub-advisory agreement with FMR Texas, FMR pays FMR Texas a fee equal to
50% of the management fee retained by FMR under its effective Management
Contract with the fund. During the fiscal year ended September 30, 1993 the
fee paid by FMR to FMR Texas for Fidelity U.S. Government Reserves amounted
to $_______.
The Statement of Financial Condition for FMR Texas as of December 30, 1992
(audited) and for the period January 1, 1993 through September 30, 1993
(unaudited) are shown beginning page ____. Funds for which FMR has entered
into a sub-advisory agreement with FMR Texas, and the net assets of each of
these funds are indicated in the Table of Average Net Assets and Expense
Ratios (Exhibit __) on page ____.
The Directors of FMR Texas are Edward C. Johnson 3d, Chairman, and J. Gary
Burkhead, President. Each of the Directors is also a Trustee of the fund.
Messrs. Johnson 3d and Burkhead are currently officers of the fund,
officers or employees of FMR Texas, and stockholders of FMR Corp. The
principal business address of the Directors is 82 Devonshire Street,
Boston, MA. The principal business address of FMR Texas is 400 East Las
Colinas Boulevard, Irving, TX.
In addition to serving as Chairman and a Director of FMR Texas, Mr. Edward
C. Johnson 3d is President and a Trustee of the trust and other funds
advised by FMR. He is Chairman, Chief Executive Officer, and a Director of
FMR Corp., Chairman of the Board and of the Executive Committee of FMR, and
a Director of FMR. Mr. Johnson 3d is also Chairman and Director of FMR U.K.
Inc. and FMR Far East Inc.
In addition to serving as President and a Director of FMR Texas, J. Gary
Burkhead is Senior Vice President and a Trustee of the trust and of other
funds advised by FMR. He is also President of FMR (1986) and President and
Director of FMR U.K. Inc. and FMR Far East Inc.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed in
1986 to provide investment research information with respect to certain
funds for which FMR acts as investment adviser. Under sub-advisory
agreements with FMR U.K. and FMR Far East, FMR pays fees equal to 110% of
FMR U.K.'s costs and 105% of FMR Far East's costs, respectively, in
connection with research services provided for the benefit of certain
Fidelity funds.
The Statements of Financial Condition of FMR U.K. and FMR Far East as of
December 31, 1993 are shown on pages __ and __, respectively. Funds
managed by FMR with respect to which FMR currently has sub-advisory
agreements with either FMR U.K. or FMR Far East, and the net assets of each
of these funds, are indicated in the Table of Average Net Assets and
Expense Ratios in Exhibit ___ on page __.
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and J. Gary Burkhead, President. Each of the Directors is also a
Trustee of the trust. Messrs. Johnson 3d and Burkhead are described in
Proposal 1. The principal business address of the Directors and FMR U.K.
and FMR Far East is 82 Devonshire Street, Boston, Massachusetts.
PRESENT MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with the fund's investment
objective, policies, and limitations. FMR also provides each fund with all
necessary office facilities and personnel for servicing the fund's
investments, and compensates all officers of the trust, all Trustees who
are "interested persons" of the trust or of FMR, and all personnel of the
trust 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 funds. 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 the funds' shares under federal and
state law; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, Fidelity U.S. Government Reserves and Fidelity Short-Intermediate
Government Fund pay all of their expenses, without limitation, that are not
assumed by those parties. Each fund pays for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although each management
contract provides that the fund will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices, and
reports to existing shareholders, the trust has entered into a revised
transfer agent agreement with FSC, pursuant to which FSC bears the cost of
providing these services to existing shareholders. Other expenses paid by
each fund include interest, taxes, brokerage commissions, each fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each fund is also liable for such nonrecurring expenses
as may arise, including costs of any litigation to which a fund may be a
party and any obligation it may have to indemnify the trust's officers and
Trustees with respect to litigation.
FMR is responsible for the payment of all expenses of Spartan Short-Term
Income Fund and Spartan Investment Grade Bond Fund with certain exceptions.
Specific expenses payable by FMR include, without limitation, the fees and
expenses of registering and qualifying the funds and their shares for
distribution under federal and state securities laws; expenses of
typesetting for printing the prospectus and statement of additional
information; custodian charges; audit and legal expenses; insurance
expense; association membership dues; and the expenses of mailing reports
to shareholders, shareholder meetings, and proxy solicitations. FMR also
provides for transfer agent and dividend disbursing services and portfolio
and general accounting record maintenance through FSC.
FMR pays all other expenses of Spartan Short-Term Income Fund and Spartan
Investment Grade Bond 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 on borrowings; taxes;
brokerage commissions (if any); and such nonrecurring expenses as may
arise, including costs of any litigation to which a fund may be a party,
and any obligation it may have to indemnify the officers and Trustees with
respect to litigation.
FMR is Fidelity U.S. Government Reserves' manager pursuant to an amended
management contract dated December 1, 1992, which was approved by
shareholders on November 18, 1992. FMR is Fidelity Short-Intermediate
Government Fund's adviser pursuant to a management contract dated October
1, 1992 that was approved by shareholders on September 16, 1992. For the
services of FMR under each contract, each fund pays FMR a monthly
management fee composed of the sum of two elements: 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 on page 39 on the left. On the right, the effective fee
rate schedule shows the results of cumulatively applying the annualized
rates at varying asset levels. For example, the effective annual fee rate
at $216 billion of group net assets - their approximate level for September
1993 - was .1638%, which is the weighted average of the respective fee
rates for each level of group net assets up to that level.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE
RATES
Average Annualized Group Effective
Group Fee Rate Net Annual
Assets 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 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
* The rates shown for average group assets in excess of $174 billion were
adopted by FMR on a voluntary basis on November 1, 1993 pending shareholder
approval of a new management contract reflecting the extended schedule. The
extended schedule provides for lower management fees as total assets under
management increase.
The individual fund fee rate for Fidelity U.S. Government Reserves is .28%.
The individual fund fee rate for Fidelity Short-Intermediate Government
Fund is .30%. Based on the average net assets of funds advised by FMR for
September 1993, the annual management fee rate would be calculated as
follows:
Individual
Group Fee Fund Fee Managemen
Rate Rate t
Fee Rate
Fidelity U.S. Government
Reserves .1638% + .28% .4438%
=
Fidelity Short-Intermediate
Government Fund .1638% + .30% .4638%
=
One twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
The substantive difference between Fidelity U.S. Government Reserves'
current contract and the contract prior to December 1, 1992 (which was
dated January 29, 1990) and Fidelity Short-Intermediate Government Fund's
prior contract dated September 21, 1991 and its current contract, is an
extension of the group fee rate table shown on page __.
The schedule shown on the previous page (minus the breakpoints added
November 1, 1993) was voluntarily adopted by FMR on January 1, 1992 until
shareholders could meet to approve the amended management contract. Prior
to January 1, 1992, the fund's group fee rate was based on a schedule with
breakpoints ending at .150% for average group assets in excess of $84
billion. In addition, for Fidelity U.S. Government Reserves, effective
September 1, 1993, FMR agreed to voluntarily adopt a revised management fee
structure which provides for a lower individual fund fee rate (.03%) and
the addition of an income-based component that is identical to that of Cash
Reserves. This change will provide for lower management fees, and will be
presented to shareholders for approval at the next shareholder meeting.
During the fiscal years ended September 30, 1993, 1992, and 1991, Fidelity
U.S. Government Reserves paid fees of $4,887,000, $6,065,000, and
$7,015,000, respectively, to FMR for its services as investment adviser to
the fund. These fees were equivalent to .4289%, .4549%, and 4613%,
respectively, of the fund's average net assets for those years.
During the fiscal years ended September 30, 1993, 1992 and the period
September 13, 1991 to September 30, 1991, FMR received $783,194, $250,118,
and $244, respectively, for its services as investment advisor to Fidelity
Short-Intermediate Government Fund. These fees are equivalent to .47%,
.47%, and .48% of the fund's average net assets for those periods. The
fees for the fiscal 1992 reflect FMR's voluntary implementation of the
group fee rate schedule. If voluntary implementation had not been in
effect, the fund's management fee for fiscal 1992 would have been higher.
FMR may, from time to time, voluntarily reimburse all or a portion of
Fidelity Short-Intermediate Government Fund's operating expenses
(excluding, interest, taxes, brokerage commissions, and extraordinary
expenses). The table on the next page outlines expense limitations (as a
percentage of the fund's average net assets) in effect from commencement of
operations to June 30, 1993. The table also shows the amount of management
fees incurred and the amounts reimbursed by FMR for each fiscal period.
From To Expense Limitations
June 1, 1993 June 30, 1993 .70%
May 1, 1993 May 31, 1993 .65%
February 1, 1993 April 30, 1993 .60%
January 1, 1993 January 31, 1993 .50%
September 1, 1992 December 31, 1992 .40%
August 1, 1992 August 31, 1992 .25%
May 1, 1992 July 31, 1992 0%
April 1, 1992 April 30, 1992 .85%
March 9, 1992 March 31, 1992 .65%
January 15, 1992 March 8, 1992 0%
September 13, 1991 January 14, 1992 .65%
Fiscal Periods ended Management Fees Amount of
September 30, Before Reimbursement Reimbursement
1993 $783,194 $486,551
1992 250,118 538,256
1991* 244 16,143
* From September 13, 1991 (commencement of operations)
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million,
2% of the next $70 million, and 1 1/2% of average net assets in excess of
$100 million. When calculating each fund's expenses for purposes of this
regulation, the fund may exclude interest, taxes, brokerage commissions,
and extraordinary expenses, as well as a portion of its distribution plan
expenses.
FMR is Spartan Short-Term Income Fund's and Spartan Investment Grade Bond
Fund's manager pursuant to management contracts dated September 17, 1992
which were approved by FMR, then sole shareholder, on September 23, 1992.
For the services of FMR under each management contract, the funds pay FMR a
monthly management fee at the annual rate of .65% of average net assets
throughout the month. FMR reduces its fee by an amount equal to the fees
and expenses of the non-interested Trustees.
FMR may, from time to time, voluntarily reimburse all or a portion of a
fund's operating expenses (excluding interest, taxes, brokerage
commissions, and extraordinary expenses). The tables on the next page
outline expense limitations (as a percentage of the fund's average net
assets) in effect from Spartan Short-Term Income Fund's commencement of
operations (October 1, 1992) through the Statement of Additional
Information dated November 19, 1993. The tables also show the amount of
management fees incurred under each contract and the amounts reimbursed by
FMR, if any, for each fiscal period from commencement of operations through
the Statement of Additional Information dated November 19, 1993.
SPARTAN SHORT-TERM INCOME FUND
From To Expense Limitations
September 1, 1993 -- .40%
August 1, 1993 August 31, 1993 .30%
July 1, 1993 July 31, 1993 .20%
June 1, 1993 June 30, 1993 .15%
April 1, 1993 May 31, 1993 .05%
October 1, 1992 March 31, 1993 .00%
Management Fees Amount of
Fiscal Year Before Reimbursement Reimbursement
1993* $3,553,000 $2,450,000
* From October 1, 1992 (commencement of operations)
SPARTAN INVESTMENT GRADE BOND
Amount of
Fiscal Year Management Fee Reimbursement
1993* $373,476 $ 0
* From October 1, 1992 (commencement of operations)
If FMR were not temporarily reimbursing these expenses, Spartan Short-Term
Income's yields would be lower and total operating expenses would be .65%
of the fund's net assets.
To defray shareholder service costs, FMR or its affiliates also collect
each fund's $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for
wire purchases and redemptions, and $2.00 checkwriting charge. Shareholder
transaction fees and charges collected for the fiscal year ended September
30, 1993 are indicated in the table below.
Account
Exchange Closeout
Fees Fees Wire Fees
Spartan Short-Term Income $23,105 $740 $1,350
Spartan Investment Grade Bond $4,465 $230 $180
SUB-ADVISER. With respect to Fidelity U.S. Government Reserves, FMR has
entered into a sub-advisory agreement with FTX pursuant to which FTX has
primary responsibility for providing portfolio investment management
services to the fund. Under each sub-advisory agreement, FMR pays FTX fees
equal to 50% of the management fee payable to FMR under its management
contract with each fund. The fees paid to FTX are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect from
time to time. For the fiscal years ended September 30, 1993, 1992, and
1991, FMR paid FTX management fees of $2,444,000, $3,032,000, and
$3,507,000.
With respect to Spartan Short-Term Income Fund and Spartan Investment
Grade Bond Fund, on September 17, 1992, FMR entered into sub-advisory
agreements with FMR U.K. and FMR Far East pursuant to which FMR U.K. and
FMR Far East supply FMR with investment research and recommendations
concerning foreign securities for the benefit of each fund. The
sub-advisory agreements provide that FMR will pay fees to FMR U.K. and FMR
Far East equal to 110% and 105%, respectively, of FMR U.K.'s and FMR Far
East's costs incurred in connection with each agreement, said costs to be
determined in relation to the assets of each fund that benefits from the
services of the sub-advisers.
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
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. Securities purchased and sold
by Fidelity U.S. Government Reserves generally will be traded on a net
basis (i.e., without commission). In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions. Commissions for foreign investments for
Spartan Short-Term Income Fund and Spartan Investment Grade Bond Fund
traded on foreign exchanges generally will be higher than for U.S.
investments and may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). For Fidelity U.S. Government Reserves, FMR
maintains a listing of broker-dealers who provide such services on a
regular basis. However, as many transactions on behalf of the funds are
placed with broker-dealers (including broker-dealers on the list) without
regard to the furnishing of such services, it is not possible to estimate
the proportion of such transactions directed to such broker-dealers solely
because such services were provided. The selection of such broker-dealers
is generally made by FMR (to the extent possible consistent with execution
considerations) based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and, conversely, research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
funds to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
funds and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI)
and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if
the commissions are fair, reasonable, and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such regulations, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
funds and review the commissions paid by each fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal years ended September 30, 1993 and September 30, 1992,
Fidelity Short-Intermediate Government Fund's portfolio turnover rates were
348% and 419%, respectively. For the fiscal year ended September 30, 1993,
Spartan Short-Term Income Fund and Spartan Investment Grade Bond Fund's
portfolio turnover rates were 112% and 55%, respectively.
For the fiscal years ended September 30, 1993, 1992 (the fiscal period
January 1, 1992 to September 30, 1992 for Fidelity Short-Intermediate
Government Fund), and 1991, Fidelity U.S. Government Reserves and Fidelity
Short-Intermediate Government Fund paid no brokerage commissions. For the
fiscal year ended September 30, 1993, Spartan Short-Term Income Fund and
Spartan Investment Grade Bond Fund paid no brokerage commissions.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for the funds to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a detrimental
effect on the price or value of the security as far as the funds are
concerned. In other cases, however, the ability of the funds to participate
in volume transactions will produce better executions and prices for the
funds. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to each fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FIDELITY U.S. GOVERNMENT RESERVES AND
FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND
FSC is transfer, dividend disbursing, and shareholders' servicing agent for
the funds. Under the trusts' contracts with FSC, Fidelity U.S. Government
Reserves pays an annual fee of $13.75 per regular account with a balance of
$5,000 or more, $10 per basic retail account with a balance of less than
$5,000, and a supplemental activity charge of $5.61 for monetary
transactions. Fidelity Short-Intermediate Government Fund pays an annual
fee of $25.50 per basic retail account with a balance of $5,000 or more;
$15.00 per basic retail account with a balance of less than $5,000; and a
supplemental activity charge of $5.61 for monetary transactions. These
fees and charges are subject to annual cost escalation based on postal rate
changes and changes in wage and price levels as measured by the National
Consumer Price Index for Urban Areas. With respect to certain institutional
client master accounts, each fund pays FSC a per account fee of $95, and
monetary transactions charges of $20, or $17.50, depending on the nature of
services provided. With respect to certain broker-dealer master accounts,
the funds pay FSC a per-account fee of $30 and a charge of $6 for monetary
transactions. Fees for certain institutional retirement plan accounts are
based on the net assets of all such accounts in each fund.
Under the contracts, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements.
The table below shows the transfer agent fees paid to FSC during each
fund's last three fiscal years.
1993 1992 1991*
Transfer Agent Transfer Agent Transfer Agent
Fees Fees Fees
Fidelity U.S.
Government Reserves $2,955,000 $3,101,000 $3,576,000
Fidelity Short-
Intermediate
Government Fund $417,815 $253,862 $98
* From September 13, 1991 for Fidelity Short-Intermediate Government
Fund (commencement of operations)
Each trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine the funds' net asset value per share
and dividends, and maintain the funds' accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules, one pertaining to a fund's average net assets, and one
pertaining to the type and number of transactions the fund made. The fee
rates in effect as of July 1, 1991 are based on a fund's average net
assets, specifically, for Fidelity U.S. Government Reserves, .0175% for the
first $500 million of average net assets and .0075% for average net assets
in excess of $500 million. The fee is limited to a minimum of $20,000 and a
maximum of $750,000 per year. For Fidelity Short-Intermediate Government
Fund, the fee rates in effect as of July 1, 1991 are .04% for the first
$500 million of average net assets and .02% for average net assets in
excess of $500 million. The fee is limited to a minimum of $45,000 and a
maximum of $750,000 per year.
FSC also receives fees for administering Fidelity Short-Intermediate
Government Fund's securities lending program. Securities lending fee are
based on the numbers and duration of individual securities loans. For
fiscal 1993, 1992, and 1991, the fund paid no securities lending fees.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses during each fund's last
three fiscal years:
Pricing and Bookkeeping
Fees
1993 1992 1991*
U.S. Government
Reserves $136,000 $151,000 $158,000
Fidelity Short-Inter-
mediate Government $80,31 $51,712
$2,250
* From September 13, 1991 for Fidelity Short-Intermediate Government
Fund (commencement of operations)
Each fund 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 agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the funds, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
SPARTAN SHORT-TERM INCOME FUND AND
SPARTAN INVESTMENT GRADE BOND FUND
FSC performs transfer agency, dividend disbursing, and shareholder
servicing functions for the funds. The costs of these services are borne
by FMR pursuant to its management contracts with the funds. FSC also
calculates each fund's net asset value per share and dividends, maintains
each fund's general accounting records, and administers each fund's
securities lending program. The costs of these services are also borne by
FMR pursuant to its management contracts with the funds.
Each fund 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 fund's 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. Promotional and administrative
expenses in connection with the offer and sale of shares are paid by FMR.
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 Co., P.O. Box 789,
Boston, Massachusetts 02102, whether other persons are beneficial owners of
shares for which proxies are being solicited and, if so, the number of
copies of the Proxy Statement and Annual Reports you wish to receive in
order to supply copies to the beneficial owners of the respective shares.
TO BE UPATED
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
__________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Fidelity Management & Research Company
(a Wholly-Owned Subsidiary of FMR Corp.):
We have audited the accompanying consolidated statement of financial
condition of Fidelity Management & Research Company as of December 31,
1993. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the consolidated financial position of Fidelity
Management & Research Company as of December 31, 1993, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
__________
ASSETS
($000)
Cash and cash equivalents $ 109
Management fees receivable 103,826
Invested assets:
Managed funds (market value $59,845,000) 56,416
Other investments (fair value $25,816,000) 20,822
Property and equipment, net 141,584
Deferred income taxes 35,910
Note receivable from affiliate 11,250
Prepaid expenses and other assets 9,597
Total Assets $ 379,514
LIABILITIES AND STOCKHOLDER'S EQUITY
Payable to mutual funds $ 8,580
Accounts payable and accrued expenses 30,349
Payable to parent company 235,232
Other liabilities 3,871
Total Liabilities 278,032
Stockholder's equity:
Common stock, $.30 par value;
authorized 50,000 shares;
issued and outstanding
26,500 shares 8
Additional paid-in capital 50,074
Retained earnings 51,400
Total Stockholder's Equity 101,482
Total Liabilities and Stockholder's Equity $ 379,514
The accompanying notes are an integral part
of the consolidated statement of financial condition.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT
OF FINANCIAL CONDITION
__________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fidelity Management & Research Company and Subsidiaries (the Company)
provide investment management and advisory services and other services
principally for the Fidelity Investments Family of Funds. The Company also
provides computer support and systems development services to affiliated
companies.
On March 1, 1993, ownership of the Company's wholly-owned subsidiary,
Fidelity Investments Institutional Services Company, Inc. was distributed
to the Company's parent. As of that date, this subsidiary had total assets
and stockholder's equity of approximately $73,000,000, and $60,000,000,
respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated statement of financial condition includes the accounts of
Fidelity Management & Research Company and its wholly-owned
subsidiaries. All intercompany accounts have been eliminated.
INVESTED ASSETS
Managed funds investments (consisting primarily of Fidelity Mutual Funds)
are carried at the lower of aggregate cost or market. Other investments
consist primarily of investments in limited partnerships which are carried
at cost. Certain restrictions exist with respect to the sale or transfer of
these investments to third parties. For managed funds investments and other
investments, fair value is determined by the quoted market price except in
the case of restricted investments which are valued based on management's
assessment of fair value. When the Company has determined that an
impairment, which is deemed other than temporary, in the market or fair
value of an investment has occurred, the carrying value of the investment
is reduced to its net realizable value.
INCOME TAXES
The Company is included in the consolidated federal and certain state
income tax returns filed by FMR Corp.
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT
OF FINANCIAL CONDITION
(CONTINUED)
________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation of furniture and equipment is computed over the
estimated useful lives of the related assets, which are principally three
to five years, using the straight-line method. Leasehold improvements are
amortized over the lesser of their economic useful lives or the period of
the lease. Maintenance and repairs are charged to operations when incurred.
Renewals and betterments of a nature considered to materially extend the
useful life of the assets are capitalized.
PENSION AND PROFIT SHARING PLANS
The Company participates in FMR Corp.'s noncontributory defined benefit
pension plan covering all of its eligible employees. There are no
statistics available for the actuarial data of this separate company. There
are no unfunded vested benefits.
The Company also participates in FMR Corp.'s defined contribution profit
sharing and retirement plans covering substantially all eligible employees.
B. PROPERTY AND EQUIPMENT, NET
At December 31, 1993, property and equipment, at cost, consist of (in
thousands):
Furniture $ 1,853
Equipment (principally computer related) 320,141
Leasehold improvements 6,712 328,706
Less: Accumulated depreciation and amortization 187,122
$ 141,584
C. NOTE RECEIVABLE FROM AFFILIATE
On December 2, 1993, the Company issued a non-recourse mortgage to an
affiliate for property located in Irving, Texas. The $11,250,000 note
receivable is due on January 1, 2009, and accrues interest at 7.6325%.
Payments of principal and interest are due monthly.
D. TRANSACTIONS WITH AFFILIATED COMPANIES
In connection with its operations, the Company provides services to and
obtains services from affiliated companies. Transactions related to these
services are settled, in the normal course of business, through an
intercompany account with the Company's parent, FMR Corp. The terms of
these transactions may not be the same as those which would otherwise exist
or result from agreements and transactions among unrelated parties.
TO BE UPDATED
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
__________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Fidelity Management & Research (Far East) Inc.
(a Wholly-Owned Subsidiary of Fidelity Management & Research Company):
We have audited the accompanying statement of financial condition of
Fidelity Management & Research (Far East) Inc. as of December 31, 1993.
This financial statement is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Fidelity Management
& Research (Far East) Inc. as of December 31, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
__________
ASSETS
Cash $ 24,294
Investments (market value $618,049) 569,958
Furniture and equipment, net of
accumulated depreciation of $10,704 642
Prepaid expenses and other assets 143,427
Receivable from parent company 840,906
Total Assets $ 1,579,227
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Payable to affiliate $ 795,567
Income taxes payable 168,646
Total Liabilities 964,213
Stockholder's equity:
Common stock, $1 par value;
authorized 300,000 shares;
issued and outstanding 100 shares 100
Additional paid-in capital 900
Retained earnings 614,014
Total Stockholder's Equity 615,014
Total Liabilities and Stockholder's Equity $ 1,579,227
The accompanying notes are an integral part
of the statement of financial condition.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT
OF FINANCIAL CONDITION
__________
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS
Fidelity Management & Research (Far East) Inc. (the Company) is a
wholly-owned subsidiary of Fidelity Management & Research Company (the
parent). The Company is a registered investment advisor and provides
research advice to the parent and an affiliate pursuant to a research joint
venture agreement. Intercompany transactions are settled during the normal
course of business.
INVESTMENTS
Investments consist of shares held in a Fidelity mutual fund and are
carried at the lower of cost or market. The fair value of investments is
equal to the quoted market price.
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost less accumulated depreciation.
Depreciation is computed over the estimated useful lives of the related
assets, which vary from three to five years, using the straight-line
method. Maintenance and repairs are charged to operations when incurred.
INCOME TAXES
The Company is included in the consolidated federal income tax return filed
by FMR Corp., the parent company of Fidelity Management & Research
Company. The Company is allocated a charge by FMR Corp. representing the
sum of the applicable foreign and U.S. statutory income tax rates.
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
TO BE UPDATED
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
__________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Fidelity Management & Research (U.K.) Inc.
(a Wholly-Owned Subsidiary of Fidelity Management & Research Company):
We have audited the accompanying statement of financial condition of
Fidelity Management & Research (U.K.) Inc. as of December 31, 1993.
This financial statement is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Fidelity Management
& Research (U.K.) Inc. as of December 31, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
__________
ASSETS
Investments (market value $3,180,192) $ 2,537,448
Equipment, net of accumulated
depreciation of $859,335 914,770
Accounts receivable from parent 2,806,932
Deferred income taxes 23,520
Total Assets $ 6,282,670
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Subordinated loan $ 1,608,100
Accounts payable to affiliate 1,452,719
Income taxes payable 173,009
Other liabilities 131
Total Liabilities 3,233,959
Stockholder's equity:
Common stock, $1 par value;
authorized 300,000 shares;
issued and outstanding 100 shares 100
Additional paid-in capital 900
Retained earnings 3,047,711
Total Stockholder's Equity 3,048,711
Total Liabilities and Stockholder's Equity $ 6,282,670
The accompanying notes are an integral part
of the statement of financial condition.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT OF
FINANCIAL CONDITION
__________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF REPORTING
The statement of financial condition is presented in accordance with United
States generally accepted accounting principles. The functional and
reporting currency for Fidelity Management & Research (U.K.) Inc. (the
Company) is the U.S. dollar.
BUSINESS
The Company is a wholly-owned subsidiary of Fidelity Management &
Research Company (the parent). The Company is a registered investment
advisor and provides research and investment advisory services under
subadvisory agreements with its parent. The Company also provides research
advice to the parent and an affiliate pursuant to a research joint venture
agreement. Intercompany transactions are settled during the normal course
of business.
INVESTMENTS
Investments consist of shares held in Fidelity mutual funds and are carried
at the lower of aggregate cost or market. The fair value of investments is
equal to the quoted market price.
EQUIPMENT
Equipment is stated at cost less accumulated depreciation. Depreciation is
computed over the estimated useful lives of the related assets, which vary
from three to five years, using the straight-line method. Maintenance and
repairs are charged to operations when incurred.
SUBORDINATED LOAN
The Company has a subordinated loan payable to its parent and due on March
31, 1994. The loan is subordinated in all respects to the rights of senior
creditors. Interest is payable annually at a rate of 4.375%. Repayment or
modification of this loan is subject to regulatory approval.
INCOME TAXES
The Company is included in the consolidated federal income tax return filed
by FMR Corp., the parent Company of Fidelity Management & Research
Company. The Company is allocated a charge by FMR Corp. representing the
sum of the applicable foreign and U.S. statutory income tax rates.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT
OF FINANCIAL CONDITION
(CONTINUED)
__________
A. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES, CONTINUED:
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes",
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
B. NET CAPITAL REQUIREMENT:
The Company is subject to certain financial regulatory resource rules which
require the Company to maintain a certain level of net capital (as
defined). At December 31, 1993, the minimum net capital requirement of
approximately $422,000 has been satisfied by the Company.
TO BE UPDATED
FMR TEXAS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
__________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
FMR Texas, Inc.
(a Wholly-Owned Subsidiary of Fidelity Management & Research Company):
We have audited the accompanying statement of financial condition of FMR
Texas, Inc. as of December 31, 1993. This financial statement is the
responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of FMR Texas, Inc. as of
December 31, 1993, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FMR TEXAS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
__________
ASSETS
Cash $ 529
Investments (market value $1,290,336) 1,237,971
Property and equipment, net 1,307,550
Deferred income taxes 708,608
Total Assets $ 3,254,658
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable and accrued expenses $ 33,804
Payable to parent company 1,804,692
Income taxes payable 161,326
Total Liabilities 1,999,822
Stockholder's equity:
Common stock, $1 par value;
authorized 100,000 shares;
issued and outstanding 1,000 shares 1,000
Additional paid-in capital 1,009,585
Retained earnings 244,251
Total Stockholder's Equity 1,254,836
Total Liabilities and Stockholder's Equity $ 3,254,658
The accompanying notes are an integral part
of the consolidated statement of financial condition.
FMR TEXAS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT OF
FINANCIAL CONDITION
__________
A. SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS
FMR Texas, Inc. (the Company) is a wholly-owned subsidiary of Fidelity
Management & Research Company (the parent). The Company was formed to
provide, under a subadvisory agreement with its parent, investment
management and advisory services.
The Company is a registered investment advisor and receives fees from its
parent for the services provided.
Intercompany transactions with Fidelity Management & Research Company
are settled during the normal course of business. The terms of these
transactions may not be the same as those which would otherwise exist or
result from agreements and transactions among unrelated parties.
INVESTMENTS
Investments, comprised of shares held in mutual funds, are stated at the
lower of aggregate cost or market. The fair value of investments is equal
to the quoted market price.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is computed over the estimated useful lives of
the related assets, which vary from three to five years, using the
straight-line method. Leasehold improvements are amortized over the lesser
of their economic useful life or the period of the lease. Maintenance and
repairs are charged to operations when incurred. Renewals and betterments
of a nature considered to materially extend the useful lives of the assets
are capitalized.
INCOME TAXES
The Company is included in the consolidated federal and certain state
income tax returns filed by FMR Corp., the parent company of Fidelity
Management & Research Company.
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
FMR TEXAS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT
OF FINANCIAL CONDITION
(CONTINUED)
__________
A. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:
PENSION AND PROFIT SHARING PLANS
The Company participates in FMR Corp.'s noncontributory defined benefit
pension plan covering all of its eligible employees. There are no
statistics available for the actuarial data of this separate company. There
are no unfunded vested benefits.
The Company also participates in FMR Corp.'s defined contribution profit
sharing and retirement plans covering substantially all eligible employees.
B. PROPERTY AND EQUIPMENT, NET
At December 31, 1993, property and equipment, at cost, consist of:
Furniture $ 2,962
Equipment (principally computer related) 796,267
Leasehold improvements 1,518,400
2,317,629
Less: Accumulated depreciation and amortization 1,010,079
$ 1,307,550
EXHIBIT 1
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
THIS AGREEMENT AND PLAN OF CONVERSION AND TERMINATION (the Agreement) is
made as of the 17th day of March 1994, by and between Fidelity U.S.
Government Reserves (the Fund), a separate series of Fidelity Charles
Street Trust (the Massachusetts Trust), a business trust duly formed under
the laws of the Commonwealth of Massachusetts, and Fidelity Phillips Street
Trust (the Trust), a business trust duly formed under the laws of the State
of Delaware.
This Agreement is intended to effect the conversion of the Fund into a
series of the Delaware business trust. The conversion will involve the
transfer of all of the assets of the Fund solely in exchange for assumption
by a series of the Trust of all liabilities of the Fund and issuance of
shares of beneficial interest of a series of the Trust (the Trust Series
Shares), followed by the constructive distribution, on the Closing Date
hereinafter referred to, of such Trust Series Shares to the holders of
shares of beneficial interest of the Fund (the Fund Shareholders) in
liquidation and termination of the Fund as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE FUND IN EXCHANGE FOR ASSUMPTION OF LIABILITIES
AND ISSUANCE OF SHARES OF THE TRUST; DISSOLUTION OF THE FUND
1.1. Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, the Fund agrees to
transfer its assets as set forth in paragraph 1.2 to a separate series of
the Trust (the Series) established by the Trust solely for the purpose of
acquiring all of the assets of the Fund, which Series has not issued any
Trust Series Shares (except for one share issued to Fidelity Management
& Research Company (FMR)) or commenced operations. The Trust, on behalf
of the Series, agrees in exchange therefor (1) that the Series shall assume
all of the Fund's liabilities, whether contingent or otherwise, then
existing, and further (2) that the Trust shall deliver to the Fund the
number of full and fractional Trust Series Shares equal to the value and
number of full and fractional shares of the Fund outstanding at the time of
closing, as described in paragraph 3.1, on the Closing Date provided for in
paragraph 3.1. Such transactions shall take place at the Closing provided
for in paragraph 3.1.
1.2. The assets of the Fund to be acquired by the Trust on behalf of the
Series and allocated thereto shall include, without limitation, all cash,
cash equivalents, securities, receivables (including interest and dividends
receivable), any claims or rights of action or rights to register shares
under applicable securities laws, any books or records of the Fund and
other property owned by the Fund and any deferred or prepaid expenses shown
as assets on the books of the Fund on the Closing Date provided for in
paragraph 3.1.
1.3. Immediately upon delivery to the Fund of the Trust Series Shares, the
individual Trustees of the Fund or any officer duly authorized by them, on
the Fund's behalf as the then sole shareholder of the Trust, shall approve
or disapprove (i) a Management Contract between the Trust and FMR, (ii) a
Sub-Advisory Agreement between FMR and FMR Texas Inc., (iii) a Distribution
and Service Plan under Rule 12b-1 under the Investment Company Act of 1940,
as amended (1940 Act), between the Trust and Fidelity Distributors
Corporation (FDC) substantively identical to the plan and contracts
currently in effect with the Fund, except as to the parties to such plan or
contract , (iv) the independent accountants who currently serve in that
capacity for the Fund, and (v) the adoption of revised fundamental policies
described in Proposals 10 through 12 of the Proxy Statement.
1.4. As provided in paragraph 3.3, on the Closing Date the Fund will
constructively distribute the Trust Series Shares pro rata in proportion to
their respective shares of beneficial interest in the Fund (Fund Shares) to
Fund Shareholders of record determined as of the close of business on the
Closing Date, in liquidation of such Fund Shares. Such distribution will be
accomplished by the transfer of the Trust Series Shares then credited to
the account of the Fund on the share records of the Trust to open accounts
on those records in the names of such Fund Shareholders and representing
the respective pro rata number of the Trust Series Shares due such Fund
Shareholders. The Trust shall not issue certificates representing Trust
Series Shares in connection with such distribution. Fractional Trust Series
Shares shall be rounded to the third decimal place.
1.5. Immediately after the distribution of the Trust Series Shares as set
forth in Section 1.4, the Fund shall be terminated and liquidated and any
such further actions shall be taken in connection therewith as required by
applicable law.
1.6. Ownership of Trust Series Shares will be shown on the books of
Fidelity Service Co. (FSC) as the Trust's transfer agent.
1.7. Any transfer taxes payable upon issuance of Trust Series Shares in a
name other than the registered holder of the corresponding Fund Shares on
the books of the Fund as of that time shall be paid by the person to whom
such Trust Series Shares are to be distributed as a condition of such
transfer.
1.8. Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the Closing Date and any
later date on which the Fund may be terminated.
2. VALUATION
2.1. The value of the Fund's net assets to be acquired by the Trust on
behalf of the Series hereunder shall be the net asset value computed as of
the valuation time provided in the Fund's prospectus on the Closing Date,
using the valuation procedures set forth in the Fund's then current
Prospectus or Statement of Additional Information.
2.2. The number, value and denominations of full and fractional Trust
Series Shares to be issued in exchange for the Fund's net assets shall be
equal to the number, value and denomination of full and fractional Fund
Shares outstanding on the Closing Date.
2.3. All computations of value shall be made by FSC, a division of FMR
Corp., in accordance with its regular practice as pricing agent for the
Fund.
3. CLOSING AND CLOSING DATE
3.1. The transfer of the Fund's assets in exchange for the assumption by
the Series of the Fund's liabilities and the issuance of Trust Series
Shares, as described above, together with related acts necessary to
consummate such acts (Closing), shall occur at the principal office of the
Trust on ____, 1995 (Closing Date), or at such other place or later date
as the parties may agree in writing. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the last daily
determination of the Fund's net asset value or at such other time and/or
place as the parties may agree.
3.2. In the event that, on the Closing Date, (a) the New York Stock
Exchange is closed to trading, or trading thereon is restricted, or (b)
trading or reporting of trading on said Exchange or in any market in which
portfolio securities of the Fund are traded is disrupted so that accurate
appraisal of the value of the total net assets of the Fund is
impracticable, the Closing shall be postponed until the first business day
upon which trading shall have been fully resumed and reporting shall have
been restored.
3.3. The Fund shall deliver at the Closing a certificate of an authorized
officer stating that it has notified the Custodian, as Custodian for the
Fund, of the Fund's conversion to a series of the Trust.
3.4. FSC, as transfer agent for the Fund, shall deliver at the Closing a
certificate as to the conversion on its books and records of each Fund
Shareholder account to an account as a holder of Trust Series Shares. The
Trust shall issue and deliver a confirmation to the Fund evidencing the
Trust Series Shares to be credited on the Closing Date or provide evidence
satisfactory to the Fund that such Trust Series Shares have been credited
to the Fund's account on the books of the Trust. At the Closing each party
shall deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Fund represents and warrants as follows:
4.1.A. The Fund is a Massachusetts business trust or series thereof duly
formed and validly existing under the laws of the Commonwealth of
Massachusetts;
4.1.B. The Fund is duly registered as an open-end management investment
company under the 1940 Act, or is a series of a registrant and such
registration is in full force and effect;
4.1.C. The Fund is not, and the execution, delivery and performance of
this Agreement will not result, in violation of any provision of the
Declaration of Trust dated November 18, 1986 or the Fund's Bylaws or, to
the Fund's knowledge, of any agreement, indenture, instrument, contract,
lease or other undertaking to which the Fund is a party or by which the
Fund is bound;
4.1.D. The Fund has no material contracts or other commitments (other
than this Agreement) that will not be terminated without liability to the
Fund on or prior to the Closing Date;
4.1.E. To the Fund's knowledge, no material litigation or administrative
proceeding or investigation of, or before, any court or governmental body
presently is pending or threatened against the Fund or any of its
properties or assets, except as previously disclosed in writing to the
Trust. The Fund knows of no facts that might form the basis for the
institution of such proceedings, and the Fund is not a party to, or subject
to, the provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects its business or its
ability to consummate the transactions herein contemplated;
4.1.F. At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Fund required by law to have been filed by
such dates shall have been filed, and all federal and other taxes shall
have been paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to
any of such returns;
4.1.G. All issued and outstanding Fund Shares are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid and
nonassessable, except that under Massachusetts law, shareholders of a
Massachusetts business trust may be held personally liable for the
obligations of the trust;
4.1.H. The information to be furnished by the Fund for use in
applications for orders, registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto;
4.1.I. All of the issued and outstanding Fund Shares will, at the time of
the Closing, be held by the persons and in the amounts as certified in
accordance with the provisions of paragraph 3.4;
4.1.J. On the Closing Date, the Fund will have good and marketable title
to its assets to be transferred to the Series pursuant to paragraph 1.2,
and full right, power, and authority to sell, assign, transfer and deliver
such assets hereunder free of any liens or other encumbrances, and upon
delivery and payment for such assets, the Trust will acquire good and
marketable title thereto;
4.1.K. The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of the Fund, and, upon its proper execution, this Agreement
will constitute a valid and binding obligation of the Fund enforceable in
accordance with its terms, subject to approval of Fund Shareholders, and
will not conflict with the Fund's Declaration of Trust, or Bylaws, if any,
or any provision of any agreement to which the Fund is a party or by which
it is bound, or to the knowledge of the Fund, result in the acceleration of
any obligation or the imposition of any penalty under any agreement,
judgment or decree to which the Fund is a party or by which it is bound;
4.1.L. To the best of the knowledge of the Fund's management, there is no
plan or intention by the Fund's shareholders to sell, exchange or otherwise
dispose of any of the Trust Series Shares to be received in the conversion;
4.1.M. The Fund shares are widely held and may be purchased and redeemed
upon request;
4.1.N. No consideration other than Trust Series Shares will be issued in
exchange for the Fund Shares in the conversion;
4.1.O. Immediately following consummation of the conversion, the Fund
Shareholders will own all of the Trust Series Shares and will own such
shares solely by reason of their ownership of the Fund Shares immediately
prior to the conversion;
4.1.P. Immediately following the consummation of the conversion, the
Trust will hold on behalf of the Series the same assets and be subject to
the same liabilities that the Fund held or was subject to immediately prior
thereto, except for assets used to pay expenses incurred in connection with
the conversion. Assets used to pay expenses and all distributions (except
for distributions and redemptions arising in the ordinary course of the
Fund's business as an open-end investment company) made by the Fund
immediately preceding the conversion will, in the aggregate, constitute
less than 1% of the net assets of the Fund;
4.1.Q. At the time of the conversion, the Fund will not have outstanding
any warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in the Fund;
4.1.R. There is no intercompany indebtedness between the Trust on behalf
of the Series and the Fund that was issued, acquired or that will be
settled at a discount;
4.1.S. The Fund's liabilities to be assumed by the Trust on behalf of the
Series in the conversion were incurred by the Fund in the ordinary course
of its business and are associated with the assets to be transferred;
4.1.T. The Fund's shareholders each will pay their own expenses, if any,
incurred in connection with the conversion;
4.1.U. The fair market value of the Fund's assets to be transferred by
the Fund to the Trust on behalf of the Series will equal or exceed the
Fund's liabilities to be assumed by the Trust on behalf of the series plus
the liabilities to which the transferred assets are subject;
4.1.V. The Fund is a regulated investment company as defined in Section
851 of the Internal Revenue Code of 1986, as amended (the Code);
4.1.W. The Fund is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the meaning
of Section 368(a)(3)(A) of the Code;
4.1.X. To the Fund's knowledge, no consent, approval, authorization or
order of any court or governmental authority is required for the
consummation by the Fund of the transactions contemplated herein, except
such as shall have been obtained prior to the Closing Date under the
Securities Act of 1933 (the 1933 Act), the Securities Exchange Act of 1934
(the 1934 Act) and the 1940 Act, and such as may be required under state
securities laws;
4.1.Y. The Statements of Assets and Liabilities and Operations, the
Statement of Changes in Net Assets, Per Share Data and Ratios, and the
Schedule of Investments of the Fund at September 30, 1993 (copies of which
have been furnished to the Trust) have been audited by Price Waterhouse,
independent accountants, in accordance with generally accepted auditing
standards. Such financial statements are presented in accordance with
generally accepted accounting principles, and fairly present, in all
material respects, the financial condition of the Fund as of such date, and
there are no material known liabilities of the Fund at such date
(contingent or otherwise) not disclosed therein;
4.1.Z. Since September 30, 1993 there has not been any material adverse
change in the Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by the Fund of indebtedness maturing more than one year from the
date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Trust; and
4.1.A.A. The Fund will be liquidated immediately after the conversion.
4.2. The Trust represents and warrants as follows:
4.2.A. The Trust is a Delaware business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware; that
the Trust filed its Trust Certificate with the Secretary of State of
Delaware;
4.2.B. The Series is a duly established and designated Series of the
Trust;
4.2.C. The Trust is not, and the execution, delivery and performance of
this Agreement will not result, in violation of any provision of the Trust
Instrument or Bylaws of the Trust or, to the Trust's knowledge, of any
agreement, indenture, instrument, contract, lease or other undertaking to
which the Trust is a party or by which the Trust is bound;
4.2.D. To the Trust's knowledge, no material litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened against the Trust or any of its properties
or assets, except as previously disclosed in writing to the Fund. The Trust
knows of no facts that might form the basis for the institution of such
proceedings, and the Trust is not a party to, or subject to, the provisions
of any order, decree or judgment of any court or governmental body that
materially and adversely affects its business or its ability to consummate
the transactions herein contemplated;
4.2.E. The Trust intends for the Series to be a regulated investment
company, under Section 851 of the Code;
4.2.F. Prior to the Closing Date, there shall be no issued and
outstanding Trust Series Shares or any other securities issued by the
Series; Trust Series Shares issued in connection with the transactions
contemplated herein will be, duly and validly issued and outstanding, fully
paid and non-assessable under Delaware law on the Closing Date;
4.2.G. The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of the Trust, and, upon its proper execution, this Agreement
will constitute a valid and binding obligation of the Trust enforceable
against the Series in accordance with its terms;
4.2.H. The Trust Series Shares at the Closing will have been duly
authorized and, when so issued and delivered, will be duly and validly
issued shares of the Series, fully paid and non-assessable under Delaware
law;
4.2.I. The fair market value of the Trust Series Shares to be received by
the Fund Shareholders will be approximately equal to the fair market value
of their Fund Shares constructively surrendered in exchange therefor;
4.2.J. The Trust has no plan or intention on behalf of the Series to
issue additional Trust Series Shares following the conversion except for
issuance of shares arising in the ordinary course of the business of the
Series as the series of an open-end investment company;
4.2.K. The Trust has no plan or intention to reacquire the Trust Series
Shares issued to the Fund Shareholders pursuant to the conversion other
than through redemptions arising in the ordinary course of the business of
the Series as a series of an open-end investment company;
4.2.L. Following the conversion, the Trust, on behalf of the Series, will
continue the Fund's historic business;
4.2.M. The Trust has no plan or intention to sell or otherwise dispose of
any of the Fund's assets to be acquired by the Series in the conversion,
except for dispositions made in the ordinary course of its business and
dispositions necessary to maintain the status of the Series as a regulated
investment company under Section 851 of the Code;
4.2.N. The information to be furnished by the Trust with respect to the
Series for use in applications for orders, registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and shall
comply in all material respects with federal securities and other laws and
regulations applicable thereto;
4.2.O. The Trust, on behalf of the Series, shall use all reasonable
efforts to obtain the approvals and authorizations required by the 1933
Act, the 1940 Act and such state securities laws as it may deem appropriate
in order to operate after the Closing Date; and
4.2.P. To the Trust's knowledge, no consent, approval, authorization or
order of any court or governmental authority is required for the
consummation by the Series of the transactions contemplated herein, except
such as shall have been obtained prior to the Closing Date under the 1933
Act, the 1934 Act and the 1940 Act and such as may be required under state
securities laws.
5. COVENANTS OF THE FUND AND THE TRUST
5.1. The Fund covenants to call a meeting of Fund Shareholders (the
Shareholder's Meeting) to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions
contemplated hereby.
5.2. The Fund covenants that the Trust Series Shares are not being
acquired for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
5.3. The Fund covenants that it will assist the Trust in obtaining such
information as the Trust reasonably requests concerning the beneficial
ownership of Fund Shares.
5.4. The Fund will, from time to time, as and when requested by the Trust,
execute and deliver, or cause to be executed and delivered, all such
assignments and other instruments, and will take or cause to be taken such
further action, as the Trust may deem necessary or desirable in order to
vest in, and confirm to, the Trust on behalf of the Series, title to, and
possession of, all the assets of the Fund to be sold, assigned, transferred
and delivered hereunder and otherwise to carry out the intent and purpose
of this Agreement.
5.5. The Fund will prepare a proxy statement in compliance with the 1933
Act, the 1934 Act and the 1940 Act in connection with the Shareholder's
Meeting to consider approval of this Agreement and the transactions
contemplated herein.
5.6. The Trust will, from time to time as and when requested by the Fund,
execute and deliver or cause to be executed and delivered all such
assignments and other instruments, and will take or cause to be taken such
further action, as the Fund may deem necessary or desirable in order to
vest in, and confirm to, the Fund, title to, and possession of, the Trust
Series Shares issued, sold, assigned, transferred and delivered hereunder
and otherwise to carry out the intent and purpose of this Agreement.
5.7. Subject to the provisions of this Agreement, the Trust and the Fund
each will take, or cause to be taken, all actions, and will do or cause to
be done all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND
The obligations of the Fund to consummate the transactions provided for
herein shall be subject to the performance by the Trust of all the
obligations to be performed by the Trust hereunder on or before the Closing
Date and, in addition thereto, to the following further conditions:
6.1. All representations and warranties of the Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date; and
6.2. The Trust shall have delivered on the Closing Date to the Fund a
certificate executed in the Trust's name by its duly authorized officer in
form and substance satisfactory to the Fund, dated as of the Closing Date,
to the effect that the representations and warranties of the Trust made in
this Agreement are true and correct at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this Agreement,
and as to such other matters as the Fund shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust to consummate the transactions provided for
herein shall be subject to the performance by the Fund of all the
obligations to be performed by the Fund hereunder on or before the Closing
Date and, in addition thereto, to the following further conditions:
7.1. All representations and warranties of the Fund contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date;
7.2. The Fund shall have delivered to the Trust on the Closing Date a
statement of its assets and liabilities, prepared in accordance with
generally accepted accounting principles consistently applied, together
with a certificate of the Treasurer or Assistant Treasurer of the Fund as
to the aggregate asset value of the Fund's portfolio securities as of the
Closing Date; and
7.3. The Fund shall have delivered to the Trust on the Closing Date a
certificate executed in the Fund's name by its duly authorized officer, in
form and substance satisfactory to the Trust, dated as of the Closing Date,
to the effect that the representations and warranties of the Fund made in
this Agreement are true and correct at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this Agreement,
and as to such other matters as the Trust shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Trust.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND AND THE TRUST
The obligations of the Fund and the Trust are each subject to the further
conditions that on or before the Closing Date:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of Fund Shareholders in accordance with
applicable law;
8.2. On the Closing Date no action, suit, or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or to obtain damages or other relief in connection
with, the transactions contemplated hereby;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those
of the SEC and of state securities authorities) deemed necessary by the
Trust or the Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the assets or properties of the Trust
or the Fund, provided that either party hereto may for itself waive any of
such conditions; and
8.4. The Trust shall have taken all necessary action so that it shall be a
registered open-end investment company under the 1940 Act immediately after
the closing.
8.5. The Fund and the Trust shall have received on or before the Closing
Date an opinion of Kirkpatrick & Lockhart satisfactory to the Fund and
the Trust, substantially to the effect that for federal income tax
purposes:
8.5.A. No gain or loss will be recognized to the Fund upon the transfer
of its assets in exchange solely for the Trust Series Shares and the
assumption by the Trust on behalf of the Series of the Fund's liabilities;
8.5.B. No gain or loss will be recognized to the Series on the Trust's
receipt of the Fund's assets in exchange for the Trust Series Shares and
the assumption by the Series of the Fund's liabilities;
8.5.C. The basis of the Fund's assets in the Series' hands will be the
same as the basis of those assets in the Fund's hands immediately before
the conversion;
8.5.D. The Series' holding period for the assets transferred to the Trust
by the Fund will include the holding period of those assets in the Fund's
hands immediately before the conversion;
8.5.E. No gain or loss will be recognized to the Fund on the distribution
of the Trust Series Shares to the Fund Shareholders in constructive
exchange for their Fund Shares;
8.5.F. No gain or loss will be recognized to a Fund Shareholder as a
result of the Fund's distribution of Trust Series Shares to that Fund
Shareholder in constructive exchange for that Fund Shareholder's Fund
Shares;
8.5.G. The basis of the Trust Series Shares received by a Fund
Shareholder will be the same as the adjusted basis of that Fund
Shareholder's Fund Shares constructively surrendered in exchange therefor;
and
8.5.H. The holding period of the Trust Series Shares received by a Fund
Shareholder will include the Fund Shareholder's holding period for the Fund
Shareholder's Fund Shares constructively surrendered in exchange therefor,
provided that said Fund Shares were held as capital assets on the date of
the conversion.
Each of the foregoing conditions precedent to the obligations of a party
may be waived by that party.
9. BROKERAGE FEES AND EXPENSES
9.1. The Trust and the Fund each represent and warrant to the other that
there are no brokers or finders fees payable in connection with the
transactions contemplated hereby.
9.2. The Fund will assume expenses incurred by the Trust and by the Fund
in connection with the entering into and carrying out of provisions of this
Agreement, including, without limitation: (a) registration or qualification
fees and expenses of preparing and filing such forms as are necessary under
applicable federal and state securities laws to qualify the Trust Series
Shares in each state in which the Fund Shareholders are resident as of the
date of the mailing of the Proxy Statement to the Fund Shareholder; (b)
postage; (c) printing; (d) accounting fees; (e) legal fees; and (f)
solicitation costs whether or not the transactions contemplated hereby are
consummated.
10. ENTIRE AGREEMENT
The Trust and the Fund agree that neither party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties. The
representations, warranties and covenants contained herein or in any
document delivered pursuant hereto or in connection herewith shall survive
the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1. This Agreement may be terminated by the mutual agreement of the
Trust and the Fund. In addition, either the Trust or the Fund may at its
option terminate this Agreement at or prior to the Closing Date because:
11.1.A. Of a material breach by the other of any representations,
warranties or agreements contained herein to be performed at or prior to
the Closing Date; or
11.1.B. A condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears that it
will not or cannot be met.
11.2. In the event of any such termination, there shall be no liability
for damages on the part of the Trust or the Fund, or their respective
trustees or officers, to the other party or its trustees or officers.
12. AMENDMENT
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties; provided, however,
that following the Shareholders' Meeting called by the Fund pursuant to
paragraph 5.1, no such amendment may have the effect of changing the
provisions for determining the number of Trust Series Shares to be paid to
the Fund Shareholders under this Agreement to the detriment of the Fund
Shareholders without their further approval.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
13.4. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto and their respective successors and assigns any rights or remedies
under or by reason of this Agreement.
13.5. The parties hereto recognize that each of the Fund and the Trust is
a business trust and all parties agree that any claim arising hereunder or
by reason hereof shall not be enforceable against the Trustees or
shareholders of either the Fund or the Trust but only against the assets of
the Fund and of the Series, respectively.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer.
FIDELITY CHARLES STREET TRUST:
FIDELITY U.S. GOVERNMENT RESERVES
[signature line omitted]
FIDELITY PHILLIPS STREET TRUST:
FIDELITY U.S. GOVERNMENT RESERVES
[signature line omitted]
FIDELITY MANAGEMENT & RESEARCH COMPANY
[signature line omitted]
EXHIBIT 2
FORM OF MANAGEMENT CONTRACT
The language to be added to the current contract is ((underlined)); the
language to be deleted is set forth in [brackets].
MANAGEMENT CONTRACT
BETWEEN
FIDELITY CHARLES STREET TRUST
FIDELITY U.S. GOVERNMENT RESERVES
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[AGREEMENT] ((MODIFICATION)) made this [29th] 1st day of [January, 1990]
((October, 1994)), by and between Fidelity Charles Street Trust, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Fund"), on behalf of
Fidelity U.S. Government Reserves (hereinafter called the "Portfolio"), and
Fidelity Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser").
((Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
January 29, 1990 to a modification of said Contract in the manner set forth
below. The Modified Management Contract shall when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of October 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 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], an Individual Fund
Fee [Rate], ((and an Income Component.))
(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] ((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
[Over] 84 - ((102 .1500
120 - 174 .1450
174 - 228)) .1400
((228 - 282 .1375
282 - 336 .1350
Over 336 .1325))
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be [.28]
((.03%)).
[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 shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Declaration of Trust of the Fund) determined as
of the close of business on each business day throughout the month.]
((One-twelfth of the Group Fee Rate (calculated as described above to the
nearest millionth) and of the Individual Fund Fee Rate shall be applied to
the average 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 to determine the Group Fee and the Individual Fee for such month.
(c) The Income Component. The Adviser shall receive a monthly payment
computed on the basis of the Portfolio's gross income. With respect to
that amount of the Portfolio's monthly gross income which is in excess of
that amount which is equivalent to an annualized yield of 5%, the Adviser
shall receive 6% of the amount of such excess. Gross income, for this
purpose, includes interest accrued and/or discount earned (including both
original issue discount and market discount) on portfolio obligations, less
amortization of premium on portfolio obligations computed in accordance
with generally accepted accounting practices. Annualized yield shall be
determined by dividing the Portfolio's gross income for the month by
average daily net assets of the Portfolio for the month and dividing the
result by the number of days in the month over 365 days.
(Gross Income for the Month) (divided by) (Days in the Month)
(Average Daily Net Assets for the Month) (365 Days)
Notwithstanding the foregoing, in no event shall the Adviser be entitled to
receive an income component for any month that is in excess of an amount
equal to 0.24% of the Portfolio's average net assets for such month.
(d) 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.
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.
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,
1990] May 31, 1995 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.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
((8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving effect
to the choice of laws provisions thereof.))
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[signature lines omitted]
EXHIBIT 3
FORM OF MANAGEMENT CONTRACT
The language to be added to the current contract is ((underlined)); the
language to be deleted is set forth in [brackets].
MANAGEMENT CONTRACT
BETWEEN
FIDELITY CHARLES STREET TRUST
FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of October [1992] ((1994)), by and between
Fidelity Charles Street Trust, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of [Fidelity Limited Maturity Government
Fund] ((Fidelity Short-Intermediate Government Fund)) (hereinafter called
the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser
((hereby)) consent, pursuant to Paragraph 6 of the existing Management
Contract [dated September 5, 1991] ((modified October 1, 1992)), to a
modification of said Contract in the manner set forth below. The Modified
Management Contract shall when executed by duly authorized officers of the
Fund and the Adviser, take effect on the later of [October 1, 1992]
((October 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] ((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 - 102 .1500
120 - 174 .1450
[Over] 174 - ((228)) .1400
((228 - 282 .1375
282 - 336 .1350
Over 336 .1325))
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .30%.
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 [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.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until [May 31,
1993] ((June 30, 1995)) 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.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals ((to be)) hereunto affixed, all as of the date
written above.
[signature lines omitted]
EXHIBIT 4
The language to be added to Spartan Short-Term Bond Fund's and Spartan
Investment Grade Bond Fund's current contract is ((underlined)); the
language to be deleted is set forth in [brackets].
The proper name of each fund - Spartan Short-Term Bond Fund and Spartan
Investment Grade Bond Fund - will be inserted in each respective fund's
contract where indicated by (Name of Portfolio).
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
((FIDELITY CHARLES STREET TRUST ON BEHALF OF (NAME OF PORTFOLIO)))
AGREEMENT made this [17th day of September, 1992] ((1st day of October,
1994)), by and between [Fidelity Management & Research (Far East) Inc.,
a Massachusetts corporation with principal offices at 82 Devonshire Street,
Boston, Massachusetts (hereinafter called the "Sub-Advisor") and] Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); ((Fidelity Management & Research
(Far East) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity
Charles Street Trust, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Trust") on behalf of (Name of Portfolio) (hereinafter called the
"Portfolio"))).
WHEREAS ((the Trust and)) the Advisor [has] ((have)) entered into a
Management Contract [with Fidelity Charles Street Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Fund")], on behalf of [(Name of
Portfolio) (hereinafter called the "Portfolio")] ((the Portfolio)),
pursuant to which the Advisor is to act as investment [advisor] ((manager))
[to] ((of)) the Portfolio; and
WHEREAS the Sub-Advisor [has personnel in Asia and the Pacific Basin and
was] ((and its subsidiaries and other affiliated persons have personnel in
various locations throughout the world and have been)) formed ((in part))
for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, ((and
securities of)) issuers located [outside of North America, principally in
Asia and the Pacific Basin] ((in such countries, and providing investment
advisory services in connection therewith;))
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, ((the Trust)), the Advisor and the Sub-Advisor agree
as follows:
((1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.))
[1.] (((a) INVESTMENT ADVICE:)) [The Sub-Advisor shall act as an
investment consultant to the Advisor and] ((If and to the extent requested
by the Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice ))shall
furnish ((the Portfolio and)) the Advisor such factual information,
research reports and investment recommendations [relating to non-U.S.
issuers of securities located in, and the economies of, various countries
outside of the U.S., all] as the Advisor may reasonably require. Such
information may include written and oral reports and analyses.
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Portfolio in accordance
with the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from time
to time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations as the
Trust or Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.)))
[2.] (((a) INVESTMENT ADVISORY FEE:)) [The Sub-Advisor will be
compensated by the Advisor on the following basis for the services to be
furnished hereunder:] ((For services provided under subparagraph (a) of
paragraph 1 of this Agreement)), the Advisor agrees to pay the Sub-Advisor
a monthly ((Sub-Advisory)) Fee. ((The Sub-Advisory Fee shall be)) equal to
105% of the Sub-Advisor's costs incurred in connection with [the]
((rendering the services referred to in subparagraph (a) of paragraph 1 of
this)) Agreement [, said costs to be determined in relation to the assets
of the Portfolio that benefit from the services of the Sub-Advisor.] ((The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.))
[3.] ((6. Interested Persons:)) It is understood that Trustees,
officers, and shareholders of the [Fund] ((Trust)) are or may be or become
interested in the Advisor [and] ((or)) the Sub-Advisor as directors,
officers or otherwise and that directors, officers and stockholders of the
Advisor [and] ((or)) the Sub-Advisor are or may be or become similarly
interested in the [Fund] ((Trust)), and that the Advisor or the Sub-Advisor
may be or become interested in the [Fund] ((Trust)) as a shareholder or
otherwise.
[4. The Sub-Adviser shall for all purposes be an independent contractor
and not an agent or employee of the Advisor of the Fund. The Sub-Adviser
shall have no authority to act for, represent, bind or obligate the Adviser
or the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.]
[5.] ((7. Services to Other Companies or Accounts)): The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations [with respect
to the rendering of investment advice] hereunder. ((The Sub-Advisor shall
for all purposes be an independent contractor and not an agent or employee
of the Advisor or the Trust)).
((8. Standard of Care)): In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the [Fund] ((Trust)) or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
[6.] ((9. Duration and Termination of Agreement; Amendments)):
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph (6) ((9)), this Agreement shall continue in force until [May 31,
1993] ((June 30 , 1995)) and indefinitely thereafter, but only so long as
the continuance after such period shall be specifically approved at least
annually by vote of the [Fund's] ((Trust's)) Board of Trustees or by vote
of a majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph (6) ((9)), the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the [Fund] ((Trust)) who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or ((with respect to the Portfolio)) by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
[7] ((10. Limitation of Liability:)) The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust ((or other organizational document)) of the [Fund]
((Trust)) and agrees that any obligations of the [Fund] ((Trust)) or the
Portfolio arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek satisfaction
of any such obligation from the Trustees or any individual Trustee.
((11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof. ))
The terms "registered investment company," "vote of a majority of the
outstanding voting securities", "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
[Investment Company Act of] 1940 ((Act)) as now in effect or as hereafter
amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, ((and their respective seals to be hereunto affixed,)) all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 5
The language to be added to Spartan Short-Term Bond Fund's and Spartan
Investment Grade Bond Fund's current contract is ((underlined)); the
language to be deleted is set forth in [brackets].
The proper name of each fund - Spartan Short-Term Bond Fund and Spartan
Investment Grade Bond Fund - will be inserted in each respective fund's
contract where indicated by (Name of Portfolio).
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
((FIDELITY CHARLES STREET TRUST ON BEHALF OF (NAME OF PORTFOLIO)))
AGREEMENT made this [17th day of September, 1992] ((1st day of October,
1994)), by and between [Fidelity Management & Research (U.K.) Inc., a
Massachusetts corporation with principal offices at 82 Devonshire Street,
Boston, Massachusetts (hereinafter called the "Sub-Advisor") and] Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); ((Fidelity Management & Research
(U.K.) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity Charles
Street Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Trust") on
behalf of (Name of Portfolio) (hereinafter called the "Portfolio"))).
WHEREAS ((the Trust and)) the Advisor [has] ((have)) entered into a
Management Contract [with Fidelity Charles Street Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Fund")], on behalf of [(Name of
Portfolio) (hereinafter called the "Portfolio")] ((the Portfolio)),
pursuant to which the Advisor is to act as investment [advisor] ((manager))
[to] ((of)) the Portfolio; and
WHEREAS the Sub-Advisor ((and its subsidiaries and other affiliated
persons)) [has] ((have)) personnel in [Western Europe] ((various locations
throughout the world and)) [was] ((have been)) formed ((in part)) for the
purpose of researching and compiling information and recommendations with
respect to the economies of various countries, ((and securities of))
issuers located [outside of North America, principally in Western Europe]
((in such countries, and providing investment advisory services in
connection therewith));
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, ((the Trust,)) the Advisor and the Sub-Advisor agree
as follows:
((1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.))
[1.] (((a) INVESTMENT ADVICE:)) [The Sub-Advisor shall act as an
investment consultant to the Advisor and] ((If and to the extent requested
by the Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice)) shall
furnish ((the Portfolio and)) the Advisor such factual information,
research reports and investment recommendations [relating to non-U.S.
issuers of securities located in, and the economies of, various countries
outside of the U.S., all] as the Advisor may reasonably require. Such
information may include written and oral reports and analyses.
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Portfolio in accordance
with the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from time
to time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations as the
Trust or Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.))
[2.] (((a) INVESTMENT ADVISORY FEE:)) [The Sub-Advisor will be
compensated by the Advisor on the following basis for the services to be
furnished hereunder:] ((For services provided under subparagraph (a) of
paragraph 1 of this Agreement,)) the Advisor agrees to pay the Sub-Advisor
a monthly ((Sub-Advisory)) Fee. ((The Sub-Advisory Fee shall be)) equal to
110% of the Sub-Advisor's costs incurred in connection with [the]
((rendering the services referred to in subparagraph (a) of paragraph 1 of
this)) Agreement [, said costs to be determined in relation to the assets
of the Portfolio that benefit from the services of the Sub-Advisor.] ((The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.))
[3.] ((6. Interested Persons:)) It is understood that Trustees,
officers, and shareholders of the [Fund] ((Trust)) are or may be or become
interested in the Advisor [and] ((or)) the Sub-Advisor as directors,
officers or otherwise and that directors, officers and stockholders of the
Advisor [and] ((or)) the Sub-Advisor are or may be or become similarly
interested in the [Fund] ((Trust)), and that the Advisor or the Sub-Advisor
may be or become interested in the [Fund] ((Trust)) as a shareholder or
otherwise.
[4. The Sub-Adviser shall for all purposes be an independent contractor
and not an agent or employee of the Advisor of the Fund. The Sub-Adviser
shall have no authority to act for, represent, bind or obligate the Adviser
or the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.]
[5.] ((7. Services to Other Companies or Accounts)): The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations [with respect
to the rendering of investment advice] hereunder. ((The Sub-Advisor shall
for all purposes be an independent contractor and not an agent or employee
of the Advisor or the Trust.))
((8. Standard of Care)): In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the [Fund] ((Trust)) or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
[6.] ((9. Duration and Termination of Agreement; Amendments)):
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph (6) ((9)), this Agreement shall continue in force until [May 31,
1993] ((June 30 , 1995)) and indefinitely thereafter, but only so long as
the continuance after such period shall be specifically approved at least
annually by vote of the [Fund's] ((Trust's)) Board of Trustees or by vote
of a majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph (6) ((9)), the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the [Fund] ((Trust)) who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or ((with respect to the Portfolio)) by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
[7] ((10. Limitation of Liability)): The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust ((or other organizational document)) of the [Fund]
((Trust)) and agrees that any obligations of the [Fund] ((Trust)) or the
Portfolio arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek satisfaction
of any such obligation from the Trustees or any individual Trustee.
((11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.))
The terms "registered investment company," "vote of a majority of the
outstanding voting securities", "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
[Investment Company Act of] 1940 ((Act)) as now in effect or as hereafter
amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, ((and their respective seals to be hereunto affixed)), all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 3
RATIO OF RATIO OF NET
ADVISORY FEES ADVISORY FEES
TO AVERAGE TO AVERAGE RATIO OF
AVERAGE NET ASSETS NET ASSETS EXPENSES TO
INVESTMENT FISCAL NET ASSETS PURSUANT TO PAID AVERAGE NET
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) ADVISORY CONTRACT TO FMR
(B) ASSETS (B)
GROWTH AND INCOME
Advisor Equity
Portfolio Income (3) 11/30/92**$ 0.5 0.50%(dagger) 0.50%(dagger)
1.55%(dagger)
Advisor Institutional
Equity Portfolio
Income(3) 11/30/92 147.1 0.50 0.42 0.71
Convertible Securities (3) 11/30/92 254.1 0.54 0.54 0.96
Equity Income II (3) 11/30/92 1,045.7 0.53 0.53 1.01
Variable Insurance
Products:
Equity-Income 12/31/92 408.0 0.53 0.53 0.65
Equity-Income (3) 1/31/93 4,656.2 0.37 0.37 0.67
Real Estate (3) 1/31/93 98.3 0.64 0.64 1.16
Utilities Income (3) 1/31/93 787.5 0.53 0.53 0.87
U.S. Equity Index 2/28/93# 1,482.3 0.28(dagger) -- 0.28(dagger)
Market Index 4/30/93 265.2 0.45 0.44 0.44
Fidelity Fund (3) 6/30/93# 1,398.0 0.42(dagger) 0.42(dagger) 0.66(dagger)
Balanced (3) 7/31/93 2,154.5 0.53 0.53 0.93
Dividend Growth (3) 7/31/93** 9.2 0.62(dagger) -- 2.50(dagger)
Global Balanced (1) 7/31/93** 35.7 0.77(dagger) 0.77(dagger) 2.12(dagger)
Growth & Income 7/31/93 5,195.4 0.53 0.53 0.83
Puritan (3) 7/31/93 6,319.2 0.47 0.47 0.74
Advisor Income &
Growth 10/31/93 870.1 0.53 0.53 1.51
International Growth
& Income (2) 10/31/93 301.5 0.77 0.77 1.52
ASSET ALLOCATION
Variable Insurance
Products II:
Asset Manager (3) 12/31/92 418.2 0.73 0.73 0.91
Index 500 12/31/92** 12.3 0.28(dagger) -- 0.28(dagger)
Asset Manager 9/30/93 4,704.2 0.72 0.72 1.09
Asset Manager: Growth(3) 9/30/93 566.0 0.73 0.63 1.19
Asset Manager: Income(3) 9/30/93 79.1 0.44 -- 0.65
GROWTH
RATIO OF RATIO OF NET
ADVISORY FEES ADVISORY FEES
TO AVERAGE TO AVERAGE RATIO OF
AVERAGE NET ASSETS NET ASSETS EXPENSES TO
INVESTMENT FISCAL NET ASSETS PURSUANT TO PAID AVERAGE NET
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) ADVISORY CONTRACT TO FMR
(B)
ASSETS (B)
Advisor Equity
Portfolio Growth(3) 11/30/92** 8.5 0.74(dagger) 0.74(dagger)
1.64(dagger)
Advisor Institutional
Equity Portfolio
Growth(3) 11/30/92 $ 129.3 0.67% 0.67% 0.98%
Emerging Growth (3) 11/30/92 595.4 0.70 0.70 1.09
Growth Company (3) 11/30/92 1,436.5 0.74 0.74 1.09
Retirement Growth (3) 11/30/92 1,918.0 0.71 0.71 1.02
Congress Street 12/31/92 64.4 0.45 0.45 0.62
Contrafund (3) 12/31/92 1,339.1 0.51 0.51 0.87
Exchange 12/31/92 185.7 0.54 0.54 0.58
Trend (3) 12/31/92 920.0 0.32 0.32 0.56
Variable Insurance
Products:
Growth 12/31/92 520.9 0.63 0.63 0.75
Overseas (2) 12/31/92 157.0 0.78 0.78 1.14
Select Portfolios:
Air Transportation (3) 2/28/93# 11.3 0.64(dagger) 0.48(dagger)
2.48(dagger)
American Gold 2/28/93# 160.2 0.64(dagger) 0.64(dagger) 1.59(dagger)
Automotive (3) 2/28/93# 106.1 0.64(dagger) 0.64(dagger) 1.57(dagger)
Biotechnology (3) 2/28/93# 752.3 0.64(dagger) 0.64(dagger) 1.50(dagger)
Broadcast and Media (3) 2/28/93# 13.9 0.64(dagger) 0.59(dagger)
2.49(dagger)
Brokerage and Investment
Management (3) 2/28/93# 18.0 0.64(dagger) 0.64(dagger) 2.21(dagger)
Chemicals (3) 2/28/93# 35.1 0.64(dagger) 0.64(dagger) 1.89(dagger)
Computers (3) 2/28/93# 38.3 0.64(dagger) 0.64(dagger) 1.81(dagger)
Construction and
Housing (3) 2/28/93# 22.1 0.64(dagger) 0.64(dagger) 2.02(dagger)
Consumer Products (3) 2/28/93# 7.5 0.64(dagger) -- 2.47(dagger)
Defense and
Aerospace (3) 2/28/93# 1.3 0.64(dagger) -- 2.48(dagger)
Developing
Communications (3) 2/28/93# 51.3 0.64(dagger) 0.64(dagger) 1.88(dagger)
Electric Utilities (3) 2/28/93# 30.6 0.64(dagger) 0.64(dagger)
1.70(dagger)
Electronics (3) 2/28/93# 47.1 0.64(dagger) 0.64(dagger) 1.69(dagger)
Energy (3) 2/28/93# 78.7 0.64(dagger) 0.64(dagger) 1.71(dagger)
Energy Service (3) 2/28/93# 52.3 0.64(dagger) 0.64(dagger) 1.76(dagger)
Environmental
Services (3) 2/28/93# 62.5 0.64(dagger) 0.64(dagger) 1.99(dagger)
Financial Services (3) 2/28/93# 119.9 0.64(dagger) 0.64(dagger)
1.54(dagger)
Food and Agriculture (3) 2/28/93# 109.1 0.64(dagger) 0.64(dagger)
1.67(dagger)
Health Care (3) 2/28/93# 782.6 0.64(dagger) 0.64(dagger) 1.46(dagger)
Home Finance (3) 2/28/93# 138.3 0.64(dagger) 0.64(dagger) 1.55(dagger)
Industrial Equipment (3) 2/28/93# 6.1 0.64(dagger) -- 2.49(dagger)
Industrial Materials (3) 2/28/93# $ 25.0 0.64%(dagger) 0.64%(dagger)
2.02%(dagger)
Insurance (3) 2/28/93# 12.3 0.64(dagger) 0.61(dagger) 2.49(dagger)
Leisure (3) 2/28/93# 39.5 0.64(dagger) 0.64(dagger) 1.90(dagger)
Medical Delivery (3) 2/28/93# 126.4 0.64(dagger) 0.64(dagger)
1.77(dagger)
Natural Gas (3) 2/28/94** 9.1 0.64(dagger) -- 2.42(dagger)
Paper and Forest
Products (3) 2/28/93# 17.5 0.64(dagger) 0.64(dagger) 2.21(dagger)
Precious Metals and
Minerals (3) 2/28/93# 127.8 0.64(dagger) 0.64(dagger) 1.73(dagger)
Regional Banks (3) 2/28/93# 193.5 0.64(dagger) 0.64(dagger) 1.49(dagger)
Retailing (3) 2/28/93# 63.1 0.64(dagger) 0.64(dagger) 1.77(dagger)
Software and Computer
Services (3) 2/28/93# 113.6 0.64(dagger) 0.64(dagger) 1.64(dagger)
Technology (3) 2/28/93# 115.2 0.64(dagger) 0.64(dagger) 1.64(dagger)
Telecommunications (3) 2/28/93# 95.0 0.64(dagger) 0.64(dagger)
1.74(dagger)
Transportation (3) 2/28/93# 4.4 0.64(dagger) -- 2.48(dagger)
Utilities (3) 2/28/93# 243.9 0.64(dagger) 0.64(dagger) 1.42(dagger)
Magellan (3) 3/31/93 21,506.4 0.75 0.75 1.00
Small Cap Stock 4/30/94** 461.9 0.67(dagger) 0.65(dagger) 1.40
Fidelity Fifty (3) 6/30/94** 18,106.2 0.69(dagger) 0.00(dagger)
2.49(dagger)
Blue Chip Growth 7/31/93 589.5 0.72 0.72 1.25
Low-Priced Stock (3) 7/31/93 2,048.8 0.76 0.76 1.12
OTC Portfolio 7/31/93 1,202.7 0.74 0.74 1.08
Advisor Strategic
Opportunities (3) 9/30/93 219.2 0.54 0.54 1.57
Destiny I 9/30/93# 2,920.5 0.60(dagger) 0.60(dagger) 0.65(dagger)
Destiny II 9/30/93# 1,100.8 0.71(dagger) 0.71(dagger) 0.84(dagger)
Strategic
Opportunities (3) 9/30/93 19.2 0.54 0.54 0.89
Advisor Global
Resources (3) 10/31/93 14.4 0.77 0.77 2.62
Advisor Growth
Opportunities 10/31/93 1,204.5 0.68 0.68 1.64
Advisor Overseas (2) 10/31/93 65.5 0.77 0.77 2.3
Canada (1) 10/31/93 61.1 0.86 0.86 2.00
Capital Appreciation (3) 10/31/93 1,139.1 0.48 0.48 0.86
Disciplined Equity (3) 10/31/93 622.1 0.70 0.70 1.09
Diversified
International (2) 10/31/93 119.1 0.73 0.73 1.47
Emerging Markets (2) 10/31/93 144.4 0.77 0.77 1.91
Europe (1) 10/31/93 488.3 0.64 0.64 1.25
Japan (1) 10/31/93 98.4 0.77 0.77 1.71
Latin America (2) 10/31/93** $ 114.6 0.77%(dagger) 0.77%(dagger)
1.94%(dagger)
Overseas (2) 10/31/93 1,025.1 0.77 0.77 1.27
Pacific Basin (1) 10/31/93 251.2 0.80 0.80 1.59
Southeast Asia (1) 10/31/93** 139.3 0.77(dagger) 0.71(dagger) 2.00(dagger)
Stock Selector (3) 10/31/93 459.7 0.71 0.69 1.10
Value (3) 10/31/93 1,100.8 0.72 0.71 1.11
Worldwide (2) 10/31/93 148.9 0.78 0.78 1.40
New Millennium 11/30/93** 181.1 0.68(dagger) 0.68(dagger) 1.25(dagger)
CURRENCY PORTFOLIOS
Deutsche Mark
Peformance, L.P. 12/31/92 18.6 0.50 0.50 1.29
Sterling
Performance, L.P. 12/31/92 7.3 0.50 -- 1.50
Yen Performance, L.P. 12/31/92 3.9 0.50 -- 1.50
INCOME
Advisor Institutional
Limited Term Bond 11/30/92 227.6 0.42 0.42 0.57
Advisor Limited
Term Bond 11/30/92** 1.0 0.42(dagger) 0.42(dagger) 0.82(dagger)
Institutional Short-
Intermediate
Government 11/30/92 189.3 0.45 0.45 0.45
Global Bond (2) 12/31/92# 300.5 0.72(dagger) 0.72(dagger) 1.37(dagger)
New Markets Income (2) 12/31/93** 54.1 0.71(dagger) 0.24(dagger)
1.25(dagger)
Short-Term World
Income (2) 12/31/92# 563.2 0.62(dagger) 0.59(dagger) 1.20(dagger)
Spartan Bond Strategist 12/31/93** 11.0 .70(dagger) .70(dagger)
.70(dagger)
Variable Insurance
Products:
High Income 12/31/92 150.7 0.52 0.52 0.67
Variable Insurance
Products II:
Investment Grade
Bond 12/31/92 57.8 0.47 0.47 0.76
Spartan Long-Term
Government Bond 1/31/93 78.3 0.65 0.65 0.65
U.S. Bond Index 2/28/93# 104.8 0.32(dagger) -- 0.32(dagger)
Capital & Income (3) 4/30/93 1,771.1 0.54 0.54 0.91
Intermediate Bond (3) 4/30/93 1,434.0 0.32 0.27 0.61
Investment Grade Bond (3) 4/30/93 1,049.6 0.37 0.37 0.68
Short-Term Bond (3) 4/30/93 1,634.8 0.47 0.47 0.77
Spartan Government
Income 4/30/93 $ 491.8 0.65% 0.65% 0.65%
Spartan High Income 4/30/93 470.8 0.70 0.70 0.70
Spartan Short-Intermediate
Government 4/30/93 23.5 0.65 0.02 0.02
The North Carolina Capital
Management Trust:
Term Portfolio 6/30/93 83.4 0.41 0.41 0.41
Ginnie Mae 7/31/93 953.2 0.47 0.47 0.80
Mortgage Securities 7/31/93 428.9 0.47 0.47 0.76
Spartan Limited Maturity
Government 7/31/93 1,653.7 0.65 0.65 0.65
Spartan Ginnie Mae 8/31/93 766.9 0.65 0.41 0.41
Government Securities 9/30/93** 616.6 0.47(dagger) 0.47(dagger)
0.69(dagger)
Short-Intermediate
Government 9/30/93 167.6 0.47 0.18 0.61
Spartan Investment
Grade Bond 9/30/93 59.1 0.65 0.65 0.65
Spartan Short-Term Bond 9/30/93 547.0 0.65 0.20 0.20
Advisor Government
Investment 10/31/93 40.8 0.46 -- 0.68
Advisor High Yield 10/31/93 299.1 0.51 0.51 1.11
Advisor Short Fixed
Income 10/31/93 359.6 0.47 0.47 0.95
MONEY MARKET
Cash Reserves (4) 11/30/92 10,249.7 0.17 0.17 0.48
State and Local Asset
Management Series:
Government Money
Market (4) 11/30/92 1,046.4 0.43 0.43 0.43
Variable Insurance
Products:
Money Market (4) 12/31/92 295.1 0.17 0.17 0.24
Select-Money Market (4) 2/28/93# 492.5 0.14(dagger) 0.14(dagger)
0.56(dagger)
Institutional Cash:
Domestic Money
Market (4) 3/31/93 768.4 0.20 0.12 0.18
Money Market (4) 3/31/93 5,033.1 0.20 0.15 0.18
U.S. Government (4) 3/31/93 6,305.4 0.20 0.14 0.18
U.S. Treasury (4) 3/31/93 2,683.0 0.20 0.15 0.18
U.S. Treasury II (4) 3/31/93 7,014.6 0.20 0.15 0.18
Spartan Money Market (4) 4/30/93 4,841.1 0.30 0.30 0.30
Spartan U.S. Government
Money Market (4) 4/30/93 $ 1,204.8 0.55% 0.45% 0.45%
The North Carolina
Capital Management Trust:
Cash Portfolio (4) 6/30/93 1,538.3 0.38 0.38 0.39
Daily Money Fund:
Capital Reserves:
Money Market (4) 7/31/93 443.3 0.50 0.31 0.95
U.S. Government
Money Market (4) 7/31/93 269.5 0.50 0.38 0.95
Money Market (4) 7/31/93 1,554.7 0.50 0.50 0.61
U.S. Treasury (4) 7/31/93 2,841.7 0.50 0.50 0.57
U.S. Treasury
Income (4) 7/31/93 1,166.9 0.42 0.20 0.20
Spartan U.S. Treasury
Money Market (4) 7/31/93 2,138.9 0.55 0.42 0.42
Daily Income Trust (4) 8/31/93 2,302.8 0.30 0.30 0.57
Money Market Trust:
Domestic Money
Market (4) 8/31/93 690.3 0.42 0.42 0.42
Retirement Government
Money Market (4) 8/31/93 1,338.8 0.42 0.42 0.42
Retirement Money
Market (4) 8/31/93 1,661.1 0.42 0.42 0.42
U.S. Government (4) 8/31/93 297.5 0.42 0.42 0.42
U.S. Treasury (4) 8/31/93 181.5 0.42 0.42 0.42
U.S. Government
Reserves (4) 9/30/93 1,139.5 0.43 0.43 0.73
TAX-EXEMPT INCOME
Advisor Institutional
Limited Term
Tax-Exempt 11/30/92 63.5 0.42 0.41 0.66
Advisor Limited
Term Tax-Exempt 11/30/92** 1.1 0.42(dagger) 0.40(dagger) 1.04(dagger)
Connecticut Municipal
Money Market (4) 11/30/92 379.8 0.42 0.26 0.43
High Yield Tax-Free 11/30/92 2,036.2 0.42 0.42 0.57
New Jersey Tax-Free
Money Market (4) 11/30/92 360.5 0.42 0.42 0.64
Spartan Connecticut
Municipal:
High Yield 11/30/92 389.8 0.55 0.55 0.55
Money Market (4) 11/30/92 48.7 0.50 0.02 0.02
Spartan Florida Municipal:
Income 11/30/92** $ 118.4 0.55%(dagger) 0.03%(dagger) 0.03%(dagger)
Money Market (4) 11/30/92** 15.8 0.50(dagger) -- --
Spartan New Jersey
Municipal High Yield 11/30/92 324.6 0.55 0.49 0.51
Aggressive Tax-Free 12/31/92 711.1 0.47 0.47 0.64
Insured Tax-Free 12/31/92 335.7 0.42 0.40 0.63
Limited Term
Municipals 12/31/92 827.3 0.47 0.47 0.64
Michigan Tax-Free:
High Yield 12/31/92 419.6 0.42 0.42 0.61
Money Market (4) 12/31/92 170.1 0.42 0.30 0.49
Minnesota Tax-Free 12/31/92 255.1 0.42 0.42 0.67
Municipal Bond 12/31/92 1,178.4 0.37 0.37 0.49
Ohio Tax-Free:
High Yield 12/31/92 359.3 0.42 0.42 0.61
Money Market (4) 12/31/92 257.0 0.42 0.41 0.58
Spartan Pennsylvania
Municipal:
High Yield 12/31/92 218.9 0.55 0.55 0.55
Money Market (4) 12/31/92 249.3 0.50 0.47 0.47
Massachusetts Tax-Free:
High Yield 1/31/93# 1,215.5 0.42(dagger) 0.42(dagger) 0.55(dagger)
Money Market (4) 1/31/93# 592.0 0.42(dagger) 0.42(dagger) 0.64(dagger)
New York Tax-Free:
High Yield 1/31/93# 429.2 0.42(dagger) 0.42(dagger) 0.61(dagger)
Insured 1/31/93# 338.7 0.42(dagger) 0.42(dagger) 0.61(dagger)
Money Market (4) 1/31/93# 536.3 0.42(dagger) 0.42(dagger) 0.62(dagger)
Spartan Massachusetts
Municipal Money
Market (4) 1/31/93# 316.1 0.50(dagger) 0.17(dagger) 0.17(dagger)
Spartan New York
Municipal:
High Yield 1/31/93# 332.3 0.55(dagger) 0.48(dagger) 0.48(dagger)
Money Market (4) 1/31/93# 454.3 0.50(dagger) 0.50(dagger) 0.50(dagger)
California Tax-Free:
High Yield 2/28/93# 543.5 0.42(dagger) 0.42(dagger) 0.60(dagger)
Insured 2/28/93# 213.4 0.42(dagger) 0.42(dagger) 0.63(dagger)
Money Market (4) 2/28/93# 548.7 0.42(dagger) 0.42(dagger) 0.62(dagger)
Spartan California
Municipal:
High Yield 2/28/93# $ 514.4 0.55%(dagger) 0.40%(dagger) 0.40%(dagger)
Money Market (4) 2/28/93# 894.4 0.50(dagger) 0.30(dagger) 0.30(dagger)
Institutional Tax-
Exempt Cash (4) 5/31/93 2,517.7 0.20 0.14 0.18
Daily Money Fund:
Capital Reserves:
Municipal Money
Market (4) 7/31/93 91.7 0.50 0.22 0.95
Spartan Aggressive
Municipal 8/31/93** 6.4 0.60(dagger) 0.60(dagger) 0.60(dagger)
Spartan Intermediate
Municipal 8/31/93** 82.6 0.55(dagger) - -
Spartan Maryland Municipal
Income 8/31/93** 13.4 0.55(dagger) -- --
Spartan Municipal
Income 8/31/93 869.8 0.55 0.47 0.47
Spartan Municipal
Money Market (4) 8/31/93 1,561.2 0.50 0.27 0.27
Spartan Short-
Intermediate
Municipal 8/31/93# 819.9 0.55(dagger) 0.55(dagger) 0.55(dagger)
Advisor High Income
Municipal 10/31/93 316.4 0.42 0.42 0.92
Daily Tax-Exempt
Money (4) 10/31/93 504.9 0.50 0.50 0.61
Spartan New Jersey
Municipal Money
Market (4) 10/31/93 329.1 0.50 0.44 0.44
Tax-Exempt Money
Market Trust (4) 10/31/93 2,789.6 0.27 0.27 0.49
(a) All fund data are as of the fiscal year end noted in the chart or as of
October 31, 1993, if fiscal year end figures are not yet available. Average
net assets are computed on the basis of average net assets of each fund at
the close of business on each business day throughout its fiscal period.
(b) Reflects reductions for any expense reimbursement paid by or due from
FMR pursuant to voluntary or state expense limitations.
(dagger) Annualized
# Year end changed
** Less than a complete fiscal year
(1) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity Management
& Research (U.K.) Inc. (FMR U.K.), Fidelity Management & Research
(Far East) Inc. (FMR Far East), Fidelity Investments Japan Ltd. (FIJ),
Fidelity International Investment Advisors (FIIA), and Fidelity
International Investment Advisors (U.K.) Limited (FIIAL U.K.), with respect
to the fund.
(2) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: FMR U.K., FMR Far
East, FIJ (New Markets Income only), FIIA, and FIIAL U.K., with respect to
the fund.
(3) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect to the
fund.
(4) Fidelity Management & Research Company has entered into a
sub-advisory agreement with FMR Texas Inc., with respect to the fund.
CHA2-PXS-794 CUSIP #316462100/FUND #050
CUSIP #316069608/FUND #448
CUSIP #316069509/FUND #449
CUSIP #316069202/FUND #464
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- - --------------------------------------------------------------------------
- - --------------------
FIDELITY CHARLES STREET TRUST: FIDELITY U.S. GOVERNMENT RESERVES
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Richard J. Flynn, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
FIDELITY CHARLES STREET TRUST as indicated above which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
September 21, 1994 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 _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
050,448,449,464 HH
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE 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 nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Edward H. Malone, Marvin L. Mann, Gerald nominees.
C. McDonough, 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 Price Waterhouse as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting it to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
7. To approve an Agreement and Plan providing for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
conversion of the fund into a separate fund of a
Delaware business trust.
8. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
fund.
10. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
limitation concerning writing or purchasing put and
call options.
</TABLE>
CHA2-PXC-794 CUSIP# 316462100/FUND# 050 H
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- - --------------------------------------------------------------------------
- - --------------------
FIDELITY CHARLES STREET TRUST: FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Richard J. Flynn, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
FIDELITY CHARLES STREET TRUST as indicated above which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
September 21, 1994 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 _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
050,448,449,464 HH
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE 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 nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Edward H. Malone, Marvin L. Mann, Gerald nominees.
C. McDonough, 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 Price Waterhouse as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting it to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
9. To approve an amended mangement contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
fund.
</TABLE>
CHA2-PXC-794 CUSIP# 316069202/FUND# 464 H
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- - --------------------------------------------------------------------------
- - --------------------
FIDELITY CHARLES STREET TRUST: SPARTAN SHORT-TERM INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Richard J. Flynn, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
FIDELITY CHARLES STREET TRUST as indicated above which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
September 21, 1994 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 _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
050,448,449,464 HH
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE 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 nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Edward H. Malone, Marvin L. Mann, Gerald nominees.
C. McDonough, 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 Price Waterhouse as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting it to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
10. To approve a new Sub-Advisory Agreement with FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
FMR Far East for the fund.
11. To approve a new Sub-Advisory Agreement with FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
FMR U.K for the fund.
</TABLE>
CHA2-PXC-794 CUSIP# 316069509/FUND# 449 H
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- - --------------------------------------------------------------------------
- - --------------------
FIDELITY CHARLES STREET TRUST: SPARTAN INVESTMENT GRADE BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Richard J. Flynn, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
FIDELITY CHARLES STREET TRUST as indicated above which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
September 21, 1994 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 _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
050,448,449,464 HH
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE 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 nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Edward H. Malone, Marvin L. Mann, Gerald nominees.
C. McDonough, 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 Price Waterhouse as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting it to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
10. To approve a new Sub-Advisory Agreement with FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
FMR Far East for the fund.
11. To approve a new Sub-Advisory Agreement with FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
FMR U.K for the fund.
</TABLE>
CHA2-PXC-794 CUSIP# 316069608/FUND# 448 H
