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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[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[X] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VARIABLE INSURANCE PRODUCTS FUND
Payment of Filing Fee (Check the appropriate box):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11:
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(5) TOTAL FEE PAID:
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[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE 0-11(A) (2)
AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID PREVIOUSLY. IDENTIFY THE
PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF
ITS FILING.
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(1) AMOUNT PREVIOUSLY PAID:
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
(3) FILING PARTY:
(4) DATE FILED:
VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO, GROWTH PORTFOLIO, HIGH INCOME
PORTFOLIO, MONEY MARKET PORTFOLIO, AND OVERSEAS PORTFOLIO
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-5429
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 Equity-Income Portfolio, Growth Portfolio, High Income
Portfolio, Money Market Portfolio, and Overseas Portfolio will be held
at the office of Variable Insurance Products Fund (the Trust), 82
Devonshire Street, Boston, Massachusetts 02109 on September 16, 1998,
at 9:00 a.m. The purpose of the Meeting is to consider and act upon
the following proposals, and to transact such other business as may
properly come before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of Price w aterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an Amended and Restated
Declaration of Trust.
4. To approve an amended management contract for each of
Equity-Income Portfolio, Growth Portfolio, and Overseas Portfolio.
5. To approve an amended management contract for High Income
Portfolio.
6. To approve an amended management contract for Money Market
Portfolio.
7. To amend the fundamental investment limitation concerning
diversification for Equity-Income Portfolio, Growth Portfolio, High
Income Portfolio, and Overseas Portfolio.
8. To amend the fundamental investment limitation concerning
diversification for Money Market Portfolio.
The Board of Trustees has fixed the close of business on July 20,
1998, as the record date for the determination of the shareholders of
each fund entitled to notice of, and to vote at, such Meeting and any
adjournments thereof.
By order of the Board of Trustees,
Eric D. Roiter, Secretary
July 20, 1998
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
ANY PERSONS HAVING A VOTING INTEREST IN THE VARIABLE ACCOUNT ARE
INVITED TO ATTEND THE MEETING IN PERSON. ANY SUCH PERSON WHO DOES NOT
EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING INSTRUCTIONS
ON THE ENCLOSED VOTING INSTRUCTION FORM, 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 VOTING INSTRUCTION CARD PROMPTLY, NO
MATTER HOW LARGE OR SMALL YOUR VOTING INTEREST MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC CORP. JOHN SMITH, TREASURER
2) ABC CORP. JOHN SMITH, TREASURER
C/O JOHN SMITH, TREASURER
B. 1) ABC CORP. PROFIT SHARING PLAN ANN B. COLLINS, TRUSTEE
2) ABC TRUST ANN B. COLLINS, TRUSTEE
3) ANN B. COLLINS, TRUSTEE ANN B. COLLINS, TRUSTEE
U/T/D 12/28/78
C. 1) ANTHONY B. CRAFT, CUST. ANTHONY B. CRAFT
F/B/O ANTHONY B. CRAFT, JR.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
GROWTH PORTFOLIO
HIGH INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
OVERSEAS PORTFOLIO
TO BE HELD ON SEPTEMBER 16, 1998
This Proxy Statement is furnished in connection with a solicitation
of proxies made by, and on behalf of, the Board of Trustees of
Variable Insurance Products Fund (the trust) to be used at the Special
Meeting of Shareholders of Equity-Income Portfolio, Growth Portfolio,
High Income Portfolio, Money Market Portfolio, and Overseas Portfolio
(the funds) and at any adjournments thereof (the Meeting), to be held
on September 16, 1998, at 9:00 a.m. at 82 Devonshire Street, Boston,
Massachusetts 02109, the principal executive office of the trust and
Fidelity Management & Research Company (FMR), the funds' investment
adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about July 20, 1998.
Supplementary solicitations may be made by mail, telephone, telegraph,
facsimile, 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,
provided that the expenses do not exceed the expense cap for each
class of each fund listed on page . Expenses exceeding a class's
expense cap will be paid by FMR. The principal business address of
Fidelity Distributors Corporation (FDC), the funds' principal
underwriter and distribution agent, and Fidelity Management & Research
(U.K.) Inc. (FMR U.K.) and Fidelity Management & Research (Far East)
Inc. (FMR Far East), subadvisers to High Income Portfolio and Overseas
Portfolio, is 82 Devonshire Street, Boston, Massachusetts 02109. The
principal business address of Fidelity Investments Money Management,
Inc. (FIMM) (the successor to FMR Texas Inc.), subadviser to Money
Market Portfolio, is Contra Way, Merrimack, New Hampshire 03054.
Fidelity International Investment Advisors (FIIA) located at Pembroke
Hall, 42 Crow Lane, Pembroke HM19, Bermuda, and Fidelity International
Investment Advisors (U.K.) Limited (FIIA (U.K.)L) located at 26 Lovat
Lane, London, EC3R 8LL, England, are also subadvisers to Overseas
Portfolio.
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. Only proxies that are
voted will be counted towards 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 not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as 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.
The following table summarizes the proposals applicable to each fund.
PROPOSAL # PROPOSAL DESCRIPTION APPLICABLE FUND(S)
1. TO ELECT AS TRUSTEES THE TWELVE EQUITY-INCOME PORTFOLIO
NOMINEES PRESENTED IN PROPOSAL GROWTH PORTFOLIO
1. HIGH INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
OVERSEAS PORTFOLIO
2. TO RATIFY THE SELECTION OF EQUITY-INCOME PORTFOLIO
PRICE W ATERHOUSECOOPERS LLP AS GROWTH PORTFOLIO
INDEPENDENT ACCOUNTANTS OF THE HIGH INCOME PORTFOLIO
FUNDS. MONEY MARKET PORTFOLIO
OVERSEAS PORTFOLIO
3. TO AUTHORIZE THE TRUSTEES TO EQUITY-INCOME PORTFOLIO
ADOPT AN AMENDED AND RESTATED GROWTH PORTFOLIO
DECLARATION OF TRUST. HIGH INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
OVERSEAS PORTFOLIO
4. TO APPROVE AN AMENDED EQUITY-INCOME PORTFOLIO
MANAGEMENT CONTRACT FOR THE GROWTH PORTFOLIO
FUND THAT WOULD REDUCE THE OVERSEAS PORTFOLIO
MANAGEMENT FEE PAYABLE TO
FMR BY THE FUND AS FMR'S
ASSETS UNDER MANAGEMENT
INCREASE.
5. TO APPROVE AN AMENDED HIGH INCOME PORTFOLIO
MANAGEMENT CONTRACT FOR THE
FUND THAT WOULD REDUCE THE
MANAGEMENT FEE PAYABLE TO
FMR BY THE FUND AS FMR'S
ASSETS UNDER MANAGEMENT
INCREASE.
6. TO APPROVE AN AMENDED MONEY MARKET PORTFOLIO
MANAGEMENT CONTRACT FOR THE
FUND THAT WOULD REDUCE THE
MANAGEMENT FEE PAYABLE TO
FMR BY THE FUND AS FMR'S
ASSETS UNDER MANAGEMENT
INCREASE.
7. DIVERSIFICATION: TO AMEND THE EQUITY-INCOME PORTFOLIO
FUNDAMENTAL DIVERSIFICATION GROWTH PORTFOLIO
LIMITATION TO EXCLUDE "SECURITIES OF HIGH INCOME PORTFOLIO
OTHER INVESTMENT COMPANIES" OVERSEAS PORTFOLIO
FROM ISSUER DIVERSIFICATION LIMITS.
8. DIVERSIFICATION: TO AMEND THE MONEY MARKET PORTFOLIO
FUNDAMENTAL DIVERSIFICATION
LIMITATION CONSISTENT WITH
AMENDMENTS TO RULE 2A-7.
Shares of each class of each fund of the trust issued and outstanding
as of May 31, 1998 are indicated in the following table:
EQUITY-INCOME PORTFOLIO:
INITIAL CLASS 460,140,000
SERVICE CLASS 3,840,000
GROWTH PORTFOLIO:
INITIAL CLASS 241,030,000
SERVICE CLASS 930,000
HIGH INCOME PORTFOLIO:
INITIAL CLASS 207,010,000
SERVICE CLASS 4,430,000
MONEY MARKET PORTFOLIO:
INITIAL CLASS 1,301,100,000
OVERSEAS PORTFOLIO:
INITIAL CLASS 107,270,000
SERVICE CLASS 581,451
To the knowledge of the trust, substantial (5% or more) record or
beneficial ownership of each class of each fund on May 31, 1998 was as
follows:
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EQUITY-INCOME PORTFOLIO - INITIAL CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 132,970,059.547 28.90%
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
FIDELITY INVESTMENTS LIFE INSURANCE CO . 71,867,201 .000 15.62%
P.O. BOX 1306
BOSTON, MA 02104-9907
AETNA LIFE & CASUALTY 36,146,771.617 7.86%
242 TRUMBULL ST.
HARTFORD, CT 06103-1205
ALLMERICA INVESTMENTS 35,861,015.328 7.79%
440 LINCOLN ST.
WORCESTER, MA 01653
LIFE OF VIRGINIA 28,974,169.440 6.30%
6610 W. BROAD ST.
RICHMOND , VA 23261
THE TRAVELERS COMPANIES 23,669,545.783 5.14%
ONE TOWER SQUARE
HARTFORD, CT 06183
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EQUITY-INCOME PORTFOLIO - SERVICE CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 3, 826,176.000 99.64%
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
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GROWTH PORTFOLIO - INITIAL CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 67,722,220.211 28.10%
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
FIDELITY INVESTMENTS LIFE INSURANCE CO . 29,910,567 .000 12.41%
P.O. BOX 1306
BOSTON, MA 02104-9907
THE TRAVELERS COMPANIES 20,360,799.251 8.45%
ONE TOWER SQUARE
HARTFORD, CT 06183
ALLMERICA INVESTMENTS 19,401,297.235 8.05%
440 LINCOLN ST.
WORCESTER, MA 01653
AETNA LIFE & CASUALTY 19,356,225.098 8.03%
242 TRUMBULL ST.
HARTFORD, CT 06103-1205
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GROWTH PORTFOLIO - SERVICE CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 927,637,467.000 99.75%
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
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HIGH INCOME PORTFOLIO - INITIAL CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 90,415,364.885 43.72%
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
ALLMERICA INVESTMENTS 28,415,143.245 13.73%
440 LINCOLN ST.
WORCESTER, MA 01653
FIDELITY INVESTMENTS LIFE INSURANCE CO . 28,167,432.000 13.61%
P.O. BOX 1306
BOSTON, MA 02104-9907
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HIGH INCOME PORTFOLIO - SERVICE CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 4,377,451.000 98.81 %
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
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MONEY MARKET PORTFOLIO - INITIAL CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
FIDELITY INVESTMENTS LIFE INSURANCE CO. 549,833,409.000 42.20%
P.O. BOX 1306
BOSTON, MA 02104-9907
AMERICAN INTERNATIONAL LIFE INS OF NY 162,633,965.890 12.50%
600 N . KING ST.
WILMINGTON, DE 19801
AMERITAS FINANCIAL SERVICES 94,790,256.390 7.29%
5900 "O" ST.
LINCOLN, NE 68510
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OVERSEAS PORTFOLIO - INITIAL CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 38,498,597.654 35.89%
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
FIDELITY INVESTMENTS LIFE INSURANCE CO . 14,434,147.000 13.46%
P.O. BOX 1306
BOSTON, MA 02104-9907
THE NEW ENGLAND 9,408,224.463 8.77%
501 BOYLSTON ST.
BOSTON, MA 02117
ALLMERICA INVESTMENTS 7,206,194.517 6.72%
440 LINCOLN ST.
WORCESTER, MA 01653
LIFE OF VIRGINIA 6,026,575.994 5.62%
6610 W. BROAD ST.
RICHMOND, VA 23261
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OVERSEAS PORTFOLIO - SERVICE CLASS:
COMPANY # OF SHARES HELD % OF SHARES
HELD
NATIONWIDE INSURANCE GROUP 568,808.000 98 %
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215-2220
To the knowledge of the trust, no other shareholder owned of record
or beneficially more than 5% of the outstanding shares of any class of
a fund on May 31, 1998 .
A shareholder owning more than 25% of a particular fund's shares may
be considered to be a "controlling person" (as defined in the
Investment Company Act of 1940) of that fund. Accordingly, its vote
could have a more significant effect on matters presented to
shareholders for approval than the votes of a fund's other
shareholders.
Each company holds its shares in a separate account (the Variable
Account) which serves as the funding vehicle for its variable
insurance products. In accordance with its view of present applicable
law, each company will vote its shares held in its respective Variable
Account at the Special Meeting of Shareholders in accordance with
instructions received from persons having a voting interest in the
Variable Account. Those persons who have a voting interest at the
close of business on July 20, 1998, will be entitled to submit
instructions to their company.
Portfolio shares held in a Variable Account for which no timely
instructions are received will be voted by the companies in proportion
to the voting instructions which are received with respect to all
contracts participating in a Variable Account. Voting instructions to
abstain on any item to be voted upon will reduce the votes eligible to
be cast.
Accordingly, if you wish to vote, you should complete the enclosed
voting instruction form as a participant in a Variable Account. All
forms which are properly executed and received prior to the Meeting,
and which are not revoked, will be voted as described above. If the
enclosed voting instruction form is executed and returned, it may
nevertheless be revoked at any time prior to the Meeting by written
notification received by your company, by execution of a later-dated
form received by your company, or by attending the Meeting and
voting in person.
FOR A FREE COPY OF A FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997, CALL FIDELITY DISTRIBUTORS CORPORATION AT
1-800-544-5429 OR THE INSURANCE COMPANY THAT ISSUED YOUR POLICY.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS
SUFFICIENT TO APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE
APPROPRIATE FUND CAST AT THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL
2. APPROVAL OF PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" OF THE ENTIRE TRUST. APPROVAL OF
PROPOSALS 4 THROUGH 8 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF
THE OUTSTANDING VOTING SECURITIES" OF THE APPROPRIATE FUND. UNDER THE
INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), THE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF
THE LESSER OF (A) 67% OR MORE OF THE VOTING SECURITIES PRESENT AT THE
MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR
(B) MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES.
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the
trust. Pursuant to the provisions of the Declaration of Trust of
Variable Insurance Products Fund, the Trustees have determined that
the number of Trustees shall be fixed at twelve. It is intended that
the enclosed proxy card will be voted for the election as Trustees of
the twelve nominees listed below, unless such authority has been
withheld in the proxy card.
All nominees named below (except Robert C. Pozen) are currently
Trustees of Variable Insurance Products Fund and have served in that
capacity continuously since originally elected or appointed. Robert M.
Gates and William O. McCoy were selected by the trust's Nominating and
Administration Committee (see page ) and were appointed to the Board
in March 1997 and January 1997, respectively. None of the nominees are
related to one another. Those nominees indicated by an asterisk (*)
are "interested persons" of the trust by virtue of, among other
things, their affiliation with either the trust, the funds' investment
adviser (FMR, or the Adviser), or the funds' distribution agent, FDC.
The business address of each nominee who is an "interested person" is
82 Devonshire Street, Boston, Massachusetts 02109, and the business
address of all other nominees is Fidelity Investments, P.O. Box 9235,
Boston, Massachusetts 02205-9235. Except for Robert M. Gates, William
O. McCoy, and Robert C. Pozen, each of the nominees is currently a
Trustee or General Partner, as the case may be, of 59 registered
investment companies (trusts or partnerships) advised by FMR. Mr.
Gates and Mr. McCoy each is currently a Trustee or General Partner, as
the case may be, of 53 registered investment companies (trusts or
partnerships) advised by FMR. Mr. Pozen is currently a Trustee or
General Partner, as the case may be, of 52 registered investment
companies (trusts or partnerships) advised by FMR.
In the election of Trustees, those twelve nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is
present, shall be elected.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
RALPH F. COX PRESIDENT OF RABAR ENTERPRISES 1991
(6 6 ) (MANAGEMENT CONSULTING-ENGINEERING
INDUSTRY, 1994). PRIOR TO FEBRUARY
1994, HE WAS PRESIDENT OF GREENHILL
PETROLEUM CORPORATION (PETROLEUM
EXPLORATION AND PRODUCTION). UNTIL
MARCH 1990, MR. COX WAS PRESIDENT
AND CHIEF OPERATING OFFICER OF UNION
PACIFIC RESOURCES COMPANY
(EXPLORATION AND PRODUCTION). HE IS A
DIRECTOR OF USA WASTE SERVICES, INC.
(NON-HAZARDOUS WASTE, 1993), CH2M
HILL COMPANIES (ENGINEERING), RIO
GRANDE, INC. (OIL AND GAS PRODUCTION),
AND DANIEL INDUSTRIES (PETROLEUM
MEASUREMENT EQUIPMENT
MANUFACTURER). IN ADDITION, HE IS A
MEMBER OF ADVISORY BOARDS OF TEXAS
A&M UNIVERSITY AND THE UNIVERSITY OF
TEXAS AT AUSTIN.
PHYLLIS BURKE DAVIS PRIOR TO HER RETIREMENT IN SEPTEMBER 1992
(66) 1991, MRS. DAVIS WAS THE SENIOR
VICE PRESIDENT OF CORPORATE AFFAIRS OF
AVON PRODUCTS, INC. SHE IS CURRENTLY
A DIRECTOR OF BELLSOUTH CORPORATION
(TELECOMMUNICATIONS), EATON
CORPORATION (MANUFACTURING, 1991),
AND THE TJX COMPANIES, INC. (RETAIL
STORES), AND PREVIOUSLY SERVED AS A
DIRECTOR OF HALLMARK CARDS, INC.
(1985-1991) AND NABISCO BRANDS,
INC. IN ADDITION, SHE IS A MEMBER OF
THE PRESIDENT'S ADVISORY COUNCIL OF
THE UNIVERSITY OF VERMONT SCHOOL OF
BUSINESS ADMINISTRATION.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
ROBERT M. GATES CONSULTANT, AUTHOR, AND LECTURER 1997
(5 5 ) (1993). MR. GATES WAS DIRECTOR OF
THE CENTRAL INTELLIGENCE AGENCY
(CIA) FROM 1991-1993. FROM 1989
TO 1991, MR. GATES SERVED AS
ASSISTANT TO THE PRESIDENT OF THE
UNITED STATES AND DEPUTY NATIONAL
SECURITY ADVISOR. MR. GATES IS A
DIRECTOR OF LUCASVARITY PLC
(AUTOMOTIVE COMPONENTS AND DIESEL
ENGINES), CHARLES STARK DRAPER
LABORATORY (NON-PROFIT), NACCO
INDUSTRIES, INC. (MINING AND
MANUFACTURING), AND TRW INC.
(ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS). MR. GATES
ALSO IS A TRUSTEE OF THE FORUM FOR
INTERNATIONAL POLICY AND OF THE
ENDOWMENT ASSOCIATION OF THE
COLLEGE OF WILLIAM AND MARY. IN
ADDITION, HE IS A MEMBER OF THE
NATIONAL EXECUTIVE BOARD OF THE BOY
SCOUTS OF AMERICA.
*EDWARD C. JOHNSON 3D PRESIDENT, IS CHAIRMAN, CHIEF 1968
(6 8 ) EXECUTIVE OFFICER AND A DIRECTOR OF
FMR CORP.; A DIRECTOR AND
CHAIRMAN OF THE BOARD AND OF THE
EXECUTIVE COMMITTEE OF FMR;
CHAIRMAN AND A DIRECTOR OF FIDELITY
INVESTMENTS MONEY MANAGEMENT,
INC. (1998), FIDELITY MANAGEMENT &
RESEARCH (U.K.) INC., AND FIDELITY
MANAGEMENT & RESEARCH (FAR EAST)
INC.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
E. BRADLEY JONES PRIOR TO HIS RETIREMENT IN 1984, 1990
(70) MR. JONES WAS CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF LTV STEEL
COMPANY. HE IS A DIRECTOR OF TRW
INC. (ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS), CONSOLIDATED
RAIL CORPORATION, BIRMINGHAM STEEL
CORPORATION, AND RPM, INC.
(MANUFACTURER OF CHEMICAL PRODUCTS),
AND HE PREVIOUSLY SERVED AS A
DIRECTOR OF NACCO INDUSTRIES, INC.
(MINING AND MANUFACTURING,
1985-1995), HYSTER-YALE MATERIALS
HANDLING, INC. (1985-1995), AND
CLEVELAND-CLIFFS INC. (MINING), AND AS
A TRUSTEE OF FIRST UNION REAL ESTATE
INVESTMENTS. IN ADDITION, HE SERVES
AS A TRUSTEE OF THE CLEVELAND CLINIC
FOUNDATION, WHERE HE HAS ALSO BEEN
A MEMBER OF THE EXECUTIVE
COMMITTEE AS WELL AS CHAIRMAN OF
THE BOARD AND PRESIDENT, A TRUSTEE
AND MEMBER OF THE EXECUTIVE
COMMITTEE OF UNIVERSITY SCHOOL
(CLEVELAND), AND A TRUSTEE OF
CLEVELAND CLINIC FLORIDA.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
DONALD J. KIRK EXECUTIVE-IN-RESIDENCE (1995) AT 1987
(65) COLUMBIA UNIVERSITY GRADUATE SCHOOL
OF BUSINESS AND A FINANCIAL
CONSULTANT. FROM 1987 TO JANUARY
1995, MR. KIRK WAS A PROFESSOR AT
COLUMBIA UNIVERSITY GRADUATE SCHOOL
OF BUSINESS. PRIOR TO 1987, HE WAS
CHAIRMAN OF THE FINANCIAL ACCOUNTING
STANDARDS BOARD. MR. KIRK IS A
DIRECTOR OF GENERAL RE CORPORATION
(REINSURANCE), AND HE PREVIOUSLY
SERVED AS A DIRECTOR OF VALUATION
RESEARCH CORP. (APPRAISALS AND
VALUATIONS, 1993-1995). IN ADDITION,
HE SERVES AS CHAIRMAN OF THE BOARD
OF DIRECTORS OF THE NATIONAL ARTS
STABILIZATION FUND, CHAIRMAN OF THE
BOARD OF TRUSTEES OF THE GREENWICH
HOSPITAL ASSOCIATION, DIRECTOR OF THE
YALE-NEW HAVEN HEALTH SERVICES
CORP. (1998), A MEMBER OF THE
PUBLIC OVERSIGHT BOARD OF THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS' SEC PRACTICE SECTION
(1995), AND AS A PUBLIC GOVERNOR OF
THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. (1996).
*PETER S. LYNCH VICE CHAIRMAN AND DIRECTOR OF FMR. 1990
(55) PRIOR TO MAY 31, 1990, HE WAS A
DIRECTOR OF FMR AND EXECUTIVE VICE
PRESIDENT OF FMR (A POSITION HE
HELD UNTIL MARCH 31, 1991); VICE
PRESIDENT OF FIDELITY MAGELLAN FUND
AND FMR GROWTH GROUP LEADER;
AND MANAGING DIRECTOR OF FMR
CORP. MR. LYNCH WAS ALSO VICE
PRESIDENT OF FIDELITY INVESTMENTS
CORPORATE SERVICES (1991-1992). IN
ADDITION, HE SERVES AS A TRUSTEE OF
BOSTON COLLEGE, MASSACHUSETTS EYE
& EAR INFIRMARY, HISTORIC DEERFIELD
(1989) AND SOCIETY FOR THE
PRESERVATION OF NEW ENGLAND
ANTIQUITIES, AND AS AN OVERSEER OF
THE MUSEUM OF FINE ARTS OF BOSTON.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
WILLIAM O. MCCOY VICE PRESIDENT OF FINANCE FOR THE 1997
(64) UNIVERSITY OF NORTH CAROLINA
(16-SCHOOL SYSTEM, 1995). PRIOR TO
HIS RETIREMENT IN DECEMBER 1994,
MR. MCCOY WAS VICE CHAIRMAN OF
THE BOARD OF BELLSOUTH CORPORATION
(TELECOMMUNICATIONS, 1984) AND
PRESIDENT OF BELLSOUTH ENTERPRISES
(1986). HE IS CURRENTLY A DIRECTOR OF
LIBERTY CORPORATION (HOLDING
COMPANY, 1984), WEEKS
CORPORATION OF ATLANTA (REAL ESTATE,
1994), CAROLINA POWER AND LIGHT
COMPANY (ELECTRIC UTILITY, 1996) AND
THE KENAN TRANSPORT CO. (1996).
PREVIOUSLY, HE WAS A DIRECTOR OF
FIRST AMERICAN CORPORATION (BANK
HOLDING COMPANY, 1979-1996). IN
ADDITION, MR. MCCOY SERVES AS A
MEMBER OF THE BOARD OF VISITORS FOR
THE UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL (1994) AND FOR THE
KENAN-FLAGER BUSINESS SCHOOL
(UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL, 1988).
GERALD C. MCDONOUGH CHAIRMAN OF G.M. MANAGEMENT 1989
( 70 ) GROUP (STRATEGIC ADVISORY SERVICES).
MR. MCDONOUGH IS A DIRECTOR OF
YORK INTERNATIONAL CORP. (AIR
CONDITIONING AND REFRIGERATION),
COMMERCIAL INTERTECH CORP.
(HYDRAULIC SYSTEMS, BUILDING
SYSTEMS, AND METAL PRODUCTS,
1992), CUNO, INC. (LIQUID AND GAS
FILTRATION PRODUCTS, 1996), AND
ASSOCIATED ESTATES REALTY
CORPORATION (A REAL ESTATE
INVESTMENT TRUST, 1993). MR.
MCDONOUGH SERVED AS A DIRECTOR OF
ACME-CLEVELAND CORP. (METAL
WORKING, TELECOMMUNICATIONS, AND
ELECTRONIC PRODUCTS) FROM
1987-1996 AND BRUSH-WELLMAN INC.
(METAL REFINING) FROM 1983-1997.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
MARVIN L. MANN CHAIRMAN OF THE BOARD, PRESIDENT, 1993
(65) AND CHIEF EXECUTIVE OFFICER OF
LEXMARK INTERNATIONAL, INC. (OFFICE
MACHINES, 1991). PRIOR TO 1991, HE
HELD THE POSITIONS OF VICE PRESIDENT
OF INTERNATIONAL BUSINESS MACHINES
CORPORATION (IBM) AND PRESIDENT AND
GENERAL MANAGER OF VARIOUS IBM
DIVISIONS AND SUBSIDIARIES. MR. MANN
IS A DIRECTOR OF M.A. HANNA
COMPANY (CHEMICALS, 1993), IMATION
CORP. (IMAGING AND INFORMATION
STORAGE, 1997), 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.
*ROBERT C. POZEN SENIOR VICE PRESIDENT, IS PRESIDENT --
(5 2 ) AND A DIRECTOR OF FMR (1997); AND
PRESIDENT AND A DIRECTOR OF FIDELITY
INVESTMENTS MONEY MANAGEMENT,
INC. (1998), FIDELITY MANAGEMENT &
RESEARCH (U.K.) INC. (1997), AND
FIDELITY MANAGEMENT & RESEARCH
(FAR EAST) INC. (1997). PREVIOUSLY,
MR. POZEN SERVED AS GENERAL
COUNSEL, MANAGING DIRECTOR, AND
SENIOR VICE PRESIDENT OF FMR CORP.
NOMINEE PRINCIPAL OCCUPATION** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
THOMAS R. WILLIAMS PRESIDENT OF THE WALES GROUP, INC. 1989
( 70 ) (MANAGEMENT AND FINANCIAL ADVISORY
SERVICES). PRIOR TO RETIRING IN 1987,
MR. WILLIAMS SERVED AS CHAIRMAN OF
THE BOARD OF FIRST WACHOVIA
CORPORATION (BANK HOLDING
COMPANY), AND CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF THE FIRST
NATIONAL BANK OF ATLANTA AND FIRST
ATLANTA CORPORATION (BANK HOLDING
COMPANY). HE IS CURRENTLY A
DIRECTOR OF CONAGRA, INC.
(AGRICULTURAL PRODUCTS), GEORGIA
POWER COMPANY (ELECTRIC UTILITY),
NATIONAL LIFE INSURANCE COMPANY OF
VERMONT, AMERICAN SOFTWARE, INC.,
AND APPLESOUTH, INC. (RESTAURANTS,
1992).
** Except as otherwise indicated, each individual has held the office
shown or other offices in the same company for the last five years.
As of May 31, 1998, the nominees, Trustees and officers of the trust
and each fund owned, in the aggregate, less than 1% of each fund's
outstanding shares.
If elected, the Trustees will hold office without limit in time
except that (a) any Trustee may resign; (b) any Trustee may be removed
by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal; (c) any Trustee who requests to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees; and (d) a Trustee may be removed at any Special Meeting of
shareholders by a two-thirds vote of the outstanding voting securities
of the trust. In case a vacancy shall for any reason exist, the
remaining Trustees will fill such vacancy by appointing another
Trustee, so long as immediately after such appointment, at least
two-thirds of the Trustees have been elected by shareholders. If, at
any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly
call a shareholders' meeting for the purpose of electing a Board of
Trustees. Otherwise, there will normally be no meeting of shareholders
for the purpose of electing Trustees.
The trust's Board, which is currently composed of two interested and
nine non-interested Trustees, met eleven times during the twelve
months ended December 31, 1997. It is expected that the Trustees will
meet at least ten times a year at regularly scheduled meetings.
The trust's Audit Committee is composed entirely of Trustees who are
not interested persons of the trust, FMR or its affiliates and
normally meets four times a year, or as required, prior to meetings of
the Board of Trustees. Currently, Messrs. Kirk (Chairman), Gates, and
McCoy, and Mrs. Davis are members of the committee. The committee
oversees and monitors the trust's internal control structure, its
auditing function and its financial reporting process, including the
resolution of material reporting issues. The committee recommends to
the Board of Trustees the appointment of auditors for the trust. It
reviews audit plans, fees and other material arrangements in respect
of the engagement of auditors, including non-audit services to be
performed. It reviews the qualifications of key personnel involved in
the foregoing activities. The committee plays an oversight role in
respect of the trust's investment compliance procedures and the code
of ethics. During the twelve months ended December 31, 1997, the
committee held four meetings.
The trust's Nominating and Administration Committee is currently
composed of Messrs. McDonough (Chairman), Jones, and Williams. The
committee members confer periodically and hold meetings as required.
The committee makes nominations for independent Trustees, and for
membership on committees. The committee periodically reviews
procedures and policies of the Board of Trustees and committees. It
acts as the administrative committee under the Retirement Plan for
non-interested Trustees who retired prior to December 30, 1996. It
monitors the performance of legal counsel employed by the trust and
the independent Trustees. The committee in the first instance monitors
compliance with, and acts as the administrator of the provisions of,
the code of ethics applicable to the independent Trustees. During the
twelve months ended December 31, 1997, the committee held one
meeting. The Nominating and Administration Committee will consider
nominees recommended by shareholders. Recommendations should be
submitted to the committee in care of the Secretary of the Trust. The
trust does not have a compensation committee; such matters are
considered by the Nominating and Administration Committee.
The following table sets forth information describing the
compensation of each Trustee and Member of the Advisory Board of each
fund for his or her services for the fiscal year ended December 31,
1997.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AGGREGATE J. GARY RALPH PHYLLIS ROBERT EDWARD C. E.
COMPENSATION BURKHEAD**, F. BURKE M. JOHNSON BRADLEY
FROM EACH FUNDB # COX DAVIS GATES*** 3D** JONES
EQUITY-INCOMEC,F $ 0 $ 3,427 $ 3,359 $ 2,939 $ 0 $ 3,380
GROWTHD,F 0 2,840 2,780 2,404 0 2,800
HIGH INCOME 0 779 763 668 0 768
MONEY MARKET 0 468 457 390 0 461
OVERSEASE,F 0 676 663 579 0 668
TOTAL $ 0 $ 214,500 $ 210,000 $ 176,000 $ 0 $ 211,500
COMPENSATION
FROM THE FUND
COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AGGREGATE DONALD PETER WILLIAM O. GERALD C. MARVIN THOMAS
COMPENSATION J. S. MCCOY L. R.
FROM EACH FUNDB KIRK LYNCH** **** MCDONOUG MANN WILLIAMS
H
EQUITY-INCOMEC,F $ 3,380 $ 0 $ 3,528 $ 4,230 $ 3,427 $ 3,427
GROWTHD,F 2,800 0 2,923 3,501 2,840 2,840
HIGH INCOME 768 0 797 961 779 779
MONEY MARKET 461 0 480 577 468 468
OVERSEASE,F 668 0 696 834 676 676
TOTAL $ 211,500 $ 0 $ 214,500 $ 264,500 $ 214,500 $ 21 4 , 5 00
COMPENSATION
FROM THE FUND
COMPLEX*,A
</TABLE>
* Information is for the calendar year ended December 31, 1997 for 230
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Mr. Gates was appointed to the Board of Trustees effective March
1, 1997.
**** Mr. McCoy was appointed to the Board of Trustees effective
January 1, 1997.
# J. Gary Burkhead served on the Board of Trustees through July 31,
1997. Effective August 1, 1997, Mr. Burkhead serves as a Member of the
Advisory Board of the trust.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1997, the Trustees accrued required
deferred compensation from the fund complex as follows: Ralph
F. Cox, $75,000, Phyllis Burke Davis, $75,000, Robert M. Gates,
$62,500, E. Bradley Jones, $75,000, Donald J. Kirk, $75,000, William
O. McCoy, $75,000, Gerald C. McDonough, $87,500, Marvin L. Mann,
$75,000, and Thomas R. Williams, $75,000. Certain of the
non-interested Trustees elected voluntarily to defer a portion of
their compensation: Ralph F. Cox, $53,699, Marvin L. Mann, $53,699,
and Thomas R. Williams, $62,462.
B Compensation figures include cash, and may include amounts required
to be deferred, and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $1,622, Phyllis Burke Davis,
$1,622, Robert M. Gates, $1,390, E. Bradley Jones, $1,622, Donald J.
Kirk, $1,622, William O. McCoy, $1,658, Gerald C. McDonough, $1,893,
Marvin L. Mann, $1,622, and Thomas R. Williams, $1,622.
D The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $1,344, Phyllis Burke Davis,
$1,344, Robert M. Gates, $1,138, E. Bradley Jones, $1,344, Donald J.
Kirk, $1,344, William O. McCoy, $1,374, Gerald C. McDonough, $1,567,
Marvin L. Mann, $1,344, and Thomas R. Williams, $1,344.
E The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $374, Phyllis Burke Davis, $374,
Robert M. Gates, $319, E. Bradley Jones, $374, Donald J. Kirk, $374,
William O. McCoy, $382, Gerald C. McDonough, $436, Marvin L. Mann,
$374, and Thomas R. Williams, $374.
F Certain of the non-interested Trustees' aggregate compensation from
a fund includes accrued voluntary deferred compensation as follows:
Equity-Income Portfolio: Ralph F. Cox, $1,352, Marvin L. Mann, $1,352,
Thomas R. Williams, $1,352; Growth Portfolio: Ralph F. Cox, $1,119,
Marvin L. Mann, $1,119, Thomas R. Williams $1,119; and Overseas
Portfolio: Ralph F. Cox, $311, Marvin L. Mann, $311, Thomas R.
Williams, $311.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds, including funds in each major investment discipline
and representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF THE FUNDS.
By a vote of the non-interested Trustees, the firm of
Pricewaterhouse Cooper s LLP has been selected as
independent accountants for each fund, to sign or certify any
financial statements of each fund required by any law or regulation to
be certified by an independent accountant and filed with the
Securities and Exchange Commission (SEC) or any state. Pursuant to the
1940 Act, such selection requires the ratification of shareholders. In
addition, as required by the 1940 Act, the vote of the Trustees is
subject to the right of each fund, by vote of a majority of its
outstanding voting securities at any meeting called for the purpose of
voting on such action, to terminate such employment without penalty.
Price w aterhouseCoopers LLP has advised each fund that it has no
direct or material indirect ownership interest in each fund.
For the funds' most recently completed fiscal year, the firm of
Coopers & Lybrand L.L.P. acted as each fund's independent accountant.
Effective July 1, 1998, Coopers & Lybrand L.L.P. and Price Waterhouse
LLP combined their businesses and practices and began doing business
as PricewaterhouseCoopers LLP.
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. In
recommending the selection of each fund's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such
services would affect the accountants' independence. Representatives
of Price w aterhouseCoopers LLP are not expected to be present at
the Meeting, but have been given the opportunity to make a statement
if they so desire and will be available should any matter arise
requiring their presence.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST.
The Board of Trustees has approved and recommends that the
shareholders of the trust authorize them to adopt and execute an
Amended and Restated Declaration of Trust for the trust and the funds
of the trust in the form attached to this Proxy Statement as Exhibit 1
(New Declaration of Trust). The attached New Declaration of Trust has
been marked to show changes from the trust's existing Declaration of
Trust (Current Declaration of Trust). The New Declaration of Trust is
a more modern form of trust instrument for a Massachusetts business
trust, and, going forward, will be used as the standard Declaration of
Trust for all new Fidelity Massachusetts business trusts.
The New Declaration of Trust gives the Trustees more flexibility and,
subject to applicable requirements of the 1940 Act and Massachusetts
law, broader authority to act. This increased flexibility may allow
the Trustees to react more quickly to changes in competitive and
regulatory conditions and, as a consequence, may allow the funds to
operate in a more efficient and economical manner. ADOPTION OF THE NEW
DECLARATION OF TRUST WILL NOT ALTER IN ANY WAY THE TRUSTEES' EXISTING
FIDUCIARY OBLIGATIONS TO ACT WITH DUE CARE AND IN THE SHAREHOLDERS'
INTERESTS. BEFORE UTILIZING ANY NEW FLEXIBILITY THAT THE NEW
DECLARATION OF TRUST MAY AFFORD, THE TRUSTEES MUST FIRST CONSIDER THE
SHAREHOLDERS' INTERESTS AND THEN ACT IN ACCORDANCE WITH SUCH
INTERESTS.
Adoption of the New Declaration of Trust will NOT result in any
changes in the funds' Trustees or officers or in the investment
policies and shareholder services described in the funds' current
prospectuses.
Generally, a majority of the Trustees may amend the Current
Declaration of Trust when authorized by a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the trust. On
October 16, 1997, the Trustees approved the form of the New
Declaration of Trust. On December 18, 1997, the Board approved several
additional changes to the form of the New Declaration of Trust, which
changes have been incorporated into the form attached to this Proxy
Statement. On June 18, 1998, the Board authorized the submission of
the New Declaration of Trust to the trust's shareholders for their
authorization at this Meeting.
The New Declaration of Trust amends the Current Declaration of Trust
in a number of significant ways. The following discussion summarizes
some of the more significant amendments to the Current Declaration of
Trust effected by the New Declaration of Trust.
IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER
SUBSTANTIVE AND STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF
TRUST AND THE CURRENT DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE NEW DECLARATION OF TRUST
ITSELF, WHICH IS ATTACHED AS EXHIBIT 1 TO THIS PROXY STATEMENT.
SIGNIFICANT CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
REORGANIZATION OR TERMINATION OF THE TRUST OR ITS SERIES. Unlike the
Current Declaration of Trust, the New Declaration of Trust generally
permits the Trustees, subject to applicable Federal and state law, to
reorganize or terminate the trust or any of its series. The Current
Declaration of Trust requires shareholder approval in order to
reorganize or terminate the trust or any of its series.
Under certain circumstances, it may not be in the shareholders'
interest to require a shareholder meeting to permit the trust or a
fund to reorganize into another entity. For example, in order to
reduce the cost and scope of state regulatory constraints or to take
advantage of a more favorable tax treatment offered by another state,
the Trustees may determine that it would be in the shareholders'
interests to reorganize a fund to domicile it in another state or to
change its legal form. Under the Current Declaration of Trust, the
Trustees cannot effectuate such a potentially beneficial
reorganization without first conducting a shareholder meeting and
incurring the attendant costs and delays. In contrast, the New
Declaration of Trust gives the Trustees the flexibility to reorganize
the trust or any of its series and achieve potential shareholder
benefits without incurring the delay and potential costs of a proxy
solicitation. Such flexibility should help to assure that the trust
and its funds operate under the most appropriate form of organization.
Similarly, under certain circumstances, it may not be in the
shareholders' interest to require a shareholder meeting to permit the
Trustees to terminate a fund. For example, a fund may have
insufficient assets to invest effectively or excessively high expense
levels due to operational needs. Under such circumstances, absent
viable alternatives, the Trustees may determine that terminating the
fund is in the shareholders' interest and the only appropriate course
of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the
fund's liquidation and termination and, in general, will increase the
costs associated with the termination. In such a case, it may be in
the shareholders' interest to permit fund termination without
incurring the costs and delays of a shareholder meeting.
As discussed above, before allowing a trust or fund reorganization or
termination to proceed without shareholder approval, the Trustees have
a fiduciary responsibility to first determine that the proposed
transaction is in the shareholders' interest. Any exercise of the
Trustees' increased authority under the New Declaration of Trust is
also subject to any applicable requirements of the 1940 Act and
Massachusetts law. Of course, in all cases, the New Declaration of
Trust would require that shareholders receive written notification of
any proposed transaction.
The New Declaration of Trust does NOT give the Trustees the authority
to merge a fund with another operating mutual fund or sell all of a
fund's assets to another operating mutual fund without first seeking
shareholder approval. Under the New Declaration of Trust, shareholder
approval is still required for these transactions.
FUTURE AMENDMENTS OF THE DECLARATION OF TRUST. The New Declaration of
Trust permits the Trustees, with certain exceptions, to amend the
Declaration of Trust without shareholder approval. Under the New
Declaration of Trust, shareholders generally have the right to vote on
any amendment affecting their right to vote, on any amendment altering
the maximum number of permitted Trustees, on any amendment affecting
the New Declaration of Trust's amendment provisions, on any amendment
required by law or the trust's registration statement, and on any
matter submitted to shareholders by the Trustees. The Current
Declaration of Trust, on the other hand, generally gives shareholders
the exclusive power to amend the Declaration of Trust. By allowing
amendment of the Declaration of Trust without shareholder approval,
the New Declaration of Trust gives the Trustees the necessary
authority to react quickly to future contingencies. As mentioned
above, such increased authority remains subordinate to the Trustees'
continuing fiduciary obligations to act with due care and in the
shareholders' interest.
DOLLAR-BASED VOTING RIGHTS. The New Declaration of Trust also
provides for voting rights based on a shareholder's total dollar
interest in a fund (dollar-based voting), rather than on the number of
shares owned. As a result, under the New Declaration of Trust, voting
power is allocated in proportion to the value of each shareholder's
investment. Under the Current Declaration of Trust, each share is
entitled to one vote, regardless of the relative value of the shares
of each series or fund in the trust. The original intent of the
one-share, one-vote provision was to provide equitable voting rights
to all shareholders as required by the 1940 Act. However, under the
current voting provisions, an investment in a fund of the trust with a
lower NAV may have significantly greater voting power than the same
dollar amount invested in another fund of the trust with a higher NAV.
Thus, on trust-wide proposals requiring the approval of the
shareholders of all of the funds of the trust, a shareholder of a fund
with a lower NAV would have greater voting power than a shareholder
invested in a fund with a higher NAV.
If approved, the New Declaration of Trust would provide a more
equitable distribution of voting rights for certain votes than the
one-share, one-vote system currently in effect. The voting power of
each shareholder would be commensurate with the value of the
shareholder's dollar investment rather than with the number of shares
held.
The Staff of the Securities and Exchange Commission (SEC) has issued
a "no-action" letter permitting a trust to seek shareholder approval
of a dollar-based voting system. The New Declaration of Trust will
comply with the conditions stated in the no-action letter.
MASTER FEEDER AUTHORITY. The New Declaration of Trust
clarifies that the Trustees may authorize the investment of all of a
fund's assets in another open-end investment company ("Master Feeder
Fund Structure"). The current Declaration of Trust does not
specifically provide the Trustees the ability to authorize the Master
Feeder Fund Structure. The purpose of a Master Feeder Fund Structure
is to achieve operational efficiencies by consolidating portfolio
management while maintaining different distribution and servicing
structures. In order to implement a Master Feeder Fund Structure, both
the Declaration of Trust and the fund's policies must permit the
structure. Currently, EACH FUND'S policies do not allow for such
investments.
A number of mutual funds have developed so called Master Feeder Fund
Structures under which several "feeder" funds invest all of their
assets in a single pooled investment, or "master" fund. For example,
an institutional equity fund with a high initial minimum investment
amount for large investors might pool its investments with an equity
fund with low minimums designed for retail investors. This structure
allows several feeder funds with substantially the same objective, but
different distribution and servicing features, to combine their
investments and manage them as one master fund instead of managing
them separately. The feeder funds combine their investments by
investing all of their assets in one master fund. (Each feeder fund
invested in a single master fund retains its own characteristics, but
is able to achieve operational efficiencies by investing together with
the other feeder funds in the Master Feeder Fund Structure.)
FMR and the Board of Trustees continually review methods of
structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees have determined that
a fund should invest in a master fund, the Trustees believe it could
be in the best interest of a fund to adopt such a structure at a
future date. If approved, the New Declaration of Trust would provide
the Trustees with the power to authorize a fund to invest all of its
assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Master Feeder Fund Structure is
permitted under the fund's investment policies, if they determine that
a Master Feeder Fund Structure is in the best interest of a fund, and
if, upon advice of counsel, they determine that the investment will
not have material adverse tax consequences to each fund or its
shareholders. The Trustees will specifically consider the impact, if
any, on fees paid by the fund as a result of adopting a Master Feeder
Fund Structure.
SHAREHOLDER NOTIFICATION OF TRUSTEE APPOINTMENT. The New Declaration
of Trust generally provides that, in the case of a vacancy on the
Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion, see fit, consistent
with the limitations of the 1940 Act. Section 16 of the 1940 Act
provides that a vacancy may be filled by the Trustees if, after
filling the vacancy, at least two-thirds of the Trustees then holding
office were elected by the holders of the outstanding voting
securities of the trust. It also provides that if at any time
less than 50% of the Trustees were elected by shareholders, a
shareholder meeting must be called within 60 days for the purposes of
electing Trustees to fill the existing vacancies. Trustees may also
appoint a Trustee in anticipation of a current Trustee's retirement or
resignation or in the event of an increase in the number of Trustees.
The Current Declaration of Trust requires that within three months of
a Trustee appointment, notification of such appointment be mailed to
each shareholder of the trust. The New Declaration of Trust eliminates
this notification requirement.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification
to all shareholders of a trust may be costly. If the New Declaration
of Trust is approved, shareholders would be notified of future Trustee
appointments in the next financial report for the fund following the
appointment.
OTHER CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
In addition to the significant changes above, the New Declaration of
Trust modifies the Current Declaration of Trust in a number of
important ways, including the following:
1. The New Declaration of Trust modifies the Current Declaration of
Trust to allow FMR and the trust, on behalf of each fund, to amend the
fund's respective Management Contract subject to the provisions of
Section 15 of the 1940 Act, as modified or interpreted by the SEC. In
contrast, the Current Declaration of Trust explicitly requires the
vote of a majority of the outstanding voting securities of a fund to
authorize all such amendments. A corresponding change is also proposed
for the funds' Management Contracts. For more information on this
topic generally, see "Modification of Management Contract Amendment
Provisions" on pages , and .
2. The New Declaration of Trust clarifies that the Trustees may
impose other fees (for example, purchase fees) in addition to sales
charges upon investment in a fund and clarifies that deferred sales
charges and other fees (for example, redemption fees) may be imposed
upon redemption of a fund's shares.
3. The New Declaration of Trust confirms and clarifies various
existing Trustee powers. For example, the New Declaration of Trust
clarifies that the Trustees, in addition to banks and trust companies,
may employ as fund custodians companies that are members of a national
securities exchange or other entities permitted under the 1940 Act;
delegate authority to investment advisers and other agents; adopt and
offer dividend reinvestment and related plans; operate and carry on
the business of an investment company; and interpret the investment
policies, practices, and limitations of any fund.
4. The New Declaration of Trust clarifies that no shareholder of a
trust series shall have a claim on the assets of another series and
further clarifies that, by virtue of investing in a fund, a
shareholder is deemed to have assented to and agreed to be bound by
the terms of the New Declaration of Trust.
5. The New Declaration of Trust deletes various technical and/or
antiquated requirements from the Current Declaration of Trust,
including existing requirements that a Trustee vacancy be deemed to
occur when a Trustee is absent from his or her state of residence,
that Trustee vacancies must be filled within six calendar months, and
that portfolio securities be held pursuant to safeguards prescribed by
usual Massachusetts practice.
6. As a general matter, the New Declaration of Trust modifies the
Current Declaration of Trust to incorporate appropriate references to
classes of shares.
7. Lastly, the New Declaration of Trust generally expands various
1940 Act defined terms to encompass SEC modifications and
interpretations. Specific references to discrete sections of the 1940
Act that are contained in the New Declaration of Trust have likewise
been expanded to include SEC modifications and interpretations.
CONCLUSION. The Board of Trustees has concluded that the proposed
adoption of the New Declaration of Trust is in the best interests of
the trust's shareholders. Accordingly, the Trustees unanimously
recommend that the shareholders vote FOR the proposal to authorize
them to adopt and execute the New Declaration of Trust. If the
proposal is not approved, the Current Declaration of Trust will remain
unchanged and in effect.
4. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR EACH OF EQUITY-INCOME
PORTFOLIO, GROWTH PORTFOLIO, AND OVERSEAS PORTFOLIO.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of each fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies the management fee that FMR
receives from the fund to provide for lower fees when FMR's assets
under management exceed certain levels. In addition, the Amended
Contract allows FMR and the trust, on behalf of the fund, to modify
the Management Contract subject to the requirements of the 1940 Act.
The existing Management Contract currently requires the vote of a
majority of the fund's outstanding voting securities to authorize all
amendments. See "Modification of Management Contract Amendment
Provisions" on page for more details. 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).
(For information on FMR, see the section entitled "Activities and
Management of FMR" on page .)
PROPOSED AMENDMENT(S) TO THE PRESENT MANAGEMENT CONTRACT. A copy of
the Amended Contract, marked to indicate the proposed amendment(s), is
supplied as Exhibit 2 on page . Except for the modifications discussed
above, it is substantially identical to the Present Contract. (For a
detailed discussion of each fund's Present Contract, refer to the
section entitled "Present Management Contracts" beginning on page
.) If approved by shareholders, the Amended Contract will take
effect on October 1, 1998 (or, if later, the first day of the first
month following approval) and will remain in effect through July 31,
1999 and thereafter, but only as long as its continuance is approved
at least annually by (i) the vote, cast in person at a meeting called
for the purpose, of a majority of the Independent Trustees and (ii)
the vote of either a majority of the Trustees or a majority of the
outstanding shares of the fund. If the Amended Contract is not
approved, the Present Contract will continue in effect through July
31, 1999, and thereafter only as long as its continuance is approved
at least annually as above.
The management fee is an annual percentage of each fund's average net
assets (the management fee rate), calculated and paid monthly. The
management fee rate is the sum of two components: a Group Fee Rate,
which varies according to assets under management by FMR, and a fixed
Individual Fund Fee Rate. The Amended Contract modifies the Group Fee
Rate by providing for lower fee rates if FMR's assets under management
remain above $210 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon
the monthly average of the aggregate net assets of all registered
investment companies having management contracts with FMR (assets
under management by FMR). For example, as assets under management by
FMR increase, the Group Fee Rate declines. The Amended Contract would
not change the group fee calculation for assets under management by
FMR of $210 billion or less. Above $210 billion in assets under FMR's
management, the Group Fee Rate declines under both the Present
Contract and the Amended Cont r act, but under the Amended
Contract it declines faster. Group Fee Rates that are lower than those
contained in each fund's Present Contract have been voluntarily
implemented by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
The Group Fee Rate is calculated according to a graduated schedule
providing for different rates for different levels of assets under
management by FMR. The rate at which the Group Fee Rate declines is
determined by fee "breakpoints" that provide for lower fee rates when
assets increase. The Amended Contract adds ten new breakpoints for
assets under FMR's management above $210 billion as illustrated in the
following table. (For an explanation of how the Group Fee Rate is used
to calculate the management fee, see the section entitled "Present
Management Contracts" beginning on page .)
GROUP FEE RATE BREAKPOINTS
PRESENT CONTRACT AMENDED CONTRACT
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT* ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
OVER 200 0.3000% 174 - 210 0.3000%
210 - 246 0.2950%
246 - 282 0.2900%
282 - 318 0.2850%
318 - 354 0.2800%
354 - 390 0.2750%
390 - 426 0.2700%
426 - 462 0.2650%
462 - 498 0.2600%
498 - 534 0.2550%
OVER 534 0.2500%
The result at various levels of group net assets is illustrated by
the table below.
EFFECTIVE ANNUAL GROUP FEE RATES
GROUP NET PRESENT AMENDED
ASSETS CONTRACT* CONTRACT
($ BILLIONS)
150 0.3371% 0.3371%
200 0.3284% 0.3284%
250 0.3227% 0.3219%
300 0.3190% 0.3163%
350 0.3162% 0 . 3113%
400 0.3142% 0.3067%
450 0.3126% 0.3024%
500 0.3114% 0.2982%
550 0.3103% 0.2942%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
Average assets under FMR's management for May 1998 were approximately
$625 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended May 31, 1998,
average assets under management by FMR were $625 billion.
Equity-Income Portfolio's management fee rate under the Amended
Contract for the month ended May 31, 1998, would have been 0.4889%,
compared to 0.5091% under the Present Contract. Growth Portfolio's
management fee rate under the Amended Contract for the month ended May
31, 1998, would have been 0.5889%, compared to 0.6091% under the
Present Contract. Overseas Portfolio's management fee rate under the
Amended Contract for the month ended May 31, 1998, would have been
0.7389%, compared to 0.7591% under the Present Contract. The
management fee rate remains the same under both the Present Contract
and the Amended Contract until assets under FMR's management exceed
$210 billion, at which point the management fee rate under the Amended
Contract begins to decline relative to the Present Contract.
The following chart compares each fund's management fee as calculated
under the terms of the Present Contract for the twelve month period
ended December 31, 1997 to the management fee each fund would have
incurred if the Amended Contract had been in effect.
FUND PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT MANAGEMENT DIFFERENCE
FEE* FEE
EQUITY-INCOME $ 43,374,726 $ 42, 199,618 (2.7 1 %)
PORTFOLIO
GROWTH PORTFOLIO $ 42,370,062 $ 41,416,43 1 (2.25%)
OVERSEAS PORTFOLIO $ 14,571,576 $ 14,309,0 58 (1.80%)
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
The following chart compares each fund's management fee as calculated
under the terms of the Present Contract for the twelve month period
ended May 31, 1998 to the management fee each fund would have incurred
if the Amended Contract had been in effect.
FUND PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT MANAGEMENT DIFFERENCE
FEE* FEE
EQUITY-INCOME $ 51,043,017 $ 49,345,881 (3.32%)
PORTFOLIO
GROWTH PORTFOLIO $ 47,743,969 $ 46,421,031 (2.77%)
OVERSEAS PORTFOLIO $ 15,755,058 $ 15,406,791 (2.21%)
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of each fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of each fund, including all of the
Independent Trustees, on June 18, 1998. The Board of Trustees
considered and approved the modifications to the Group Fee Rate
schedule during the two month periods from November to December 1995,
June to July 1994, and September to October 1993. The Board of
Trustees received materials relating to the Amended Contract in
advance of the meeting at which the Amended Contract was considered,
and had the opportunity to ask questions and request further
information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings Trustees receive materials specifically relating to the
Amended Contract. These materials include (i) information on the
investment performance of each fund, a peer group of funds and an
appropriate index or combination of indices, (ii) sales and redemption
data in respect of each fund, (iii) the economic outlook and the
general investment outlook in the markets in which each fund invests,
and (iv) notable changes in each fund's investments. The Board of
Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of each fund's shares, (3)
the procedures employed to determine the value of each fund's assets,
(4) the allocation of each fund's brokerage, if any, including
allocations to brokers affiliated with FMR and the use of "soft"
commission dollars to pay fund expenses and to pay for research and
other similar services, (5) FMR's management of the relationships with
each fund's custodian and subcustodians, (6) the resources devoted to
and the record of compliance with each fund's investment policies and
restrictions and with policies on personal securities transactions,
and (7) the nature, cost and audit of non-investment management
services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including each fund's
shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether each fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly each fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees annually review a report detailing the background
of each fund's portfolio manager and each fund's investment objective
and discipline. The Independent Trustees have also had discussions
with senior management of FMR responsible for investment operations
and the senior management of Fidelity's fixed-income and equity
group s . Among other things they considered the size, education
and experience of FMR's investment staff, its use of technology, and
FMR's approach to recruiting, training and retaining portfolio
managers and other research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Amended Contract and under
separate agreements covering transfer agency functions and pricing,
bookkeeping and securities lending services, if any. The Board of
Trustees and the Independent Trustees have also considered the nature
and extent of FMR's supervision of third party service providers,
principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered each fund's expense ratio and expense ratios of a peer
group of funds. They also considered the amount and nature of fees
paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including each fund. This consideration included
an extensive review of FMR's methodology in allocating its costs to
the management of each fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of each fund and whether the amount of
profit is a fair entrepreneurial profit for the management of each
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to each fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including each fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by each
fund and each fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with each fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee
structure, that is the reduction of the Group Fee Rate schedule and
the proposed modification to the Present Contract's amendment
provisions, are in the best interest of each fund's shareholders. The
Board of Trustees, including the Independent Trustees, voted to
approve the submission of the Amended Contract to shareholders of each
fund and recommends that shareholders of each fund vote FOR the
Amended Contract. If approved, the Amended Contract will take effect
on the first day of the first month following shareholder approval.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR HIGH INCOME
PORTFOLIO.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies the management fee that FMR
receives from the fund to provide for lower fees when FMR's assets
under management exceed certain levels. In addition, the Amended
Contract allows FMR and the trust, on behalf of the fund, to modify
the Management Contract subject to the requirements of the 1940 Act.
The existing Management Contract currently requires the vote of a
majority of the fund's outstanding voting securities to authorize all
amendments. See "Modification of Management Contract Amendment
Provisions" on page for more details. 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).
(For information on FMR, see the section entitled "Activities and
Management of FMR" on page .)
PROPOSED AMENDMENTS TO THE PRESENT MANAGEMENT CONTRACT. A copy of the
Amended Contract, marked to indicate the proposed amendment(s), is
supplied as Exhibit 3 on page . Except for the modifications discussed
above, 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 Contracts" beginning on page
. ) If approved by shareholders, the Amended Contract will take
effect on October 1, 1998 (or, if later, the first day of the first
month following approval) and will remain in effect through June 30,
1999 and thereafter, but only as long as its continuance is approved
at least annually by (i) the vote, cast in person at a meeting called
for the purpose, of a majority of the Independent Trustees and (ii)
the vote of either a majority of the Trustees or a majority of the
outstanding shares of the fund. If the Amended Contract is not
approved, the Present Contract will continue in effect through June
30, 1999, and thereafter only as long as its continuance is approved
at least annually as above.
The management fee is an annual percentage of the fund's average net
assets (the management fee rate), calculated and paid monthly. The
management fee rate is the sum of two components: a Group Fee Rate,
which varies according to assets under management by FMR, and a fixed
Individual Fund Fee Rate. The Amended Contract modifies the Group Fee
Rate by providing for lower fee rates if FMR's assets under management
remain above $156 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon
the monthly average of the aggregate net assets of all registered
investment companies having management contracts with FMR (assets
under management by FMR). For example, as assets under management by
FMR increase, the Group Fee Rate declines. The Amended Contract would
not change the group fee calculation for assets under management by
FMR of $156 billion or less. Above $156 billion in assets under FMR's
management, the Group Fee Rate declines under both the Present
Contract and the Amended Cont r act, but under the Amended
Contract it declines faster. Group Fee Rates that are lower than those
contained in the fund's Present Contract have been voluntarily
implemented by FMR on August 1, 1994, and January 1, 1996.
The Group Fee Rate is calculated according to a graduated schedule
providing for different rates for different levels of assets under
management by FMR. The rate at which the Group Fee Rate declines is
determined by fee "breakpoints" that provide for lower fee rates when
assets increase. The Amended Contract revises the current fee
breakpoints for assets under FMR's management above $156 billion and
adds nine new fee breakpoints for assets under FMR's management above
$228 billion as illustrated in the following table. (For an
explanation of how the Group Fee Rate is used to calculate the
management fee, see the section entitled "Present Management
Contracts" beginning on page .)
GROUP FEE RATE BREAKPOINTS
PRESENT CONTRACT AMENDED CONTRACT
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT* ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
120 - 174 0.1450% 120 - 156 0.1450%
174 - 228 0.1400% 156 - 192 0.1400%
228 - 282 0.1375% 192 - 228 0.1350%
282 - 336 0.1350% 228 - 264 0.1300%
OVER 336 0.1325% 264 - 300 0.1275%
300 - 336 0.1250%
336 - 372 0.1225%
372 - 408 0.1200%
408 - 444 0.1175%
444 - 480 0.1150%
480 - 516 0.1125%
OVER 516 0.1100%
The result at various levels of group net assets is illustrated by
the table below.
EFFECTIVE ANNUAL GROUP FEE RATES
GROUP NET PRESENT AMENDED
ASSETS CONTRACT* CONTRACT
($ BILLIONS)
150 0.1736% 0.1736%
200 0.1658% 0.1652%
250 0.1604% 0.1587%
300 0.1565% 0.1536%
350 0.1533% 0.1494%
400 0.1507% 0.1459%
450 0.1487% 0.1427%
500 0.1471% 0.1399%
550 0.1457% 0.1372%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
Average assets under FMR's management for May 1998 were approximately
$625 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended May 31, 1998,
average assets under management by FMR were $625 billion. The fund's
management fee rate under the Amended Contract for the month ended May
31, 1998, would have been 0.58 40 %, compared to 0.59 41 %
under the Present Contract. The management fee rate remains the same
under both the Present Contract and the Amended Contract until assets
under FMR's management exceed $156 billion, at which point the
management fee rate under the Amended Contract begins to decline
relative to the Present Contract.
The following chart compares the fund's management fee as calculated
under the terms of the Present Contract for the twelve month period
ended December 31, 1997 to the management fee the fund would have
incurred if the Amended Contract had been in effect.
PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT MANAGEMENT DIFFERENCE
FEE* FEE
$11,548,903 $11,40 3,916 (1.2 6 %)
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
The following chart compares the fund's management fee as calculated
under the terms of the Present Contract for the twelve month period
ended May 31, 1998 to the management fee the fund would have incurred
if the Amended Contract had been in effect.
PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT MANAGEMENT DIFFERENCE
FEE* FEE
$13,727,481 $13,524,539 (1.48%)
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees, on June 18, 1998. The Board of Trustees
considered and approved the modifications to the Group Fee Rate
schedule during the two month periods from November to December 1995
and June to July 1994. The Board of Trustees received materials
relating to the Amended Contract in advance of the meeting at which
the Amended Contract was considered, and had the opportunity to ask
questions and request further information in connection with such
consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings Trustees receive materials specifically relating to the
Amended Contract. These materials include (i) information on the
investment performance of the fund, a peer group of funds and an
appropriate index or combination of indices, (ii) sales and redemption
data in respect of the fund, (iii) the economic outlook and the
general investment outlook in the markets in which the fund invests,
and (iv) notable changes in the fund's investments. The Board of
Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of the fund's shares, (3)
the procedures employed to determine the value of the fund's assets,
(4) the allocation of the fund's brokerage, if any, including
allocations to brokers affiliated with FMR, (5) FMR's management of
the relationships with the fund's custodian and subcustodians, (6) the
resources devoted to and the record of compliance with the fund's
investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost and audit of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the choice of performance indices and benchmarks, (c) the
composition of peer groups of funds, (d) transfer agency and
bookkeeping fees paid to affiliates of FMR, (e) investment
performance, (f) investment management staffing, (g) the potential for
achieving further economies of scale, (h) operating expenses paid to
third parties, and (i) the information furnished to investors,
including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees annually review a report detailing the background
of the fund's portfolio manager and the fund's investment objective
and discipline. The Independent Trustees have also had discussions
with senior management of FMR responsible for investment operations
and the senior management of Fidelity's fixed income group. Among
other things they considered the size, education and experience of
FMR's investment staff, its use of technology, and FMR's approach to
recruiting, training and retaining portfolio managers and other
research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Amended Contract and under
separate agreements covering transfer agency functions and pricing,
bookkeeping and securities lending services, if any. The Board of
Trustees and the Independent Trustees have also considered the nature
and extent of FMR's supervision of third party service providers,
principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee
structure, that is the reduction of the Group Fee Rate schedule and
the proposed modification to the Present Contract's amendment
provisions, are in the best interest of the fund's shareholders. The
Board of Trustees, including the Independent Trustees, voted to
approve the submission of the Amended Contract to shareholders of the
fund and recommends that shareholders of the fund vote FOR the Amended
Contract. If approved, the Amended Contract will take effect on the
first day of the first month following shareholder approval.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR MONEY MARKET
PORTFOLIO.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies the management fee that FMR
receives from the fund to provide for lower fees when FMR's assets
under management exceed certain levels. In addition, the Amended
Contract allows FMR and the trust, on behalf of the fund, to modify
the Management Contract subject to the requirements of the 1940 Act.
The existing Management Contract currently requires the vote of a
majority of the fund's outstanding voting securities to authorize all
amendments. See "Modification of Management Contract Amendment
Provisions" on page for more details. 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).
(For information on FMR, see the section entitled "Activities and
Management of FMR" on page .)
PROPOSED AMENDMENT(S) TO THE PRESENT MANAGEMENT CONTRACT. A copy of
the Amended Contract, marked to indicate the proposed amendment(s), is
supplied as Exhibit 4 on page . Except for the modifications discussed
above, 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 Contracts" beginning on page .)
If approved by shareholders, the Amended Contract will take effect on
October 1, 1998 (or, if later, the first day of the first month
following approval) and will remain in effect through May 31, 1999 and
thereafter, but only as long as its continuance is approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of the Independent Trustees and (ii) the vote
of either a majority of the Trustees or a majority of the outstanding
shares of the fund. If the Amended Contract is not approved, the
Present Contract will continue in effect through May 31, 1999, and
thereafter only as long as its continuance is approved at least
annually as above.
The management fee is an annual percentage of the fund's average net
assets (the management fee rate), calculated and paid monthly. The
management fee rate is the sum of three components: a Group Fee Rate,
which varies according to assets under management by FMR, a fixed
Individual Fund Fee Rate, and an Income Component. The proposal would
modify the Group Fee Rate by providing for lower fee rates if FMR's
assets under management remain above $156 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon
the monthly average of the aggregate net assets of all registered
investment companies having management contracts with FMR (assets
under management by FMR). For example, as assets under management by
FMR increase, the Group Fee Rate declines. The Amended Contract would
not change the group fee calculation for assets under management by
FMR of $156 billion or less. Above $156 billion in assets under FMR's
management, the Group Fee Rate declines under both the Present
Contract and the Amended Cont r act, but under the Amended
Contract it declines faster. Group Fee Rates that are lower than those
contained in the fund's Present Contract have been voluntarily
implemented by FMR on August 1, 1994 and January 1, 1996.
The Group Fee Rate is calculated according to a graduated schedule
providing for different rates for different levels of assets under
management by FMR. The rate at which the Group Fee Rate declines is
determined by fee "breakpoints" that provide for lower fee rates when
assets increase. The Amended Contract revises the current fee
breakpoints for assets under FMR's management above $156 billion and
adds nine new fee breakpoints for assets under FMR's management above
$228 billion as illustrated in the following table. (For an
explanation of how the Group Fee Rate is used to calculate the
management fee, see the section entitled "Present Management
Contracts" beginning on page .)
GROUP FEE RATE BREAKPOINTS
PRESENT CONTRACT AMENDED CONTRACT
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT* ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
120 - 174 0.1450% 120 - 156 0.1450%
174 - 228 0.1400% 156 - 192 0.1400%
228 - 282 0.1375% 192 - 228 0.1350%
282 - 336 0.1350% 228 - 264 0.1300%
OVER 336 0.1325% 264 - 300 0.1275%
300 - 336 0.1250%
336 - 372 0.1225%
372 - 408 0.1200%
408 - 444 0.1175%
444 - 480 0.1150%
480 - 516 0.1125%
OVER 516 0.1100%
The result at various levels of group net assets is illustrated by the
table below.
EFFECTIVE ANNUAL GROUP FEE RATES
GROUP NET PRESENT AMENDED
ASSETS CONTRACT* CONTRACT
($ BILLIONS)
150 0.1736% 0.1736%
200 0.1658% 0.1652%
250 0.1604% 0.1587%
300 0.1565% 0.1536%
350 0.1533% 0.1494%
400 0.1507% 0.1459%
450 0.1487% 0.1427%
500 0.1471% 0.1399%
550 0.1457% 0.1372%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
Average assets under FMR's management for May 1998 were approximately
$625 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended May 31, 1998,
average assets under management by FMR were $625 billion. The fund's
management fee rate under the Amended Contract for the month ended May
31, 1998, would have been 0.1640%, compared to 0.1741% under the
Present Contract. The management fee rate remains the same under both
the Present Contract and the Amended Contract until assets under FMR's
management exceed $156 billion, at which point the management fee rate
under the Amended Contract begins to decline relative to the Present
Contract.
The following chart compares the fund's management fee as calculated
under the terms of the Present Contract for the twelve month period
ended December 31, 1997 to the management fee the fund would have
incurred if the Amended Contract had been in effect.
PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT MANAGEMENT DIFFERENCE
FEE* FEE
$ 2,385,998 $ 2,325,636 ( 2.53 %)
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
The following chart compares the fund's management fee as calculated
under the terms of the Present Contract for the twelve month period
ended May 31, 1998 to the management fee the fund would have incurred
if the Amended Contract had been in effect.
PRESENT CONTRACT AMENDED CONTRACT PERCENTAGE
MANAGEMENT MANAGEMENT DIFFERENCE
FEE* FEE
$ 2,417,735 $ 2,341,947 ( 3.13 %)
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on August 1, 1994 and January 1, 1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees, on June 18, 1998. The Board of Trustees
considered and approved the modifications to the Group Fee Rate
schedule during the two month periods from November to December 1995
and June to July 1994. The Board of Trustees received materials
relating to the Amended Contract in advance of the meeting at which
the Amended Contract was considered, and had the opportunity to ask
questions and request further information in connection with such
consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings Trustees receive materials specifically relating to the
Amended Contract. These materials include (i) information on the
investment performance of the fund, a peer group of funds and an
appropriate index or combination of indices, (ii) sales and redemption
data in respect of the fund, (iii) the economic outlook and the
general investment outlook in the markets in which the fund invests,
and (iv) notable changes in the fund's investments. The Board of
Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of the fund's shares, (3)
the procedures employed to determine the value of the fund's assets,
(4) the allocation of the fund's brokerage, if any, including
allocations to brokers affiliated with FMR, (5) FMR's management of
the relationships with the fund's custodian and subcustodians, (6) the
resources devoted to and the record of compliance with the fund's
investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost and audit of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the choice of performance indices and benchmarks, (c) the
composition of peer groups of funds, (d) transfer agency and
bookkeeping fees paid to affiliates of FMR, (e) investment
performance, (f) investment management staffing, (g) the potential for
achieving further economies of scale, (h) operating expenses paid to
third parties, and (i) the information furnished to investors,
including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees annually review a report detailing the background
of the fund's portfolio manager and the fund's investment objective
and discipline. The Independent Trustees have also had discussions
with senior management of FMR responsible for investment operations
and the senior management of Fidelity's money market group. Among
other things they considered the size, education and experience of
FMR's investment staff, its use of technology, and FMR's approach to
recruiting, training and retaining portfolio managers and other
research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Amended Contract and under
separate agreements covering transfer agency functions and pricing,
bookkeeping and securities lending services, if any. The Board of
Trustees and the Independent Trustees have also considered the nature
and extent of FMR's supervision of third party service providers,
principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee
structure, that is the reduction of the Group Fee Rate schedule and
the proposed modification to the Present Contract's amendment
provisions, are in the best interest of the fund's shareholders. The
Board of Trustees, including the Independent Trustees, voted to
approve the submission of the Amended Contract to shareholders of the
fund and recommends that shareholders of the fund vote FOR the Amended
Contract. If approved, the Amended Contract will take effect on the
first day of the first month following shareholder approval.
7. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION FOR EQUITY-INCOME PORTFOLIO, GROWTH PORTFOLIO, HIGH
INCOME PORTFOLIO, AND OVERSEAS PORTFOLIO.
Each fund's current fundamental investment limitation concerning
diversification is as follows:
The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer.
The Trustees recommend that shareholders of each fund vote to replace
that fund's current fundamental investment limitation with the
following amended fundamental investment limitation governing
diversification:
The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or securities of other investment companies) if, as
a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer.
The percentage limits in the proposed fundamental limitation
concerning diversification are the percentage limitations imposed by
the 1940 Act for diversified investment companies. The amended
fundamental diversification limitation makes one significant change
from the current limitation: subject to applicable 1940 Act
requirements, it would permit each fund to invest without limit in the
securities of other investment companies. Pursuant to an order of
exemption granted by the SEC, each fund may invest up to 25% of total
assets in non-publicly offered money market or short-term bond funds
(the Central Funds) managed by FMR or an affiliate of FMR. The Central
Funds do not currently pay investment advisory, management, or
transfer agent fees, but do pay minimal fees for services, such as
custodian, auditor, and Independent Trustees fees. FMR anticipates
that making use of the Central Funds will benefit each fund by
enhancing the efficiency of cash management and by providing increased
short-term investment opportunities. If the proposal is approved, the
Central Funds are expected to serve as a principal option for cash
investment for each fund.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit each fund and its shareholders. The Trustees
recommend voting FOR the proposal. The amended fundamental
diversification limitation, upon shareholder approval, will become
effective when the disclosure is revised to reflect the changes. If
the proposal is not approved by the shareholders of a fund, that
fund's current fundamental diversification limitation will remain
unchanged.
8. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION FOR MONEY MARKET PORTFOLIO.
Money Market Portfolio's current fundamental investment limitation
concerning diversification is as follows:
The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed as to principal and interest by the
United States, its agencies or instrumentalities) if, as a result,
more than 5% of its total assets would be invested in the securities
of such issuer, provided, however, that with respect to 25% of its
total assets, 10% of its assets may be invested in the securities of
any single issuer.
The fund is a diversified company within the meaning of the 1940 Act.
In addition, as a money market fund, the fund is subject to additional
diversification requirements. These additional diversification
requirements have been amended by the SEC from time to time,
most recently in amendments effective July 1, 1998. In order to avoid
the possibility of seeking shareholder approval of amended
diversification limits if these requirements are amended further in
the future, the Trustees recommend that shareholders of the fund vote
to replace the fund's current fundamental investment limitation with
the following amended fundamental investment limitation governing
diversification:
The fund may not purchase the securities of any issuer if, as a
result, the fund would not comply with any applicable diversification
requirements for a money market fund under the Investment Company Act
of 1940 and the rules thereunder, as such may be amended from time to
time.
If the proposal is adopted, the Trustees intend to adopt the
following non-fundamental limit setting forth the fund's current
policy:
The fund does not currently intend to purchase a security (other than
securities issued or guaranteed by the U.S. G overnment or any
of its agencies or instrumentalities or securities of other money
market funds) if, as a result, more than 5% of its total assets would
be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier
securities of a single issuer for up to three business days.
For the purposes of this non-fundamental limit certain securities
subject to guarantees (including insurance, letters of credit and
demand features) are not considered securities of their issuer, but
are subject to industry standard requirements for money market funds.
This non-fundamental limit may be amended by the Trustees as
necessary to comply with amendments to SEC diversification
policies without the need for shareholder approval.
The proposed limits will allow the fund always to comply with the
diversification limits under the 1940 Act as they are amended
from time to time.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund and its shareholders. The Trustees
recommend voting FOR the proposal. The amended fundamental
diversification limitation, upon shareholder approval, will become
effective when the disclosure is revised to reflect the changes. If
the proposal is not approved by the shareholders of the fund, the
fund's current fundamental diversification limitation will remain
unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the
Meeting. However, if any other matters properly come before the
Meeting, it is the intention that proxies that do not contain specific
instructions to the contrary will be voted on such matters in
accordance with the judgment of the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser
to a number of investment companies. Information concerning the ratio
of advisory fees to average net assets of funds with investment
objectives similar to Growth Portfolio and Overseas Portfolio and
advised by FMR is contained in the table in Exhibit 5 beginning on
page . Information concerning the ratio of advisory fees to average
net assets of funds with investment objectives similar to
Equity-Income Portfolio and advised by FMR is contained in the table
in Exhibit 6 beginning on page . Information concerning the ratio of
advisory fees to average net assets of funds with investment
objectives similar to High Income Portfolio and advised by FMR is
contained in the table in Exhibit 7 beginning on page . Information
concerning the ratio of advisory fees to average net assets of funds
with investment objectives similar to Money Market Portfolio and
advised by FMR is contained in the table in Exhibit 8 beginning on
page .
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions that have occurred to date have included mortgages
and personal and general business loans. In the judgment of FMR, the
terms and conditions of those transactions were not influenced by
existing or potential custodial or other fund relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter
S. Lynch, Vice Chairman. With the exception of Robert C. Pozen, who is
proposed for election as a Trustee, each of the Directors is also a
Trustee of the trust. Messrs. Johnson 3d, Pozen, J. Gary Burkhead,
John H. Costello, Eric D. Roiter, Thomas D. Maher, Thomas Simpson,
Richard A. Silver, Leonard M. Rush, Robert A. Lawrence, Fred L.
Henning, Jr., Boyce Greer, Abigail Johnson, Richard A.
Spillane , Jr., Dwight D. Churchill, Bart A. Grenier, Stephen
Petersen, Jennifer Uhrig, Barry J. Coffman, Robert K. Duby, and
Richard R . Mace , Jr. are currently officers of the trust
and officers or employees of FMR or FMR Corp. With the exception of
Mr. Costello, Mr. Maher, Mr. Simpson, and Mr. Silver, all of
these persons hold or have options to acquire stock of FMR Corp. The
principal business address of each of the Directors of FMR is 82
Devonshire Street, Boston, Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore,
under the 1940 Act may be deemed to form a controlling group with
respect to FMR Corp.
During the period January 1, 1997 through May 31, 1998, no
transactions were entered into by Trustees and nominees as Trustee of
the trust involving more than 1% of the voting common, non-voting
common and equivalent stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FIMM
FIMM is a wholly owned subsidiary of FMR formed in 1997 to provide
portfolio management services to Fidelity's money market funds and
investment advice with respect to money market instruments.
Funds with investment objectives similar to Money Market Portfolio
for which FMR has entered into a sub-advisory agreement with FIMM (the
successor to FMR Texas Inc.), and the net assets of each of these
funds, are indicated in the Table of Average Net Assets and Expense
Ratios in Exhibit 8 beginning on page .
The Directors of FIMM are Edward C. Johnson 3d, Chairman, and Robert
C. Pozen, President. Mr. Johnson 3d also is President and a Trustee of
the trust and of other funds advised by FMR; Chairman, Chief Executive
Officer, President, and a Director of FMR Corp.; Chairman of the Board
and of the Executive Committee of FMR; a Director of FMR; and Chairman
and a Director of FMR U.K. and FMR Far East. In addition, Mr.
Pozen is Senior Vice President of the trust and Senior Vice President
and a Trustee of other funds advised by FMR; a Director of FMR Corp.;
President and a Director of FMR; and President and a Director
of FMR U.K. and FMR Far East. Each of the Directors is a stockholder
of FMR Corp. The principal business address of the Directors is 82
Devonshire Street, Boston, Massachusetts 02109.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR
formed in 1986 to provide research and investment advice with respect
to companies based outside the United States for certain funds for
which FMR acts as investment adviser. FMR may also grant the
sub-advisers investment management authority as well as authority to
buy and sell securities for certain of the funds for which it acts as
investment adviser, if FMR believes it would be beneficial to a fund.
Funds with investment objectives similar to High Income Portfolio
managed by FMR with respect to which FMR currently has sub-advisory
agreements with either FMR U.K. or FMR Far East, and the net assets of
each of these funds, are indicated in the Table of Average Net Assets
and Expense Ratios in Exhibit 7 beginning on page . Funds with
investment objectives similar to Overseas Portfolio 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 5 beginning on page .
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is
President and a Trustee of the trust and of other funds advised by
FMR; Chairman and a Director of FIMM; Chairman, Chief Executive
Officer, President, and a Director of FMR Corp.; and a Director and
Chairman of the Board and of the Executive Committee of FMR. In
addition, Mr. Pozen is Senior Vice President of the trust and Senior
Vice President and a Trustee of other funds advised by FMR; a Director
of FMR Corp.; President and a Director of FMR; and President and a
Director of FIMM. Each of the Directors is a stockholder of FMR Corp.
The principal business address of the Directors is 82 Devonshire
Street, Boston, Massachusetts 02109.
ACTIVITIES AND MANAGEMENT OF FIIA AND FIIA(U.K.)L
FMR, on behalf of Overseas Portfolio, has entered into a sub-advisory
agreement with FIIA, a wholly owned subsidiary of Fidelity
International Limited (FIL). FIIA in turn has entered into a
sub-advisory agreement with its U.K. subsidiary, FIIA(U.K.)L.
The sub-advisers provide research and investment recommendations with
respect to companies based outside of the United States. FIIA focuses
primarily on companies based in Hong Kong, Australia, New Zealand, and
Southeast Asia (other than Japan). FIIA(U.K.)L focuses primarily on
companies based in the U.K. and Europe.
The Directors of FIIA are David J. Saul, President, Anthony Bolton,
Charles T.M. Collis, William R. Ebsworth, Brett Goodin, and Simon
Haslam. The principal business address of each of the Directors is
Pembroke Hall, 42 Crow Lane, Pembroke HM19, Bermuda.
The Directors of FIIA(U.K.)L are Anthony Bolton, Pamela Edwards,
Simon Haslam, and Sally Walden. The principal business address of each
of the Directors is 26 Lovat Lane, London, EC3R 8LL, England.
FIIA also is the investment adviser of Fidelity Advisor Emerging Asia
Fund, Inc. and Fidelity Advisor Korea Fund, Inc., closed-end
investment companies with net assets of approximately $88,101,646 and
$45,312,051, respectively, as of October 31, 1997 and September 30,
1997, respectively. As compensation for its services to each
closed-end fund, FIIA receives 60% of the management fee paid by that
fund to FMR. The Emerging Asia Fund management fee has two components,
a basic fee and a performance adjustment. The basic fee is payable
monthly at an annual rate equal to 1.00% of the Emerging Asia Fund's
average daily net assets. The performance adjustment may increase or
decrease the basic fee by up to 0.25% annually, based on the Emerging
Asia Fund's performance (over a rolling performance period of up to 36
months) as compared to the MS Combined All Country Asia Free ex Japan
Index. The Korea Fund management fee is payable monthly at an annual
rate equal to 1.00% of Korea Fund's average daily net assets.
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 the fund in accordance with its
investment objective, policies, and limitations. FMR also provides
each fund with all necessary office facilities and personnel for
servicing the fund's investments, compensates all officers of each
fund and all Trustees who are "interested persons" of the trust or of
FMR, and all personnel of each fund or FMR performing services
relating to research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees. Services provided by affiliates of FMR will continue under
the proposed management contracts described in Proposals 4, 5 and 6.
In addition to the management fee payable to FMR, each fund pays
transfer agent fees to Fidelity Investments Institutional Operations
Company, Inc. (FIIOC), and pricing and bookkeeping fees to Fidelity
Service Company, Inc. (FSC), affiliates of FMR. Each fund's management
contract further provides that the fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional
information, notices, and reports to shareholders; however, under the
terms of each fund's transfer agent agreement, FIIOC bears the costs
of providing these services to existing shareholders of the applicable
classes. Other expenses paid by each fund or each class thereof, as
applicable, include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. Each fund is also liable for such non-recurring expenses as may
arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including
reimbursement for out-of-pocket expenses, paid to FIIOC and FSC by the
funds for the fiscal year ended December 31, 1997 are presented in the
table below.
FUND TRANSFER PRICING AND
AGENT FEES BOOKKEEPING FEES
EQUITY-INCOME PORTFOLIO $ 5,689,149 $ 819,525
GROWTH PORTFOLIO $ 4,712,209 $ 816,139
HIGH INCOME PORTFOLIO $ 1,407,745 $ 812,930
MONEY MARKET PORTFOLIO $ 810,738 $ 133,309
OVERSEAS PORTFOLIO $ 1,302,648 $ 803,038
Each fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. Each
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
FMR is each fund's manager pursuant to management contracts dated
January 1, 1993 (Equity-Income Portfolio, Growth Portfolio, and
Overseas Portfolio) and January 1, 1994 (High Income Portfolio and
Money Market Portfolio), which were approved by shareholders on
December 16, 1992 (Equity-Income Portfolio, Growth Portfolio, and
Overseas Portfolio) and December 15, 1993 (High Income Portfolio and
Money Market Portfolio). For Equity-Income Portfolio, Growth
Portfolio, and Overseas Portfolio, shareholder approval had been
requested to modify the group fee portion of the management fee to
provide for lower fee rates if FMR's assets under management remain
above $138 billion. For High Income Portfolio and Money Market
Portfolio, shareholder approval had been requested to modify the group
fee portion of the management fee to provide for lower fee rates if
FMR's assets under management remain above $228 billion.
EQUITY-INCOME PORTFOLIO, GROWTH PORTFOLIO, AND OVERSEAS PORTFOLIO.
For the services of FMR under the contracts, 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 following is the fee schedule for each fund:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE
ASSETS RATE ASSETS ANNUAL
FEE RATE
0 - $3 BILLION 0.5200% $ 0.5 BILLION 0.5200%
3 - 6 0.4900 25 0.4238
6 - 9 0.4600 50 0.3823
9 - 12 0.4300 75 0.3626
12 - 15 0.4000 100 0.3512
15 - 18 0.3850 125 0.3430
18 - 21 0.3700 150 0.3371
21 - 24 0.3600 175 0.3325
24 - 30 0.3500 200 0.3284
30 - 36 0.3450 225 0.3253
36 - 42 0.3400 250 0.3223
42 - 48 0.3350 275 0.3198
48 - 66 0.3250 300 0.3175
66 - 84 0.3200 325 0.3153
84 - 102 0.3150 350 0.3133
102 - 138 0.3100
138 - 174 0.3050
174 - 228 0.3000
228 - 282 0.2950
282 - 336 0.2900
OVER 336 0.2850
</TABLE>
Under each fund's current management contract with FMR, the group
fee rate is based on a schedule with breakpoints ending at 0.3000% for
average group assets in excess of $174 billion. Prior to January 1,
1993, the group fee rate breakpoints shown above for average group
assets in excess of $138 billion and under $228 billion were
voluntarily adopted by FMR on January 1, 1992. The additional
breakpoints shown above for average group assets in excess of $228
billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to
the group fee rate schedule, and added new breakpoints for average
group assets in excess of $210 billion and under $390 billion as shown
in the schedule below, pending shareholder approval of a new
management contract reflecting the revised schedule. The revised group
fee rate schedule provides for lower management fees as FMR's assets
under management increase. The revised group fee rate schedule was
identical to the above schedule for average group assets under $210
billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $390 billion,
pending shareholder approval of a new management contract reflecting
the revised schedule and additional breakpoints. The revised group fee
rate schedule and its extensions provide for lower management fee
rates as FMR's assets under management increase. For average group
assets in excess of $210 billion, the revised group fee rate schedule
with additional breakpoints voluntarily adopted by FMR is as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE
ASSETS RATE ASSETS ANNUAL
FEE RATE
174 - $ 210 0.3000% $ 150 BILLION 0.3371%
BILLION
210 - 246 0.2950 175 0.3325
246 - 282 0.2900 200 0.3284
282 - 318 0.2850 225 0.3249
318 - 354 0.2800 250 0.3219
354 - 390 0.2750 275 0.3190
390 - 426 0.2700 300 0.3163
426 - 462 0.2650 325 0.3137
462 - 498 0.2600 350 0.3113
498 - 534 0.2550 375 0.3090
OVER 534 0.2500 400 0.3067
425 0.3046
450 0.3024
475 0.3003
500 0.2982
525 0.2962
550 0.2942
</TABLE>
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 above on the left. The
schedule above on the right shows the effective annual group fee rate
at various asset levels, which is the result of cumulatively applying
the annualized rates on the left. For example, the effective annual
fee rate at $550 billion of group net assets - the approximate level
for December 1997 - was 0.2942%, which is the weighted average of the
respective fee rates for each level of group net assets up to $550
billion.
The individual fund fee rates for the funds are as follows: 0.20%
for Equity-Income Portfolio; 0.30% for Growth Portfolio; and 0.45% for
Overseas Portfolio. Based on the average group net assets of the funds
advised by FMR for December 1997, the annual management fee rate for
each fund would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUND GROUP INDIVIDUAL FUND MANAGEMENT
FEE RATE FEE RATE FEE RATE
EQUITY-INCOME 0.2942% + 0.20% = 0.4942%
GROWTH 0.2942% + 0.30% = 0.5942%
OVERSEAS 0.2942% + 0.45% = 0.7442%
</TABLE>
One-twelfth of this annual management fee rate is applied to each
fund's net assets averaged for the month, giving a dollar amount,
which is the fee for that month.
During the fiscal year ended December 31, 1997, FMR received
$42,199,618, $41,416,431, and $14,309,058 for its services as
investment adviser to Equity-Income, Growth, and Overseas Portfolios,
respectively. This fee was equivalent to 0.50%, 0.60%, and 0.75%,
respectively, of the average net assets of Equity-Income, Growth, and
Overseas Portfolios.
HIGH INCOME PORTFOLIO. For the services of FMR under the contract,
the 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 following is the fee schedule for the fund:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE
ASSETS RATE ASSETS ANNUAL
FEE RATE
0 - $3 BILLION 0.3700% $ 0.5 BILLION 0.3700%
3 - 6 0.3400 25 0.2664
6 - 9 0.3100 50 0.2188
9 - 12 0.2800 75 0.1986
12 - 15 0.2500 100 0.1869
15 - 18 0.2200 125 0.1793
18 - 21 0.2000 150 0.1736
21 - 24 0.1900 175 0.1695
24 - 30 0.1800 200 0.1658
30 - 36 0.1750 225 0.1629
36 - 42 0.1700 250 0.1604
42 - 48 0.1650 275 0.1583
48 - 66 0.1600 300 0.1565
66 - 84 0.1550 325 0.1548
84 - 120 0.1500 350 0.1533
120 - 174 0.1450 40 0 0.1507
174 - 228 0.1400
228 - 282 0.1375
282 - 336 0.1350
OVER 336 0.1325
On August 1, 1994, FMR voluntarily revised the prior extensions to
the group fee rate schedule, and added new breakpoints for average
group assets in excess of $156 billion and under $372 billion as shown
in the schedule below. The revised group fee rate schedule is
identical to the above schedule for average group assets under $156
billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $372 billion,
pending shareholder approval of a new management contract reflecting
the revised schedule and additional breakpoints. The revised group fee
rate schedule and its extensions provide for lower management fee
rates as FMR's assets under management increase. For average group
assets in excess of $156 billion, the revised group fee rate schedule
with additional breakpoints voluntarily adopted by FMR is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE
ASSETS RATE ASSETS ANNUAL
FEE RATE
120 - $156 BILLION 0.1450% $ 150 BILLION 0.1736%
156 - 192 0.1400 175 0.1690
192 - 228 0.1350 200 0.1652
228 - 264 0.1300 225 0.1618
264 - 300 0.1275 250 0.1587
300 - 336 0.1250 275 0.1560
336 - 372 0.1225 300 0.1536
372 - 408 0.1200 325 0.1514
408 - 444 0.1175 350 0.1494
444 - 480 0.1150 375 0.1476
480 - 516 0.1125 400 0.1459
OVER 516 0.1100 425 0.1443
450 0.1427
475 0.1413
500 0.1399
525 0.1385
550 0.1372
</TABLE>
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 above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $550 billion of group net assets - the approximate level for
December 1997 - was 0.1372%, which is the weighted average of the
respective fee rates for each level of group net assets up to $550
billion.
The individual fund fee rate is 0.45%. Based on the average group net
assets of the funds advised by FMR for December 1997, the annual
management fee rate would be calculated as follows:
GROUP INDIVIDUAL FUND MANAGEMENT
FEE RATE FEE RATE FEE RATE
0.1372% + 0.45% = 0.5872%
One-twelfth of this annual management fee rate is applied to the
fund's net assets averaged for the month, giving a dollar amount,
which is the fee for that month.
For the fiscal year ended December 31, 1997, High Income Portfolio
paid FMR management fees of $11,403,916. This fee was equivalent to
0.59% of the average net assets of High Income Portfolio.
MONEY MARKET PORTFOLIO. For the services of FMR under the
contract, the fund pays FMR a monthly management fee composed of a
group fee rate, an individual fund fee rate (0.03%), and an
income-based component of 6% of the fund's gross income in excess of a
5% yield. The maximum income-based component is 0.24% of the fund's
average net assets.
The following is the fee schedule for the fund:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE
ASSETS RATE ASSETS ANNUAL
FEE RATE
0 - $3 BILLION 0.3700% $ 0.5 BILLION 0.3700%
3 - 6 0.3400 25 0.2664
6 - 9 0.3100 50 0.2188
9 - 12 0.2800 75 0.1986
12 - 15 0.2500 100 0.1869
15 - 18 0.2200 125 0.1793
18 - 21 0.2000 150 0.1736
21 - 24 0.1900 175 0.1695
24 - 30 0.1800 200 0.1658
30 - 36 0.1750 225 0.1629
36 - 42 0.1700 250 0.1604
42 - 48 0.1650 275 0.1583
48 - 66 0.1600 300 0.1565
66 - 84 0.1550 325 0.1548
84 - 120 0.1500 350 0.1533
120 - 174 0.1450 400 0.1507
174 - 228 0.1400
228 - 282 0.1375
282 - 336 0.1350
OVER 336 0.1325
</TABLE>
On August 1, 1994, FMR voluntarily revised the prior extensions to
the group fee rate schedule, and added new breakpoints for average
group assets in excess of $156 billion and under $372 billion as shown
in the schedule below. The revised group fee rate schedule is
identical to the above schedule for average group assets under $156
billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $372 billion,
pending shareholder approval of a new management contract reflecting
the revised schedule and additional breakpoints. The revised group fee
rate schedule and its extensions provide for lower management fee
rates as FMR's assets under management increase. For average group
assets in excess of $156 billion, the revised group fee rate schedule
with additional breakp oints voluntarily adopted by FMR is as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE
ASSETS RATE ASSETS ANNUAL
FEE RATE
120 - $156 BILLION 0.1450% $ 150 BILLION 0.1736%
156 - 192 0.1400 175 0.1690
192 - 228 0.1350 200 0.1652
228 - 264 0.1300 225 0.1618
264 - 300 0.1275 250 0.1587
300 - 336 0.1250 275 0.1560
336 - 372 0.1225 300 0.1536
372 - 408 0.1200 325 0.1514
408 - 444 0.1175 350 0.1494
444 - 480 0.1150 375 0.1476
480 - 516 0.1125 400 0.1459
OVER 516 0.1100 425 0.1443
450 0.1427
475 0.1413
500 0.1399
525 0.1385
550 0.1372
</TABLE>
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 above on the left. The
schedule above on the right shows the effective annual group fee rate
at various asset levels, which is the result of cumulatively applying
the annualized rates on the left. For example, the effective annual
fee rate at $550 billion of group net assets - the approximate level
for December 1997 - was 0.1372%, which is the weighted average of the
respective fee rates for each level of group net assets up to $550
billion.
The fund's individual fund fee rate is 0.03%.
One-twelfth of the sum of the group fee rate and the individual
fund fee rate is applied to the fund's average net assets for the
current month, giving a dollar amount which is the fee for that
month.
If the fund's monthly gross yield is 5% or less, the total
management fee is the sum of the group fee and the individual fund
fee. If the fund's monthly gross yield is greater than 5%, the
management fee that FMR receives includes an income-based component.
The income-based component 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% (annualized) of average
net assets, at a fund gross yield of 9%. 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. Realized and unrealized gains and
losses, if any, are not included in gross income.
For the fiscal year ended December 31, 1997, Money Market
Portfolio paid FMR management fees of $2,325,636. This fee was
equivalent to 0.21% of the average net assets of Money Market
Portfolio.
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year. Expense
reimbursements by FMR will increase a fund's total returns and yield
and repayment of the reimbursement by a fund will lower its total
returns and yield.
FMR has voluntarily agreed, subject to revision or termination, to
reimburse each class of certain funds to the extent that total
operating expenses (as a percentage of average net assets) exceed the
rates below:
FUND INITIAL CLASS EFFECTIVE DATE SERVICE EFFECTIVE DATE
CLASS
EQUITY-INCOME 1.50% 10/09/86 1.60% 11/03/97
GROWTH 1.50% 10/09/86 1.60% 11/03/97
HIGH INCOME 1.00% 09/19/85 1.10% 11/03/97
OVERSEAS 1.50% 01/28/87 1.60% 11/03/97
SUB-ADVISORY AGREEMENTS
On behalf of Money Market Portfolio, FMR has entered into a
sub-advisory agreement with Fidelity Investments Money Management,
Inc. (FIMM) (the successor to FMR Texas Inc.) pursuant to which FIMM
has primary responsibility for providing portfolio investment
management services to the fund. The sub-advisory agreement, dated
January 1, 1990, was approved by the fund's shareholders on December
13, 1989.
Under the sub-advisory agreement, FMR pays FIMM fees equal to 50% of
the management fee payable to FMR under its management contract with
Money Market Portfolio. The fees paid to FIMM are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect
from time to time. For the fiscal year ended December 31, 1997, FMR
paid FMR Texas Inc. fees of $1,162,818 on behalf of Money Market
Portfolio.
On behalf of High Income Portfolio, FMR has entered into sub-advisory
agreements with FMR U.K. and FMR Far East. On behalf of Overseas
Portfolio, FMR has entered into sub-advisory agreements with FMR U.K.,
FMR Far East, and FIIA. FIIA, in turn, has entered into a sub-advisory
agreement with FIIA(U.K.)L. Pursuant to the sub-advisory agreements,
FMR may receive investment advice and research services outside the
United States from the sub-advisers. On behalf of High Income
Portfolio and Overseas Portfolio, FMR may also grant the sub-advisers
investment management authority, as well as the authority to buy and
sell securities if FMR believes it would be beneficial to a fund.
Overseas Portfolio's sub-advisory agreements, dated April 1, 1992,
were approved by shareholders on March 25, 1992. High Income
Portfolio's sub-advisory agreements, dated January 1, 1994, were
approved by shareholders on December 15, 1993.
Currently, FMR U.K., FMR Far East, FIIA and FIIA(U.K.)L each focuses
on issuers in countries other than the United States, such as those in
Europe, Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. FIIA is a wholly owned subsidiary of
Fidelity International Limited (FIL), a Bermuda company formed in 1968
which primarily provides investment advisory services to non-U.S.
investment companies and institutional investors investing in
securities throughout the world. Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family own,
directly or indirectly, more than 25% of the voting common stock of
FIL. FIIA was organized in Bermuda in 1983. FIIA(U.K.)L was organized
in the United Kingdom in 1984, and is a direct subsidiary of Fidelity
Investments Management Limited and an indirect subsidiary of FIL.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR
Far East, and FIIA. FIIA, in turn, pays the fees of FIIA(U.K.)L. For
providing non-discretionary investment advice and research services,
the sub-advisers are compensated as follows:
(medium solid bullet) FMR pays FMR U.K. and FMR Far East fees equal
to 110% and 105%, respectively, of FMR U.K's and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(medium solid bullet) FMR pays FIIA fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by
the fund for which FIIA has provided FMR with investment advice and
research services.
(medium solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing investment
advice and research services.
F or providing discretionary investment management and
executing portfolio transactions, the sub-advisers are compensated as
follows:
(medium solid bullet) FMR pays FMR U.K., FMR Far East, and FIIA a fee
equal to 50% of its monthly management fee with respect to the fund's
average net assets managed by the sub-adviser on a discretionary
basis.
(medium solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
For providing investment advice and research services, the fees
paid to the sub-advisers by FMR on behalf of the funds for the fiscal
year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUND FMR U.K FMR FAR EAST FIIA FIIA (U.K.)L
OVERSEAS $ 1,028,965 $ 984,199 $0 $0
HIGH INCOME $ 0 $ 0 -- --
</TABLE>
For providing discretionary investment management and executing
portfolio transactions, no fees were paid to the sub-advisers
by FMR on behalf of the funds for the fiscal year ended
December 31, 1997.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by FMR pursuant to authority contained
in the fund's management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (Japan), LLC
(FBSJ), indirect subsidiaries of FMR Corp., if the commissions are
fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. Prior
to December 9, 1997, FMR used research services provided by and placed
agency transactions with Fidelity Brokerage Services (FBS), an
indirect subsidiary of FMR Corp.
For the fiscal year ended December 31, 1997, the table below lists
the brokerage commissions paid by each fund (except Money Market
Portfolio) to NFSC and FBS in dollars and as a percentage of all
transactions.
FUND TO NFSC TO FBS % TO NFSC % TO FBS
EQUITY-INCOME $ 836,386 $ 13,815 12% 0%
GROWTH $ 2,325,582 $ 17,682 26% 0%
HIGH INCOME $ 13,664 $ 0 5% 0%
OVERSEAS $ 8,726 $ 2 86,119 0% 7%
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 INSURANCE COMPANIES
Please advise the trust, in care of Client Services at
1-800- 544-5429, 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 variable contract owners of the
respective shares.
EXHIBIT 1
((FORM OF AMENDED AND RESTATED DECLARATION OF TRUST))
The language to be added to the current contract is ((underlined))
and the language to be deleted is set forth in [brackets]. Headings
that were underlined in the Trust's current Amended and Restated
Declaration of Trust remain underlined in this Exhibit.
((DECLARATION OF TRUST))
[AS AMENDED AND RESTATED DATED JULY 31, 1985]
[DECLARATION OF TRUST, made November 13, 1981 by Edward C. Johnson
3d, Eugene H. Clapp 2nd, Walter E. Hanson, Robert L. Johnson, Caleb
Loring, Jr., George K. McKenzie, William R. Spaulding, Bertram H.
Witham, and David L. Yunich (the initial "Trustees").]
((AMENDED AND RESTATED DECLARATION OF TRUST, made ______, 1998_ by
each of the Trustees whose signature is affixed hereto (the
"Trustees"))).
WHEREAS, the [initial] Trustees desire to [establish a trust fund for
the investment and reinvestment of funds contributed thereto;] ((amend
and restate this Declaration of Trust for the sole purpose of
supplementing the Declaration of Trust to incorporate amendments duly
adopted; and))
((WHEREAS, this Trust was initially made on November 13, 1981 by
Edward C. Johnson 3d, Eugene H. Clapp 2nd, Walter E. Hanson, Robert L.
Johnson, Caleb Loring, Jr., George K. McKenzie, William R. Spaulding,
Bertram H. Witham, and David L. Yunich in order to establish a trust
fund for the investment and reinvestment of funds contributed
thereto;))
NOW, THEREFORE, the [initial] Trustees declare that all money and
property contributed to the trust fund hereunder shall be held and
managed in trust under this ((Amended and Restated)) Declaration of
Trust as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "Variable Insurance Products
Fund".
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the
context or specifically provided:
[(a) The Terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) and "Principal Underwriter" shall have
the meanings given them in the 1940 Act, as amended from time to
time;]
(((a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable), and "Principal Underwriter" shall have
the meanings given them in the 1940 Act, as modified by or interpreted
by any applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission
thereunder;))
[(b) The "Trust" refers to Variable Insurance Products Fund and
reference to the Trust, when applicable to one or more Series of the
Trust, shall refer to any such Series;]
(((b) "Bylaws" shall mean the bylaws of the Trust, if any, as amended
from time to time;
(c) "Class" refers to the class of Shares of a Series of the Trust
established in accordance with the provisions of Article III;
(d) "Declaration of Trust" means this Amended and Restated
Declaration of Trust, as further amended or restated, from time to
time;))
[(c)](( (e) )) "Net Asset Value" means the net asset value of each
Series of the Trust ((or Class thereof)) determined in the manner
provided in Article X, Section 3;
[(d)](( (f) )) "Shareholder" means a record owner of Shares of the
Trust;
(((g) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of the Trust or each
Series shall be divided from time to time, including such Class or
Classes of Shares as the Trustees may from time to time create and
establish and including fractions of Shares as well as whole Shares as
consistent with the requirements of Federal and/or state securities
laws;
(h) "Series" refers to any series of Shares of the Trust established
in accordance with the provisions of Article III;
(i) "Trust" refers to Variable Insurance Products Fund and reference
to the Trust, when applicable to one or more Series of the Trust,
shall refer to any such Series;))
[(e)]((j)) [The] "Trustees" refer to the individual trustees in their
capacity as trustees ((hereunder)) of the Trust and their successor or
successors for the time being in office as such trustee or trustees;
((and))
[(f) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series shall be
divided from time to time, and includes fractions of shares as well as
whole shares consistent with the requirements of Federal and/or other
securities laws;]
[(g)](( (k) )) [The] "1940 Act" refers to the Investment Company Act
of 1940, as amended from time to time[; and]((.))
[(h) "Series" refers to series of Shares of the Trust established in
accordance with the provisions of Article III.]
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source
of managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into
such transferable Shares of one or more separate and distinct Series
((or Classes of Series)) as the Trustees shall((,)) from time to
time((,)) create and establish. The number of ((authorized)) Shares
[is unlimited and each Share]((of each Series, and Class thereof, is
unlimited. Each Share)) shall be without par value and shall be fully
paid and nonassessable. The Trustees shall have full power and
authority, in their sole discretion((,)) and without obtaining any
prior authorization or vote of the Shareholders ((or)) [of] ((any
Series or Class)) of Shareholders of the Trust (( (a) )) to create and
establish (and to change in any manner) Shares ((or any Series or
Classes thereof)) with such preferences, voting powers, rights((,))
and privileges as the Trustees may((,)) from time to time((,))
determine[,]((; (b) )) to divide or combine the Shares or any Series
((or Classes thereof)) into a greater or lesser number[,]((; (c) )) to
classify or reclassify any issued Shares into one or more Series ((or
Classes)) of Shares[,]((; (d) )) to abolish any one or more Series
((or Classes)) of Shares[, and]((; and (e) )) to take such other
action with respect to the Shares as the Trustees may deem desirable.
[ESTABLISHMENT OF SERIES]
((ESTABLISHMENT OF SERIES AND CLASSES))
Section 2. The establishment of any Series ((or Class thereof)) shall
be effective upon the adoption of a resolution by a majority of the
then Trustees setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series ((or
Class)). At any time that there are no Shares outstanding of any
particular Series ((or Class)) previously established and designated,
the Trustees may by a majority vote abolish [that] ((such)) Series
((or Class)) and the establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of
the Trust[.] ((or a transfer or similar agent.)) The Trustees may make
such rules as they consider appropriate for the transfer of Shares and
similar matters. The record books of ((the Trust as kept by)) the
Trust ((or by any transfer or similar agent, as the case may be,))
shall be conclusive as to who are the holders of Shares and as to the
number of Shares held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from
such persons and on such terms as they may((,)) from time to time
((,)) authorize. Such investments may be in the form of cash((,
securities,)) or ((other)) [securities] ((property)) in which the
appropriate Series is authorized to invest, valued as provided in
Article X, Section 3. After the date of the initial contribution of
capital, the number of Shares to represent the initial contribution
may in the Trustees' discretion be considered as outstanding((,)) and
the amount received by the Trustees on account of the contribution
shall be treated as an asset of the Trust. Subsequent investments in
the Trust shall be credited to each Shareholder's account in the form
of full Shares at the Net Asset Value per Share next determined after
the investment is received; provided, however, that the Trustees may,
in their sole discretion, (a) impose a sales charge ((or other fee))
upon investments in the Trust ((or Series or any Class thereof,)) and
(b) issue fractional Shares.
ASSETS AND LIABILITIES OF SERIES ((AND CLASSES))
[Section 5. All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be referred to as "assets
belonging to" that Series. In addition any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not
readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series
in such manner as they, in their sole discretion, deem fair and
equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Series for all purposes, and shall be referred
to as assets belonging to that Series. The assets belonging to a
particular Series shall be so recorded upon the books of the Trust,
and shall be held by the Trustees in trust for the benefit of the
holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series
and all expenses, costs, charges and reserves attributable to that
Series. Any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees
between or among any one or more of the Series in such manner as the
Trustees in their sole discretion deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Any creditor of any Series may look only
to the assets of that Series to satisfy such creditor's debt.]
((Section 5. All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange, or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be referred to as "assets
belonging to" that Series. In addition, any assets, income, earnings,
profits, and proceeds thereof, funds, or payments that are not readily
identifiable as belonging to any particular Series or Class, shall be
allocated by the Trustees between and among one or more of the Series
or Classes in such manner as they, in their sole discretion, deem fair
and equitable. Each such allocation shall be conclusive and binding
upon the Shareholders of all Series or Classes for all purposes and
shall be referred to as assets belonging to that Series or Class. The
assets belonging to a particular Series shall be so recorded upon the
books of the Trust or of its agent or agents and shall be held by the
Trustees in trust for the benefit of the holders of Shares of that
Series.
The assets belonging to each particular Series shall be charged with
the liabilities of that Series and all expenses, costs, charges, and
reserves attributable to that Series, except that liabilities and
expenses may, in the Trustees' discretion, be allocated solely to a
particular Class and, in which case, shall be borne by that Class. Any
general liabilities, expenses, costs, charges, or reserves of the
Trust that are not readily identifiable as belonging to any particular
Series or Class shall be allocated and charged by the Trustees between
or among any one or more of the Series or Classes in such manner as
the Trustees, in their sole discretion, deem fair and equitable and
shall be referred to as "liabilities belonging to" that Series or
Class. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes. Any creditor
of any Series may look only to the assets of that Series to satisfy
such creditor's debt. No Shareholder or former Shareholder of any
Series shall have a claim on or any right to any assets allocated or
belonging to any other Series.))
NO PREEMPTIVE RIGHTS
Section 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the
Trust or the Trustees.
[LIMITATION OF PERSONAL LIABILITY]
((STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY))
[Section 7. The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum
of money or assessment whatsoever other than such as the Shareholder
may at any time personally agree to pay by way of subscription for any
Shares or otherwise. Every note, bond, contract or other undertaking
issued by or on behalf of the Trust or the Trustees relating to the
Trust shall include a recitation limiting the obligation represented
thereby to the Trust and its assets (but the omission of such a
recitation shall not operate to bind any Shareholder).]
((Section 7. Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every shareholder by
virtue of having become a shareholder shall be held to have expressly
assented and agreed to be bound by the terms hereof. No Shareholder of
the Trust and of each Series shall be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or by or on behalf of
any Series. The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum
of money or assessment whatsoever other than such as the Shareholder
may, at any time, personally agree to pay by way of subscription for
any Shares or otherwise. Every note, bond, contract, or other
undertaking issued by or on behalf of the Trust or the Trustees
relating to the Trust or to a Series shall include a recitation
limiting the obligation represented thereby to the Trust or to one or
more Series and its or their assets (but the omission of such a
recitation shall not operate to bind any Shareholder or Trustee).))
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable
to carry out that responsibility.
[ELECTION: INITIAL TRUSTEES]
((INITIAL TRUSTEES: ELECTION))
[Section 2. The initial Trustees shall be Edward C. Johnson 3d,
Eugene H. Clapp 2nd, Walter E. Hanson, Robert L. Johnson, Caleb
Loring, Jr., George K. McKenzie, William R. Spaulding, Bertram H.
Witham, and David L. Yunich, and such other individuals as the Board
of Trustees shall appoint pursuant to Section 4 of the Article IV.]
((Section 2. The initial Trustees shall be at least three individuals
who shall affix their signatures hereto. On a date fixed by the
Trustees, the Shareholders shall elect not less than three Trustees. A
Trustee shall not be required to be a Shareholder of the Trust.))
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a)
that any Trustee may resign his trust by written instrument signed by
him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds (( (2/3) )) of the number of Trustees
prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) a Trustee may
be removed at any [Special] ((special)) [Meeting] ((meeting)) of the
Trust by a vote of two-thirds (( (2/3) )) of the outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation,
retirement, [removal, incapacity,] or [inability] ((removal)) of any
of the Trustees, or in case a vacancy shall, by reason of an increase
in ((number of the)) [number,] ((Trustees,)) or for any other reason,
exist, the remaining Trustees shall fill such vacancy by appointing
such other person as they in their discretion shall see fit consistent
with the limitations under the [Investment Company Act of] 1940
((Act)). Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by recording in the
records of the Trust, whereupon the appointment shall take effect.
[Within three months of such appointment the Trustees shall cause
notice of such appointment to be mailed to each Shareholder at his
address as recorded on the books of the Trust.] An appointment of a
Trustee may be made by the Trustees then in office [and notice thereof
mailed to Shareholders as aforesaid] in anticipation of a vacancy to
occur by reason of retirement, resignation or increase in number of
Trustees effective at a later date, provided that said appointment
shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as
any Trustee so appointed shall have accepted this [trust] ((Trust)),
the [trust] ((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
((foregoing)) power of appointment is subject to the provisions of
Section 16(a) of the 1940 Act[.] ((,as modified by or interpreted by
any applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission.))
TEMPORARY ABSENCE OF TRUSTEE((S))
Section 5. Any Trustee may, by power of attorney, delegate his power
for a period not exceeding six ((6)) months at any one time to any
other Trustee or Trustees, provided that in no case shall fewer than
two Trustees personally exercise the other powers hereunder except as
herein otherwise expressly provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees, not less than three (3) nor more
than twelve (12), serving hereunder at any time shall be determined by
the Trustees themselves.
[Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is absent from the
Commonwealth of Massachusetts or, if not a domiciliary of
Massachusetts, is absent from his state of domicile, or is physically
or mentally incapacitated by reason of disease or otherwise, the other
Trustees shall have all the powers hereunder and the certificate of
the other Trustees of such vacancy, absence or incapacity, shall be
conclusive, provided, however, that no vacancy shall remain unfilled
for a period longer than six calendar months.]
((Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is physically or mentally
incapacitated by reason of disease or otherwise, the other Trustees
shall have all the powers hereunder and the certificate of the other
Trustees of such vacancy or incapacity shall be conclusive.))
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart
from any assets now or hereafter held in any capacity other than as
Trustee hereunder by the Trustees or any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in
the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees((,)) in all instances((,)) shall act as
principals[,] and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and
instruments that they may consider necessary or appropriate in
connection with the management of the Trust. ((Except as otherwise
provided herein or in the 1940 Act,)) [The] ((the)) Trustees shall not
in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power
to make any and all investments [which] ((that)) they, in their
[uncontrolled] discretion, shall deem proper to accomplish the purpose
of this Trust. Subject to any applicable limitation in [the] ((this))
Declaration of Trust or the Bylaws of the Trust, ((if any,)) the
Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested[,] without((,)) in any event((,)) being
bound by or limited by any present or future law or custom in regard
to investments by Trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on((,)) and lease any or all of
the assets of the Trust[;]((.))
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to
the Shareholders[;]((.))
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate[;]((.))
[(d) To employ a bank or trust company as custodian of any assets of
the Trust subject to any conditions set forth in this Declaration of
Trust or in the Bylaws, if any;]
(d) ((To employ one or more banks, trust companies, companies that
are members of a national securities exchange, or other entities
permitted under the 1940 Act, as modified by or interpreted by any
applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission
thereunder, as custodians of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or in the Bylaws, if
any.))
(e) To retain a transfer agent and Shareholder servicing agent, or
both[;]((.))
(f) To provide for the distribution of interests of the Trust either
through a [principal underwriter] ((Principal Underwriter)) in the
manner hereinafter provided for or by the Trust itself, or
both[;]((.))
(g) To set record dates in the manner hereinafter provided
for[;]((.))
(h) To delegate such authority as they consider desirable to any
officers of the Trust and to any [agent,] ((investment)) [custodian]
((adviser, manager, custodian, underwriter, or other agent)) or
((independent)) [underwriter;] ((contractor.))
(i) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XII, Section [4(b)] ((4))
hereof[;]((.))
(j) To vote or give assent[,] or exercise any rights of ownership[,]
with respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper[;]((.))
(k) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities[;]((.))
(l) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form; or
either in its own name or in the name of a custodian or a nominee or
[nominees, subject in either case to proper safeguards according to
the usual practice of Massachusetts trust companies or investment
companies;]((nominees.))
[(m) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment
purposes in accordance with the provisions of Article III;]
(((m) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment
purposes in accordance with the provisions of Article III and to
establish Classes of such Series having relative rights, powers, and
duties as the Trustees may provide consistent with applicable laws.))
(n) To allocate assets, liabilities((,)) and expenses of the Trust to
a particular Series ((or Class, as appropriate,)) or to apportion the
same between or among two or more Series[,] ((or Classes, as
appropriate,)) provided that any liabilities or expenses incurred by a
particular Series ((or Class)) shall be payable solely out of the
assets belonging to that Series as provided for in Article III[;]((.))
(o) To consent to or participate in any plan for the reorganization,
consolidation((,)) or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract,
lease, mortgage, purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any
security held in the Trust[;]((.))
(p) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy((,)) including, but
not limited to, claims for taxes[;]((.))
(q) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for[;]((.))
(r) [To borrow money subject to the applicable requirements of the
1940 Act. The Trustees shall not pledge, mortgage or hypothecate the
assets of the Trust except that, to secure borrowings, the Trustees
may pledge securities; provided that, with respect to Equity-Income,
Growth, High Income and Overseas Portfolios, the Trustees shall have
power to pledge, mortgage and hypothecate the assets belonging to such
Portfolios, subject to applicable requirements of the 1940 Act;]
((To borrow money, and to pledge, mortgage, or hypothecate the assets
of the Trust, subject to the applicable requirements of the 1940
Act.))
(s) To establish, from time to time, a minimum total investment for
Shareholders[,] and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving
notice to such Shareholder[;]((.))
(((t) To operate as and carry on the business of an investment
company and to exercise all the powers necessary and appropriate to
the conduct of such operations.
(u) To interpret the investment policies, practices or limitations of
any Series.
(v) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power herein before
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects or powers.
(w) Notwithstanding any other provision hereof, to invest all of the
assets of any Series in a single open-end investment company,
including investment by means of transfer of such assets in exchange
for an interest or interests in such investment company.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees.
Any action by one or more of the Trustees in their capacity as such
hereunder shall be deemed an action on behalf of the Trust or the
applicable Series and not an action in an individual capacity.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust or any Series or
Class thereof.))
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see
to the application of any payments made or property transferred to the
Trustees or upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may issue and sell
or cause to be issued and sold Shares to and buy such Shares from any
such person of any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and
purchase of such Shares; and all subject to any restrictions which may
be contained in the Bylaws((, if any)).
ACTION BY THE TRUSTEES
Section 3. [The] ((Except as otherwise provided herein or in the 1940
Act, the)) Trustees shall act by majority vote at a meeting duly
called or by unanimous written consent without a meeting or by
telephone consent provided a quorum of Trustees participate in any
such telephonic meeting, unless the 1940 Act requires that a
particular action be taken only at a meeting ((at)) [of] ((which)) the
Trustees ((are present in person)). At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman of the
Trustees or by any two other Trustees. Notice of the time, date((,))
and place of all meetings of the Trustees shall be given by the party
calling the meeting to each Trustee by [telephone] ((telephone,
telefax, telegram,)) or [telegram] ((other electro-mechanical means))
sent to his home or business address at least twenty-four (( (24) ))
hours in advance of the meeting or by written notice mailed to his
home or business address at least seventy-two (( (72) )) hours in
advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting.
Subject to the requirements of the 1940 Act, the Trustees by majority
vote may delegate to any one of their number their authority to
approve particular matters or take particular actions on behalf of the
Trust. ((Written consents or waivers of Trustees may be executed in
one or more counterparts. Execution of a written consent or waiver and
delivery thereof to the Trust may be accomplished by telefax or other
electro-mechanical means.))
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees may appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all
meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the
Trust, and may be the chief executive, financial and accounting
officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the [trust] ((Trust)) estate or the
assets belonging to the appropriate Series for their expenses and
disbursements, including, without limitation, fees and expenses of
Trustees who are not Interested Persons of the Trust[,]((;)) interest
expense, taxes, fees and commissions of every kind[,]((;)) expenses of
pricing Trust portfolio securities[,]((;)) expenses of issue,
repurchase and redemption of shares including expenses attributable to
a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and
[State] ((state)) laws and regulations[,]((;)) charges of custodians,
transfer agents, and registrars[,]((;)) expenses of preparing and
setting up in type prospectuses and [Statements of Additional
Information,] ((statements of additional information;)) expenses of
printing and distributing prospectuses sent to existing
Shareholders[,]((;)) auditing and legal expenses[,]((;)) reports to
Shareholders[,]((;)) expenses of meetings of Shareholders and proxy
solicitations therefor[,]((;)) insurance expense[s,]((;)) association
membership dues((;)) and for such non-recurring items as may arise,
including litigation to which the Trust is a party[,]((;)) and for all
losses and liabilities by them incurred in administering the Trust,
and for the payment of such expenses, disbursements, losses((,)) and
liabilities[,] the Trustees shall have a lien on the assets belonging
to the appropriate Series prior to any rights or interests of the
Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER((,)) AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to a Majority Shareholder Vote, the Trustees
may((,)) in their discretion ((and)) from time to time((,)) enter into
an investment advisory or management contract(s) with respect to the
Trust or any Series thereof whereby the other party(ies) to such
contract(s) shall undertake to furnish the Trustees such management,
investment advisory, statistical((,)) and research facilities and
services and such other facilities and services, if any, and all upon
such terms and conditions, as the Trustees may((,)) in their
discretion((,)) determine. Notwithstanding any provisions of this
Declaration of Trust, the Trustees may authorize the investment
adviser(s) (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales or
exchanges of portfolio securities and other investment instruments of
the Trust on behalf of the Trustees or may authorize any officer,
agent, or Trustee to effect such purchases, sales((,)) or exchanges
pursuant to recommendations of the investment adviser (and all without
further action by the Trustees). Any such purchases, sales((,)) and
exchanges shall be deemed to have been authorized by all of the
Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
((as modified by or interpreted by any applicable order or orders of
the Commission or any rules or regulations adopted or interpretative
releases of the Commission thereunder,)) including those relating to
Shareholder approval, authorize the investment adviser to employ one
or more sub-advisers from time to time to perform such of the acts and
services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and
sub-adviser.
PRINCIPAL UNDERWRITER
Section 2. The Trustees may in their discretion from time to time
enter into [a] ((an exclusive or non-exclusive)) contract(s) ((on
behalf of the Trust or any Series or Class thereof)) providing for the
sale of the Shares, whereby the Trust may either agree to sell the
Shares to the other party to the contract or appoint such other party
its sales agent for such Shares. In either case, the contract shall be
on such terms and conditions as may be prescribed in the Bylaws, if
any, and such further terms and conditions as the Trustees may((,)) in
their discretion((,)) determine not inconsistent with the provisions
of this Article VII, or of the Bylaws, if any[;]((.)) [and such]
((Such)) contract may also provide for the repurchase or sale of
Shares by such other party as principal or as agent of the Trust.
TRANSFER AGENT
Section 3. The Trustees may((,)) in their discretion ((and)) from
time to time((,)) enter into [a] ((one or more)) transfer agency and
Shareholder service [contract] ((contracts)) whereby the other party
shall undertake to furnish the Trustees with transfer agency and
Shareholder services. [The contract] ((Such contracts)) shall be on
such terms and conditions as the Trustees may((,)) in their
discretion((,)) determine not inconsistent with the provisions of this
Declaration of Trust or of the Bylaws, if any. Such services may be
provided by one or more entities.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2
and 3 of this Article VII or in Article IX hereof may be entered into
with any corporation, firm, partnership, trust or association,
although one or more of the Trustees or officers of the Trust may be
an officer, director, trustee, shareholder, or member of such other
party to the contract, and no such contract shall be invalidated or
rendered voidable by reason of the existence of any relationship, nor
shall any person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when
entered into was reasonable and fair and not inconsistent with the
provisions of this Article VII or the Bylaws, if any. The same person
(including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections
1, 2 and 3 above or Article IX, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any
or all of the contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
[Section 5. Any contract entered into pursuant to Sections 1 and 2 of
this Article VII shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendments
thereof or other applicable Act of Congress hereafter enacted) with
respect to its continuance in effect, its termination, and the method
of authorization and approval of such contract or renewal thereof, and
no amendment to any contract, entered into pursuant to Section 1 shall
be effective unless assented to by a Majority Shareholder Vote.]
((Section 5. Any contract entered into pursuant to Sections 1 and 2
of this Article VII shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretative releases of the
Commission (or other applicable Act of Congress hereafter enacted),
with respect to its continuance in effect, its amendment, its
termination, and the method of authorization and approval of such
contract or renewal thereof.))
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
[Section 1. The Shareholders shall have power to vote (i) for the
election of Trustees as provided in Article IV, Section 2, (ii) for
the removal of Trustees as provided in Article IV, Section 3(d), (iii)
with respect to any investment advisory or management contract as
provided in Article VII, Section 1, (iv) with respect to the amendment
of this Declaration of Trust as provided in Article XII, Section 7,
(v) to the same extent as the shareholders of a Massachusetts business
corporation, as to whether or not a court action, proceeding or claim
should be brought or maintained derivatively or as a class action on
behalf of the Trust or the Shareholders, provided, however, that a
Shareholder of a particular Series shall not be entitled to bring any
derivative or class action on behalf of any other Series of the Trust,
and (vi) with respect to such additional matters relating to the Trust
as may be required or authorized by law, by this Declaration of Trust,
or the Bylaws of the Trust, if any, or any registration of the Trust
with the Securities and Exchange Commission (the "Commission") or any
State, as the Trustees may consider desirable. On any matter submitted
to a vote of the Shareholders, all shares shall be voted by individual
Series, except (i) when required by the 1940 Act, Shares shall be
voted in the aggregate and not by individual Series; and (ii) when the
Trustees have determined that the matter affects only the interests of
one or more Series, then only the Shareholders of such Series shall be
entitled to vote thereon. 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.
There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. Until Shares are issued,
the Trustees may exercise all rights of Shareholders and may take any
action required or permitted by law, this Declaration of Trust or any
Bylaws of the Trust to be taken by Shareholders.]
((Section 1. The Shareholders shall have power to vote (a) for the
election of Trustees as provided in Article IV, Section 2; (b) for the
removal of Trustees as provided in Article IV, Section 3(d); (c) with
respect to any investment advisory or management contract as provided
in Article VII, Sections 1 and 5; (d) with respect to any termination,
merger, consolidation, reorganization, or sale of assets of the Trust
or any of its Series or Classes as provided in Article XII, Section 4;
(e) with respect to the amendment of this Declaration of Trust as
provided in Article XII, Section 7; (f) to the same extent as the
shareholders of a Massachusetts business corporation, as to whether or
not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or
the Shareholders, provided, however, that a Shareholder of a
particular Series shall not be entitled to bring any derivative or
class action on behalf of any other Series of the Trust; and (g) with
respect to such additional matters relating to the Trust as may be
required or authorized by law, by this Declaration of Trust, or the
Bylaws of the Trust, if any, or any registration of the Trust with the
Commission or any state, as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series, except as provided in the
following sentence and except (a) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series;
and (b) when the Trustees have determined that the matter affects only
the interests of one or more Series, then only the Shareholders of
such Series shall be entitled to vote thereon. The Trustees may also
determine that a matter affects only the interests of one or more
Classes of a Series, in which case, any such matter shall be voted on
by such Class or Classes. A Shareholder of each Series or Class
thereof shall be entitled to one vote for each dollar of net asset
value (number of Shares owned times net asset value per share) of such
Series or Class thereof on any matter on which such Shareholder is
entitled to vote, and each fractional dollar amount shall be entitled
to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or
by proxy. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required or permitted
by law, this Declaration of Trust or any Bylaws of the Trust, if any,
to be taken by Shareholders.))
MEETINGS
Section 2. The first Shareholders' meeting shall be held as specified
in Section 2 of Article IV at the principal office of the Trust or
such other place as the Trustees may designate. Special meetings of
the Shareholders of any Series may be called by the Trustees and shall
be called by the Trustees upon the written request of Shareholders
owning at least one-tenth ((1/10)) of the outstanding Shares entitled
to vote. Whenever ten or more Shareholders meeting the qualifications
set forth in Section 16(c) of the 1940 Act, as ((modified by or
interpreted by any applicable order or orders of the Commission or any
rules or)) [the same] ((regulations)) [may] ((adopted)) [be] ((or))
[amended] ((interpretative)) [from] ((releases)) [time] ((of)) [to]
((the)) [time,] ((Commission,)) seek the opportunity of furnishing
materials to the other Shareholders with a view to obtaining
signatures on such a request for a meeting, the Trustees shall comply
with the provisions of said Section 16(c) with respect to providing
such Shareholders access to the list of the Shareholders of record of
the Trust or the mailing of such materials to such Shareholders of
record. Shareholders shall be entitled to at least fifteen ((15))
days' notice of any meeting.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in person or by
proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of
this Declaration of Trust permits or requires that holders of any
Series ((or Class)) shall vote as a Series[,] ((or Class)) then a
majority of the aggregate number of Shares of that Series ((or Class))
entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series ((or Class)). Any lesser number
shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except
when a larger vote is required ((by applicable law or)) by any
provision of this Declaration of Trust or the Bylaws, ((if any,)) a
majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Declaration of Trust permits or
requires that the holders of any Series ((or Class)) shall vote as a
Series ((or Class)), then a majority of the Shares of that Series ((or
Class)) voted on the matter shall decide that matter insofar as that
Series ((or Class)) is concerned. ((Shareholders may act by unanimous
written consent. Actions taken by a Series or Class may be consented
to unanimously in writing by Shareholders of that Series or Class.))
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
[Section 1. The Trustees shall at all times employ a bank or trust
company having capital, surplus and undivided profits of at least two
million dollars ($2,000,000), or such other amount or such other
entity as shall be allowed by the Commission or by the 1940 Act, as
custodian with authority as its agent, but subject to such
restrictions, limitations or other requirements, if any, as may be
contained in the Bylaws of the Trust:]
((The Trustees shall at all times employ a bank, a company that is a
member of a national securities exchange, trust company, or other
entity permitted under the 1940 Act, as modified by or interpreted by
any applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission
thereunder, having capital, surplus, and undivided profits of at least
two million dollars ($2,000,000), or such other amount as shall be
allowed by the Commission or by the 1940 Act, as custodian with
authority as its agent, but subject to such restrictions, limitations
and other requirements, if any, as may be contained in the Bylaws of
the Trust, if any:))
(1) to hold the securities owned by the Trust and deliver the same
upon written order or oral order, if confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust
and the custodian, if such procedures have been authorized in writing
by the Trust;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
[(2) to compute, if authorized to do so by the Trustees, the Net
Asset Value of any Series in accordance with the provisions hereof;]
(((2) to compute, if authorized to do so, the Net Asset Value of any
Series or Class thereof in accordance with the provisions hereof; all
upon such basis of compensation as may be agreed upon between the
Trustees and the custodian.))
[all upon such basis of compensation as may be agreed upon between
the Trustees and the custodian. If so directed by a Majority
Shareholder Vote, the custodian shall deliver and pay over all
property of the Trust held by it as specified in such vote.]
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and
services of the custodian, and upon such terms and conditions, as may
be agreed upon between the custodian and such sub-custodian and
approved by the Trustees, provided that in every case such
sub-custodian shall be a bank ((, a company that is a member of a
national securities exchange, trust company,)) or [trust]((other))
[company]((entity)) [organized]((permitted)) under the ((1940 Act, as
modified by or interpreted by)) [laws]((any applicable order or
orders)) of the ((Commission or any)) [United] ((rules)) [States]((or
regulations adopted)) or [one]((interpretative releases)) of
the[states thereof]((Commission)) [and]((thereunder,)) having capital,
surplus((,)) and undivided profits of at least two million dollars
($2,000,000) or such other [persons]((amount)) as [may]((shall)) be
[permitted]((allowed)) by the Commission[,] or [otherwise in]((by))
[accordance with] the 1940 Act [as from time to time amended.]
CENTRAL [CERTIFICATE] ((DEPOSITORY)) SYSTEM
Section 2. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit
all or any part of the securities owned by the Trust in a system for
the central handling of securities established by a national
securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934[,] or
such other person as may be permitted by the Commission[,] or
otherwise in accordance with the 1940 Act((,)) [as from time to time
amended,] pursuant to which system all securities of any particular
[class or series] ((Class or Series)) of any issuer deposited within
the system are treated as fungible and may be transferred or pledged
by bookkeeping entry without physical delivery of such securities[,]
((;)) provided that all such deposits shall be subject to withdrawal
only upon the order of the Trust ((or its custodian, subcustodians, or
other authorized agents)).
ARTICLE X
[DISTRIBUTIONS AND REDEMPTIONS]
((DISTRIBUTIONS, REDEMPTIONS AND DETERMINATION OF NET
ASSET VALUE))
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in
the discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent permitted by
the laws of Massachusetts, at any time to declare and cause to be paid
dividends on Shares of a particular Series, from the assets belonging
to that Series, which dividends, at the election of the Trustees, may
be paid daily or otherwise pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees
may determine, and may be payable in Shares of that Series((, or
Classes thereof,)) at the election of each Shareholder of that Series.
((The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or related plans as
the Trustees shall deem appropriate.))
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute ((a stock dividend))
pro rata among the Shareholders of a particular Series((, or Class
thereof,)) as of the record date of that Series ((or Class)) fixed as
provided in [Section 3] ((Article XII,)) [hereof a "stock dividend"]
((Section 3)).
REDEMPTIONS
Section 2. In case any holder of record of Shares of a particular
Series ((or Class of a Series)) desires to dispose of his Shares, he
may deposit at the office of the transfer agent or other authorized
agent of that Series a written request or such other form of request
as the Trustees may((,)) from time to time((,)) authorize, requesting
that the Series purchase the Shares in accordance with this Section 2;
and the Shareholder so requesting shall be entitled to require the
Series to purchase, and the Series or the principal underwriter of the
Series shall purchase his said Shares, but only at the Net Asset Value
thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series((,)) and payment for such
Shares ((less any applicable deferred sales charge and/or fees)) shall
be made by the Series or the principal underwriter of the Series to
the Shareholder of record within seven (7) days after the date upon
which the request is [received] ((effective)).
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
Section 3. The term "Net Asset Value" of any Series ((or Class))
shall mean that amount by which the assets of[,] that Series ((or
Class)) exceed its liabilities, all as determined by or under the
direction of the Trustees. Such value per Share shall be determined
separately for each Series ((or Class)) of Shares and shall be
determined on such days and at such times as the Trustees may
determine. Such determination shall be made with respect to securities
for which market quotations are readily available, at the market value
of such securities; and with respect to other securities and assets,
at the fair value as determined in good faith by the Trustees,
provided, however, that the Trustees, without Shareholder approval,
may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the rules, regulations((,)) and
interpretations thereof promulgated or issued by the Commission or
insofar as permitted by any [Order] ((order)) of the Commission
applicable to the Series. The Trustees may delegate any of its powers
and duties under this Section 3 with respect to appraisal of assets
and liabilities. At any time((,)) the Trustees may cause the value per
Share last determined to be determined again in similar manner and may
fix the time when such redetermined value shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940
Act. Such suspension shall take effect at such time as the Trustees
shall specify((,)) but not later than the close of business on the
business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment until the
Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the
Net Asset Value per Share existing after the termination of the
suspension. ((In the event that any Series is divided into Classes,
the provisions of this Section, to the extent applicable as determined
in the discretion of the Trustees and consistent with applicable law,
may be equally applied to each such Class.))
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section 1. Provided they have exercised reasonable care and have
acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees shall not be responsible for or
liable in any event for neglect or wrongdoing of them or any officer,
agent, employee((,)) or investment adviser of the Trust, but nothing
contained herein shall protect any Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence((,)) or reckless disregard of the duties
involved in the conduct of his office.
[INDEMNIFICATION]
((INDEMNIFICATION OF COVERED PERSONS))
Section 2.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent permitted
by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit((,)) or
proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer and against
amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office((;)) or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a [sesttlement]((settlement)), unless there has
been a determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence((,)) or reckless
disregard of the duties involved in the conduct of his office.
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
[interested persons]((Interested Persons)) of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be such Trustee or officer((,)) and shall inure to
the benefit of the heirs, executors((,)) and administrators of such a
person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise
under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit((,)) or proceeding of the character
described in [paragraph] ((Paragraph)) (a) of this Section 2 may be
paid by the applicable Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the
applicable Series if it is ultimately determined that he is not
entitled to indemnification under this Section 2; provided, however,
that either [(a)] (( (i) )) such Covered Person shall have provided
appropriate security for such undertaking[, (b)]((; (ii) )) the Trust
is insured against losses arising out of any such advance
payments((;)) or [(c)] (( (iii) )) either a majority of the Trustees
who are neither interested persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed
to a trial-type inquiry or full investigation), that there is reason
to believe that such Covered Person will be found entitled to
indemnification under this Section 2.
[SHAREHOLDERS]
((INDEMNIFICATION OF SHAREHOLDERS))
Section 3. In case any Shareholder or former Shareholder of any
Series of the Trust shall be held to be personally liable solely by
reason of his being or having been a Shareholder and not because of
his acts or omissions or for some other reason, the Shareholder or
former Shareholder (or his heirs, executors, administrators((,)) or
other legal representatives or((,)) in the case of a corporation or
other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense
arising from such liability. The Series shall, upon request by the
Shareholder, assume the defense of any claim made against the
Shareholder for any act or obligation of the Series and satisfy any
judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP((, ETC.))
Section 1. It is hereby expressly declared that a trust ((is created
hereby)) and not ((a partnership, joint stock association,
corporation, bailment, or any form of)) a ((legal relationship))
[partnership] ((other)) [is] ((than)) [created] ((a)) [hereby.]
((trust.)) No Trustee hereunder shall have any power to ((personally))
bind [personally] either the Trust's officers or any Shareholder. All
persons extending credit to, contracting with((,)) or having any claim
against the Trust or the Trustees shall look only to the assets of the
appropriate Series for payment under such credit, contract((,)) or
claim; and neither the Shareholders nor the Trustees, nor any of their
agents, whether past, present((,)) or future, shall be personally
liable therefor. Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which the Trustee would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence((,)) or reckless disregard of the duties involved in the
conduct of the office of Trustee hereunder.
[TRUSTEE'S] ((TRUSTEES')) GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY
Section 2. The exercise by the Trustees of their powers and
discretions hereunder in good faith and with reasonable care under the
circumstances then prevailing, shall be binding upon everyone
interested. Subject to the provisions of Section 1 of this Article XII
and to Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1
of this Article XII and to Article XI, shall be under no liability for
any act or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
Section 3. The Trustees may close the stock transfer books of the
Trust for a period not exceeding sixty (60) days preceding the date of
any meeting of Shareholders, or the date for the payment of any
dividends, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect;
or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date[,] not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for
payment of any [dividend] ((dividends)), or the date for the allotment
of rights, or the date when any change or conversion or exchange of
Shares shall go into effect, as a record date for the determination of
the Shareholders entitled to notice of, and to vote at, any such
meeting, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of Shares, and in such case
such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting, or to receive payment of such dividend,
or to receive such allotment or rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any Shares on the
books of the Trust after any such record date fixed or aforesaid.
[TERMINATION OF TRUST]
((DURATION; TERMINATION OF TRUST, A SERIES OR A CLASS;
MERGERS, ETC.))
[Section 4.]
[(a)]((Section 4.1. Duration.)) [This] ((The)) Trust shall continue
without limitation of time((,)) but subject to the provisions [of
sub-section (b)] of this [Section 4] ((Article XII)).
[(b) Subject to a Majority Shareholder Vote of each Series affected
by the matter or, if applicable, to a Majority Shareholder Vote of the
Trust, the Trustees may
(i) sell and convey the assets of the Trust or any affected Series
to another trust, partnership, association or corporation organized
under the laws of any state which is a diversified open-end management
investment company as defined in the 1940 Act, for adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of
beneficial interest or stock of such trust, partnership, association
or corporation; or]
((Section 4.2 Termination of the Trust, a Series or a Class. (a)
Subject to applicable Federal and state law, the Trust or any Series
or Class thereof may be terminated (i) by Majority Shareholder Vote of
the Trust, each Series affected, or each Class affected, as the case
may be; or (ii) without the vote or consent of Shareholders by a
majority of the Trustees either at a meeting or by written consent.
The Trustees shall provide written notice to the affected Shareholders
of a termination effected under clause (ii) above. Upon the
termination of the Trust or the Series or Class,))
[(ii) at any time sell and convert into money all of the assets of
the Trust or any affected Series.]
(((i) the Trust or the Series or Class shall carry on no business
except for the purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the Trust
or the Series or Class, and all of the powers of the Trustees under
this Declaration of Trust shall continue until the affairs of the
Trust shall have been wound up, including the power to fulfill or
discharge the contracts of the Trust or the Series or Class thereof;
collect its assets; sell, convey, assign, exchange, transfer, or
otherwise dispose of all or any part of the remaining Trust property
or Trust property allocated or belonging to such Series or Class to
one or more persons at public or private sale for consideration that
may consist in whole or in part of cash, securities, or other property
of any kind; discharge or pay its liabilities; and do all other acts
appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer, or other disposition of
all or substantially all the Trust property or Trust property
allocated or belonging to such Series or Class (other than as provided
in (iii) below) shall require Shareholder approval in accordance with
Section 4.3 below.))
[Upon making provision for the payment of all such liabilities in
either (i) or (ii), by such assumption or otherwise, the Trustees
shall distribute the remaining proceeds or assets (as the case may be)
ratably among the holders of the Shares of the Trust or any affected
Series then outstanding.]
(((iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust property or the remaining
property of the terminated Series or Class, in cash or in kind or
partly each, among the Shareholders of the Trust or the Series or
Class according to their respective rights.))
[(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in sub-section (b), the Trust or any
affected Series shall terminate and the Trustees shall be discharged
of any and all further liabilities and duties hereunder and the right,
title and interest of all parties shall be cancelled and discharged.]
(((b) After termination of the Trust or the Series or Class and
distribution to the Shareholders as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust and
file with the Secretary of The Commonwealth of Massachusetts, as
appropriate, an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties with respect to the Trust or the
terminated Series or Class, and the rights and interests of all
Shareholders of the Trust or the terminated Series or Class shall
thereupon cease.
Section 4.3. Merger, Consolidation, and Sale of Assets. Subject to
applicable Federal and state law and except as otherwise provided in
Section 4.4 below, the Trust or any Series thereof may merge or
consolidate with any other corporation, association, trust, or other
organization or may sell, lease, or exchange all or substantially all
of the Trust property or Trust property allocated or belonging to such
Series, including its good will, upon such terms and conditions and
for such consideration when and as authorized at any meeting of
Shareholders called for such purpose by a Majority Shareholder Vote of
the Trust or affected Series, as the case may be. Any such merger,
consolidation, sale, lease, or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to Massachusetts
law.
Section 4.4. Incorporation; Reorganization. Subject to applicable
Federal and state law, the Trustees may without the vote or consent of
Shareholders cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any
other trust, partnership, limited liability company, association, or
other organization to take over all of the Trust property or the Trust
property allocated or belonging to such Series or to carry on any
business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust property or the
Trust property allocated or belonging to such Series to any such
corporation, trust, limited liability company, partnership,
association, or organization in exchange for the shares or securities
thereof or otherwise, and to lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such
corporation, trust, partnership, limited liability company,
association, or organization, or any corporation, partnership, limited
liability company, trust, association, or organization in which the
Trust or such Series holds or is about to acquire shares or any other
interest. Subject to applicable Federal and state law, the Trustees
may also cause a merger or consolidation between the Trust or any
successor thereto and any such corporation, trust, partnership,
limited liability company, association, or other organization. Nothing
contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one
or more corporations, trusts, partnerships, limited liability
companies, associations, or other organizations and selling,
conveying, or transferring the Trust property or a portion of the
Trust property to such organization or entities; provided, however,
that the Trustees shall provide written notice to the affected
Shareholders of any transaction whereby, pursuant to this Section 4.4,
the Trust or any Series therof sells, conveys, or transfers
substantially all of its assets to another entity or merges or
consolidates with another entity.))
FILING OF COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each supplemental declaration of trust shall be
filed by the Trustees with the Secretary of [the] ((The)) Commonwealth
of Massachusetts and the Boston City Clerk, as well as any other
governmental office where such filing may from time to time be
required. Anyone dealing with the Trust may rely on a certificate by
an officer or Trustee of the Trust as to whether or not any such
supplemental declarations of trust have been made and as to any
matters in connection with the Trust hereunder, and with the same
effect as if it were the original, may rely on a copy certified by an
officer or Trustee of the Trust to be a copy of this instrument or of
any such supplemental declaration of trust. In this instrument or in
any such supplemental declaration of trust, references to this
instrument[,] and all expressions like "herein," "hereof" and
"hereunder," shall be deemed to refer to this instrument as amended or
affected by any such supplemental declaration of trust. Headings are
placed herein for convenience of reference only and in case of any
conflict, the text of this instrument, rather than the headings, shall
control. This instrument may be executed in any number of counterparts
each of which shall be deemed an original.
APPLICABLE LAW
Section 6. The [trust] ((Trust)) set forth in this instrument is made
in [the] ((The)) Commonwealth of Massachusetts, and it is created
under and is to be governed by and construed and administered
according to the laws of said Commonwealth. The Trust shall be of the
type commonly called a Massachusetts business trust, and without
limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such [a trust] ((a trust, and the
absence of a specific reference herein to any such power, privilege,
or action shall not imply that the Trust may not exercise such power
or privilege or take such actions)).
AMENDMENTS
[Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by
applicable law or this Declaration of Trust in any particular case,
the Trustees shall amend or otherwise supplement this instrument, by
making a declaration of trust supplemental hereto, which thereafter
shall form a part hereof, except that an amendment which shall affect
the Shareholders of one or more Series but not the Shareholders of all
outstanding Series shall be authorized by vote of the Shareholders
holding a majority of the Shares entitled to vote of each Series
affected and no vote of Shareholders of a Series not affected shall be
required. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder vote.
Copies of the supplemental declaration of trust shall be filed as
specified in Section 5 of this Article XII.]
((Section 7. Except as specifically provided herein, the Trustees
may, without shareholder vote, amend or otherwise supplement this
Declaration of Trust by making an amendment, a Declaration of Trust
supplemental hereto or an amended and restated Declaration of Trust.
Shareholders shall have the right to vote (a) on any amendment that
would affect their right to vote granted in Section 1 of Article VIII;
(b) on any amendment that would alter the maximum number of Trustees
permitted under Section 6 of Article IV; (c) on any amendment to this
Section 7; (d) on any amendment as may be required by law or by the
Trust's registration statement filed with the Commission; and (e) on
any amendment submitted to them by the Trustees. Any amendment
required or permitted to be submitted to Shareholders that, as the
Trustees determine, shall affect the Shareholders of one or more
Series or Classes shall be authorized by vote of the Shareholders of
each Series or Class affected and no vote of shareholders of a Series
or Class not affected shall be required. Notwithstanding anything else
herein, any amendment to Article XI shall not limit the rights to
indemnification or insurance provided therein with respect to action
or omission of Covered Persons prior to such amendment.))
FISCAL YEAR
Section 8. The fiscal year of the Trust shall end on a specified date
as set forth in the Bylaws, ((if any,)) provided, however, that the
Trustees may, without Shareholder approval, change the fiscal year of
the Trust.
USE OF THE WORD "FIDELITY"
Section 9. Fidelity Management & Research Company ("FMR") has
consented to the use by any Series of the Trust of the identifying
word "Fidelity" in the name of any Series of the Trust at some future
date. Such consent is conditioned upon the employment of FMR ((or a
subsidiary or affiliate thereof)) as investment adviser of each Series
of the Trust. As between the Trust and itself, FMR controls the use of
the name of the Trust insofar as such name contains the identifying
word "Fidelity((.))"[.] FMR may from time to time use the identifying
word "Fidelity" in other connections and for other purposes,
including, without limitation, in the names of other investment
companies, corporations((,)) or businesses [which] ((that)) it may
manage, advise, sponsor or own or in which it may have a financial
interest. FMR may require the Trust or any Series thereof to cease
using the identifying word "Fidelity" in the name of the Trust or any
Series thereof if the Trust or any Series thereof ceases to employ FMR
or a subsidiary or affiliate thereof as investment adviser.
((Provisions in Conflict with Law or Regulations.
Section 10. (a) The provisions of this Declaration of Trust are
severable, and, if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue
Code or with other applicable laws and regulations, the conflicting
provision shall be deemed never to have constituted a part of this
Declaration of Trust; provided, however, that such determination shall
not affect any of the remaining provisions of this Declaration of
Trust or render invalid or improper any action taken or omitted prior
to such determination.
(b) If any provision of this Declaration Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any
other jurisdiction or any other provision of this Declaration of Trust
in any jurisdiction.))
IN WITNESS WHEREOF, the undersigned, being all [of] the [initial]
Trustees of the Trust, have executed this instrument [as of the]
((this)) [date] ((____)) [first] ((day of)) [written] ((____)) [above]
((1998.)).
SIGNATURE LINES OMITTED
EXHIBIT 2
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
COMMENTS IN {CURLED BRACKETS} ARE NOT PART OF THE CONTRACT
FORM OF
MANAGEMENT CONTRACT
BETWEEN
VARIABLE INSURANCE PRODUCTS FUND
{NAME OF EACH PORTFOLIO OMITTED}
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION made] ((AGREEMENT AMENDED and RESTATED as of)) this
[1st day of January, 1993,](( ___ day of __________1998)), by and
between Variable Insurance Products Fund, a Massachusetts business
trust [that] ((which)) may issue one or more series of shares of
beneficial interest (hereinafter called the "Fund"), on behalf of
{NAME OF EACH PORTFOLIO OMITTED}[,] (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser") ((as set
forth in its entirety below)).
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [January 1, 1990] [January 1, 1987, modified
December 1, 1987 and January 1, 1990 {in the case of Overseas
Portfolio}] ((January 1, 1993)) to a modification of said Contract in
the manner set forth below. The [Modified]((Amended)) Management
Contract shall, when executed by duly authorized officers of the Fund
and [the] Adviser, take effect on [the first day of the month
following approval]((_______, 1998)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act")((,)) and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The [Fund's] 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. [Management Fee.] The Adviser will be compensated on the following
basis for the services and facilities to be furnished hereunder. The
Adviser shall receive a monthly management fee, payable monthly as
soon as practicable after the last day of each month ((, composed of a
Group Fee and an Individual Fund Fee.)) [which shall be computed as
follows:]
(a) Group Fee Rate. The Group [fee rate] ((Fee Rate)) shall be based
upon the monthly average of the net assets of the registered
investment companies having Advisory and Service or Management
Contracts with the Adviser (computed in the manner set forth in the
[charter of each investment company] ((Fund's Declaration of Trust or
other organizational document))) determined as of the close of
business on each business day throughout the month. The [group fee
rate] ((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 .52((00))%
3 - 6 .49((00))
6 - 9 .46((00))
9 - 12 .43((00))
12 - 15 .40((00))
15 - 18 .385((0))
18 - 21 .37((00))
21 - 24 .36((00))
24 - 30 .35((00))
30 - 36 .345((0))
36 - 42 .34((00))
42 - 48 .335((0))
48 - 66 .325((0))
66 - 84 .320((0))
84 - 102 .315((0))
102 - 138 .310((0))
138 - 174 .305((0))
174 - [200]((210)) .300((0))
[OVER 200] [.300]
((210)) - ((246)) ((.2950))
((246)) - ((282)) ((.2900))
((282)) - ((318)) ((.2850))
((318)) - ((354)) ((.2800))
((354)) - ((390)) ((.2750))
((390)) - ((426)) ((.2700))
((426)) - ((462)) ((.2650))
((462)) - ((498)) ((.2600))
((498)) - ((534)) ((.2550))
((OVER)) ((534)) ((.2500))
(b) Individual Fund Fee Rate. The Individual [fund fee rate] ((Fund
Fee Rate)) shall be {0.20% in the case of Equity-Income Portfolio,
0.30% in the case of Growth Portfolio, and 0.45% in the case of High
Income Portfolio}.
The sum of the Group [fee rate] ((Fee Rate)), calculated as described
above to the nearest millionth, and the Individual Fund [fee rate]
((Fee Rate)) shall constitute the [annual management fee rate]
((Annual Management Fee Rate)). One-twelfth of the [annual management
fee rate] ((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 [of the Fund] ((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 ((or other investment
instrument)).
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until July
31, [1993] ((1999)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent[, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
((or other organizational document)) and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust ((or other organizational document)) are separate
and distinct from those of any and all other [Funds]((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 [SEC] ((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.
VARIABLE INSURANCE PRODUCTS FUND
on behalf of {Name Of Each Portfolio Omitted}
Signature Lines Omitted
EXHIBIT 3
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
VARIABLE INSURANCE PRODUCTS FUND
HIGH INCOME PORTFOLIO
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made this [1st day of January, 1994,]
((___ day of __________1998)), by and between Variable Insurance
Products Fund, a Massachusetts business trust [that] ((which)) may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of High Income Portfolio[,] (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser") ((as set
forth in its entirety below.))
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [January 1, 1990 and modified January 1,
1993] ((January 1, 1994,)) to a modification of said Contract in the
manner set forth below. The [Modified] ((Amended)) Management Contract
shall, when executed by duly authorized officers of the Fund and [the]
Adviser, take effect on [the first day of the month following
approval]((__________, 1998)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act") and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio'
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 [Fund's] 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. [Management Fee.] The Adviser will be compensated on the following
basis for the services and facilities to be furnished hereunder. The
Adviser shall receive a monthly management fee, payable monthly as
soon as practicable after the last day of each month((, composed of a
Group Fee and an Individual Fund Fee.)) [which shall be computed as
follows:]
(a) Group Fee Rate. The Group [fee rate]((Fee Rate)) shall be based
upon the monthly average of the net assets of the registered
investment companies having Advisory and Service or Management
Contracts with the Adviser (computed in the manner set forth in the
[charter of each investment company] ((Fund's Declaration of Trust or
other organizational document))) determined as of the close of
business on each business day throughout the month. The [group fee
rate] ((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 [0].37((00))%
3 - 6 [0].34((00))
6 - 9 [0].31((00))
9 - 12 [0].28((00))
12 - 15 [0].25((00))
15 - 18 [0].22((00))
18 - 21 [0].20((00))
21 - 24 [0].19((00))
24 - 30 [0].18((00))
30 - 36 [0].175((0))
36 - 42 [0].17((00))
42 - 48 [0].165((0))
48 - 66 [0].16((00))
66 - 84 [0].155((0))
84 - 120 [0].15((00))
[120 - 174] [0.1450]
[174 - 228] [0.140]
[228 - 282] [0.1375]
[282 - 336] [0.1350]
[OVER 336] [0.1325]
((120 - 156)) ((.1450))
((156 - 192)) ((.1400))
((192 - 228)) ((.1350))
((228 - 264)) ((.1300))
((264 - 300)) ((.1275))
((300 - 336)) ((.1250))
((336 - 372)) ((.1225))
((372 - 408)) ((.1200))
((408 - 444)) ((.1175))
((444 - 480)) ((.1150))
((480 - 516)) ((.1125))
((OVER 516)) ((.1100))
(b) Individual Fund Fee Rate. The Individual [fund fee rate] ((Fund
Fee Rate)) shall be ((0)).45%.
The sum of the Group [fee rate] ((Fee Rate)), calculated as described
above to the nearest millionth, and the Individual Fund [fee rate]
((Fee Rate)) shall constitute the [annual management fee rate]
((Annual Management Fee Rate)). One-twelfth of the [annual management
fee rate] ((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 [of the Fund] ((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 ((or other investment
instrument)).
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until [June
30,1994] ((June 30, 1999)), and indefinitely thereafter, but only so
long as the continuance after such date shall be specifically approved
at least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent[, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 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 [Funds] ((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.
VARIABLE INSURANCE PRODUCTS FUND
on behalf of High Income Portfolio
SIGNATURE LINES OMITTED
EXHIBIT 4
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
VARIABLE INSURANCE PRODUCTS FUND
MONEY MARKET PORTFOLIO
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION made] ((AGREEMENT AMENDED AND RESTATED as of)) this
[1st day of January, 1994] ((___day of_________ 1998,)) by and between
Variable Insurance Products Fund, a Massachusetts business trust
[that] ((which)) may issue one or more series of shares of beneficial
interest (hereinafter called the "Fund"), on behalf of Money Market
Portfolio[,] (hereinafter called the "Portfolio"), and Fidelity
Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser") ((as set forth in its entirety
below)).
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [January 1, 1987] ((January 1, 1994)) to a
modification of said Contract in the manner set forth below. The
[Modified] ((Amended)) Management Contract shall, when executed by
duly authorized officers of the Fund and [the] Adviser, take effect on
[the first day of the month following approval.] ((________, 1998.))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act") and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform(( ) )) or arrange
for the performance by its affiliates of(( ) )) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (( ) )) which may be its own(( ) )) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations
with, and monitoring the performance of custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters,
brokers and dealers, insurers and other persons in any capacity deemed
to be necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio'((s))
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The [Fund's] 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,
an Individual Fund Fee, and an Income Component.
(a) Group Fee Rate. The Group [fee rate] ((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
[Portfolio's] ((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] ((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 [0].37((00))%
3 - 6 [0].34((00))
6 - 9 [0].31((00))
9 - 12 [0].28((00))
12 - 15 [0].25((00))
15 - 18 [0].22((00))
18 - 21 [0].20((00))
21 - 24 [0].19((00))
24 - 30 [0].18((00))
30 - 36 [0].175((0))
36 - 42 [0].17((00))
42 - 48 [0].165((0))
48 - 66 [0].16((00))
66 - 84 [0].155((0))
84 - 120 [0].15((00))
[120 - 174] [0.1450]
[174 - 228] [0.140]
[228 - 282] [0.1375]
[282 - 336] [0.1350]
[OVER 336] [0.1325]
((120 - 156)) ((.1450))
((156 - 192)) ((.1400))
((192 - 228)) ((.1350))
((228 - 264)) ((.1300))
((264 - 300)) ((.1275))
((300 - 336)) ((.1250))
((336 - 372)) ((.1225))
((372 - 408)) ((.1200))
((408 - 444)) ((.1175))
((444 - 480)) ((.1150))
((480 - 516)) ((.1125))
((OVER 516)) ((.1100))
(b) Individual Fund Fee Rate. The Individual Fund [fee rate] ((Fee
Rate)) shall be ((0)).03%.
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 Fund 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 the 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
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
[other than those expressly stated to be payable by the Adviser
hereunder,] which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities
laws; (vii) expenses of printing and mailing reports and notices and
proxy material to shareholders of the Portfolio; (viii) all other
expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or
Management Contracts with the Adviser of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument)).
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until May
31, [1994] ((1999)), and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent[, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or ((any)) other Portfolios of the Fund.
In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other [Funds] ((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.
VARIABLE INSURANCE PRODUCTS FUND
on behalf of Money Market Portfolio
SIGNATURE LINES OMITTED
EXHIBIT 5
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
GROWTH
FIDELITY FIFTY ((POUND)) 6/30/97 $ 152.4 0.45%
ADVISOR FOCUS FUNDS:
CONSUMER INDUSTRIES: ((POUND))**
CLASS A 7/31/97 0.7 0.60(DAGGER)
CLASS T 7/31/97 3.9 0.60(DAGGER)
CLASS B 7/31/97 0.3 0.60(DAGGER)
CLASS C ((HOLLOW DIAMOND)) 7/31/98 0.3 0.60(DAGGER)
INSTITUTIONAL CLASS 7/31/97 1.1 0.60(DAGGER)
CYCLICAL INDUSTRIES: ((POUND))**
CLASS A 7/31/97 0.2 0.60(DAGGER)
CLASS T 7/31/97 1.1 0.60(DAGGER)
CLASS B 7/31/97 0.1 0.60(DAGGER)
CLASS C ((HOLLOW DIAMOND))((SUNBURST)) 7/31/98 0.0 0.60(DAGGER)*
INSTITUTIONAL CLASS 7/31/97 4.1 0.60(DAGGER)
FINANCIAL SERVICES: ((POUND))**
CLASS A 7/31/97 2.9 0.60(DAGGER)
CLASS T 7/31/97 22.0 0.60(DAGGER)
CLASS B 7/31/97 3.3 0.60(DAGGER)
CLASS C ((HOLLOW DIAMOND)) 7/31/98 5.3 0.60(DAGGER)
INSTITUTIONAL CLASS 7/31/97 2.2 0.60(DAGGER)
HEALTH CARE: ((POUND))**
CLASS A 7/31/97 2.9 0.60(DAGGER)
CLASS T 7/31/97 22.5 0.60(DAGGER)
CLASS B 7/31/97 2.4 0.60(DAGGER)
CLASS C ((HOLLOW DIAMOND)) 7/31/98 3.9 0.60(DAGGER)
INSTITUTIONAL CLASS 7/31/97 2.7 0.60(DAGGER)
NATURAL RESOURCES: ((POUND))**
CLASS A 7/31/97 4.5 0.60(DAGGER)
CLASS T 7/31/97 634.0 0.60(DAGGER)
CLASS B 7/31/97 49.4 0.60(DAGGER)
CLASS C ((HOLLOW DIAMOND)) 7/31/98 1.1 0.60(DAGGER)
INSTITUTIONAL CLASS 7/31/97 10.8 0.60(DAGGER)
ADVISOR FOCUS FUNDS:
- -CONTINUED
TECHNOLOGY: ((POUND))**
CLASS A 7/31/97 $ 3.6 0.60%(DAGGER)
CLASS T 7/31/97 25.8 0.60(DAGGER)
CLASS B 7/31/97 2.2 0.60(DAGGER)
CLASS C ((HOLLOW DIAMOND)) 7/31/98 2.1 0.60(DAGGER)
INSTITUTIONAL CLASS 7/31/97 1.6 0.60(DAGGER)
UTILITIES GROWTH: ((POUND))**
CLASS A 7/31/97 0.4 0.60(DAGGER)
CLASS T 7/31/97 3.8 0.60(DAGGER)
CLASS B 7/31/97 0.8 0.60(DAGGER)
CLASS C ((HOLLOW DIAMOND)) 7/31/98 1.2 0.60(DAGGER)*
INSTITUTIONAL CLASS 7/31/97 1.8 0.60(DAGGER)
BLUE CHIP GROWTH ((POUND)) 7/31/97 10,047.1 0.51
LOW-PRICED STOCK ((POUND)) 7/31/97 6,107.7 0.76
OTC PORTFOLIO ((POUND)) 7/31/97 3,330.0 0.56
EXPORT AND MULTINATIONAL FUND 8/31/97 415.7 0.60
((POUND))
ADVISOR KOREA FUND, INC. ((PSI)) 9/30/97 49.9 1.00
DESTINY I ((POUND)) 9/30/97 5,260.4 0.36
DESTINY II ((POUND)) 9/30/97 3,074.7 0.50
ADVISOR EMERGING ASIA FUND, 10/31/97 130.4 1.16
INC. ((PSI))
ADVISOR OVERSEAS: ((EPSLON))
CLASS A 10/31/97 2.6 0.81
CLASS T 10/31/97 1,112.8 0.81
CLASS B 10/31/97 29.0 0.81
CLASS C ((HOLLOW DIAMOND)) 10/31/98** 6.4 0.81*
INSTITUTIONAL CLASS 10/31/97 30.4 0.81
CANADA ((EPSLON)) 10/31/97 127.5 0.39
CAPITAL APPRECIATION ((POUND)) 10/31/97 1,773.3 0.41
DISCIPLINED EQUITY ((POUND)) 10/31/97 2,212.1 0.44
DIVERSIFIED INTERNATIONAL ((EPSLON)) 10/31/97 1,106.3 0.83
EMERGING MARKETS ((EPSLON)) 10/31/97 1,049.2 0.75
EUROPE ((EPSLON)) 10/31/97 874.8 0.78
EUROPE CAPITAL APPRECIATION 10/31/97 335.4 0.65
((EPSLON))
FRANCE ((EPSLON)) 10/31/97 6.3 0.00*
GERMANY ((EPSLON)) 10/31/97 11.9 0.48*
HONG KONG AND CHINA ((REX-ALL)) 10/31/97 217.5 0.75
INTERNATIONAL VALUE ((REX-ALL)) 10/31/97 305.5 0.85
JAPAN ((REX-ALL)) 10/31/97 295.1 0.93
JAPAN SMALL COMPANIES ((REX-ALL)) 10/31/97 $ 94.1 0.75%
LATIN AMERICA ((EPSLON)) 10/31/97 868.0 0.75
NORDIC ((EPSLON))** 10/31/97 68.5 0.75
OVERSEAS ((EPSLON)) 10/31/97 3,574.3 0.84
PACIFIC BASIN ((REX-ALL)) 10/31/97 347.5 0.70
SOUTHEAST ASIA ((REX-ALL) 10/31/97 584.7 0.76
STOCK SELECTOR ((POUND)) 10/31/97 1,738.2 0.47
TECHNOQUANT GROWTH** 10/31/97 63.4 0.59(DAGGER)
UNITED KINGDOM ((EPSLON)) 10/31/97 5.1 0.00*
VALUE ((POUND)) 10/31/97 7,464.9 0.46
WORLDWIDE ((EPSLON)) 10/31/97 1,067.5 0.75
ADVISOR EQUITY GROWTH: ((POUND))
CLASS A 11/30/97 14.6 0.60
CLASS T 11/30/97 3,860.7 0.60
CLASS B 11/30/97 31.7 0.60
CLASS C 11/30/97 0.5 0.60
INSTITUTIONAL CLASS 11/30/97 1,154.7 0.60
ADVISOR GROWTH OPPORTUNITIES:
((POUND))
CLASS A 11/30/97 136.1 0.52(DAGGER)
CLASS T 11/30/97 20,087.8 0.52(DAGGER)
CLASS B 11/30/97 395.4 0.52(DAGGER)
CLASS C 11/30/97 2.9 0.52(DAGGER)
INSTITUTIONAL CLASS 11/30/97 384.3 0.52(DAGGER)
ADVISOR LARGE CAP: ((POUND))
CLASS A 11/30/97 1.5 0.60
CLASS T 11/30/97 35.8 0.60
CLASS B 11/30/97 16.1 0.60
CLASS C ((SUNBURST)) 11/30/97 0.0 0.60
INSTITUTIONAL CLASS 11/30/97 7.7 0.60
ADVISOR MID CAP: ((POUND))
CLASS A 11/30/97 2.6 0.60
CLASS T 11/30/97 266.9 0.60
CLASS B 11/30/97 43.5 0.60
CLASS C 11/30/97 0.1 0.60
INSTITUTIONAL CLASS 11/30/97 52.0 0.60
ADVISOR STRATEGIC
OPPORTUNITIES: ((POUND))
CLASS A 11/30/97 $ 1.1 0.40%(DAGGER)
CLASS T 11/30/97 494.6 0.40(DAGGER)
CLASS B 11/30/97 99.5 0.40(DAGGER)
INSTITUTIONAL CLASS 11/30/97 5.9 0.40(DAGGER)
INITIAL CLASS 11/30/97 20.5 0.40(DAGGER)
ADVISOR TECHNOQUANT
GROWTH: ((POUND))
CLASS A 11/30/97 4.1 0.60
CLASS T 11/30/97 13.0 0.60
CLASS B 11/30/97 6.4 0.60
CLASS C ((SUNBURST)) 11/30/97 0.0 0.60
INSTITUTIONAL CLASS 11/30/97 1.3 0.60
EMERGING GROWTH ((POUND)) 11/30/97 1,907.1 0.77
GROWTH COMPANY ((POUND)) 11/30/97 10,175.2 0.47
NEW MILLENNIUM ((POUND)) 11/30/97 1,437.9 0.74
RETIREMENT GROWTH ((POUND)) 11/30/97 4,042.6 0.41
CONGRESS STREET 12/31/97 86.8 0.45
CONTRAFUND ((POUND)) 12/31/97 27,817.1 0.48
EXCHANGE 12/31/97 291.8 0.54
TREND ((POUND)) 12/31/97 1,442.4 0.42
VARIABLE INSURANCE PRODUCTS:
GROWTH
INITIAL CLASS 12/31/97 6,937.2 0.60
SERVICE CLASS 12/31/97 0.6 0.60
OVERSEAS ((EPSLON))
INITIAL CLASS 12/31/97 1,917.4 0.75
SERVICE CLASS 12/31/97 0.3 0.75
VARIABLE INSURANCE PRODUCTS II:
ASSET MANAGER: GROWTH ((POUND))
INITIAL CLASS 12/31/97 389.5 0.60
SERVICE CLASS ((SUNBURST)) 12/31/97 0.0 0.60
CONTRAFUND ((POUND))
INITIAL CLASS 12/31/97 3,294.9 0.60
SERVICE CLASS 12/31/97 1.4 0.60
VARIABLE INSURANCE PRODUCTS III:
GROWTH OPPORTUNITIES ((POUND))
INITIAL CLASS 12/31/97 703.1 0.60
SERVICE CLASS 12/31/97 0.7 0.60
SELECT PORTFOLIOS:
AIR TRANSPORTATION ((POUND)) 2/28/98 $ 62.7 0.60%
AMERICAN GOLD 2/28/98 279.5 0.60
AUTOMOTIVE ((POUND)) 2/28/98 62.2 0.59
BIOTECHNOLOGY ((POUND)) 2/28/98 577.4 0.60
BROKERAGE AND INVESTMENT 2/28/98 416.4 0.60
MANAGEMENT ((POUND))
BUSINESS SERVICES AND 2/28/98 7.1 0.60((ITALIC B))
OUTSOURCING ((POUND))
CHEMICALS ((POUND)) 2/28/98 83.4 0.60
COMPUTERS ((POUND)) 2/28/98 658.0 0.60
CONSTRUCTION AND 2/28/98 26.0 0.60
HOUSING ((POUND))
CONSUMER INDUSTRIES ((POUND)) 2/28/98 26.5 0.61
CYCLICAL INDUSTRIES ((POUND)) 2/28/98 3.6 0.00*
DEFENSE AND AEROSPACE ((POUND)) 2/28/98 63.9 0.60
DEVELOPING COMMUN- 2/28/98 238.7 0.60
ICATIONS ((POUND))
ELECTRONICS ((POUND)) 2/28/98 2,374.6 0.60
ENERGY ((POUND)) 2/28/98 191.3 0.59
ENERGY SERVICE ((POUND)) 2/28/98 964.1 0.59
ENVIRONMENTAL SERVICES ((POUND)) 2/28/98 27.8 0.60
FINANCIAL SERVICES ((POUND)) 2/28/98 468.5 0.60
FOOD AND AGRICULTURE ((POUND)) 2/28/98 247.0 0.60
HEALTH CARE ((POUND)) 2/28/98 1,590.8 0.60
HOME FINANCE ((POUND)) 2/28/98 1,334.7 0.60
INDUSTRIAL EQUIPMENT ((POUND)) 2/28/98 60.1 0.60
INDUSTRIAL MATERIALS ((POUND)) 2/28/98 29.9 0.60
INSURANCE ((POUND)) 2/28/98 110.4 0.60
LEISURE ((POUND)) 2/28/98 142.1 0.60
MEDICAL DELIVERY ((POUND)) 2/28/98 159.1 0.60
MEDICAL EQUIPMENT AND 2/28/99** 6.9 0.60((ITALIC B))
SYSTEMS ((POUND))((HOLLOW DIAMOND))
MULTIMEDIA ((POUND)) 2/28/98 59.1 0.60
NATURAL GAS ((POUND)) 2/28/98 82.3 0.59
NATURAL RESOURCES ((POUND)) 2/28/98 6.4 0.00*
PAPER AND FOREST 2/28/98 24.2 0.60
PRODUCTS ((POUND))
PRECIOUS METALS AND 2/28/98 194.7 0.60
MINERALS ((POUND))
REGIONAL BANKS ((POUND)) 2/28/98 1,035.6 0.60
RETAILING ((POUND)) 2/28/98 $ 152.9 0.60%
SOFTWARE AND COMPUTER 2/28/98 434.9 0.60
SERVICES ((POUND))
TECHNOLOGY ((POUND)) 2/28/98 552.2 0.60
TELECOMMUNICATIONS ((POUND)) 2/28/98 413.4 0.60
TRANSPORTATION ((POUND)) 2/28/98 57.4 0.59
UTILITIES GROWTH ((POUND)) 2/28/98 273.5 0.60
MAGELLAN ((POUND)) 3/31/98 61,521.2 0.43
LARGE CAP STOCK ((POUND)) 4/30/98 133.9 0.45
MID CAP STOCK ((POUND)) 4/30/98 1,579.2 0.60
SMALL CAP STOCK ((POUND))** 4/30/98 383.2 0.35(DAGGER)*
SMALL CAP STOCK SELECTOR ((POUND)) 4/30/98 727.3 0.67
CONTRAFUND II ((POUND))((HOLLOW DIAMOND)) 6/30/98** 194.6 0.72(DAGGER)
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of May 31, 1998, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets
of each fund at the close of business on each business day throughout
its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*).
(dagger) Annualized
((sunburst)) Average net assets for the period shown were less than
$100,000
** Less than a complete fiscal year
((italic B)) Based on estimated expenses
((Rex-all)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management &
Research (Far East) Inc. (FMR Far East), Fidelity Investments Japan
Ltd. (FIJ), Fidelity International Investment Advisors (FIIA), and
Fidelity International Investment Advisors (U.K.) Limited
(FIIA(U.K.)L), with respect to the fund.
((epslon)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: FMR U.K., FMR
Far East, FIIA, and FIIA(U.K.)L, with respect to the fund.
((pound)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect
to the fund.
((psi)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FIIA and FIJ, with respect to the fund.
((hollow diamond)) The ratio of net advisory fees to average net
assets paid to FMR represents the amount as of the prior fiscal year
end. Updated ratios will be presented for each class of shares of the
fund when the next fiscal year end figures are available.
EXHIBIT 6
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
GROWTH AND INCOME
FIDELITY FUND ((POUND)) 6/30/97 $ 4,503.9 0.39%
BALANCED ((POUND)) 7/31/97 3,927.2 0.45
DIVIDEND GROWTH ((POUND)) 7/31/97 2,674.3 0.65
GLOBAL BALANCED ((REX-ALL)) 7/31/97 76.2 0.75
GROWTH & INCOME ((POUND)) 7/31/97 25,463.2 0.50
PURITAN ((POUND)) 7/31/97 19,047.2 0.45
ADVISOR BALANCED: ((POUND))
CLASS A 10/31/97 4.3 0.45*
CLASS B 10/31/97 7.7 0.45
CLASS T 10/31/97 2,909.7 0.45
CLASS C ((HOLLOW DIAMOND)) 10/31/98** 4.7 0.45
INSTITUTIONAL CLASS 10/31/97 28.2 0.45
INTERNATIONAL GROWTH & INCOME ((REX-ALL)) 10/31/97 1,090.1 0.75
ADVISOR EQUITY INCOME: ((POUND))
CLASS A 11/30/97 12.9 0.50*
CLASS B 11/30/97 586.4 0.50*
CLASS T 11/30/97 1,928.3 0.50
CLASS C 11/30/97 0.3 0.50*
INSTITUTIONAL CLASS 11/30/97 459.4 0.50
ADVISOR GROWTH & INCOME: ((POUND))
CLASS A 11/30/97 2.8 0.50*
CLASS B 11/30/97 12.9 0.50*
CLASS T 11/30/97 55.6 0.50
CLASS C 11/30/97 0.2 0.50*
INSTITUTIONAL CLASS 11/30/97 13.5 0.50
CONVERTIBLE SECURITIES ((POUND)) 11/30/97 1,080.2 0.46
EQUITY-INCOME II ((POUND)) 11/30/97 15,981.8 0.50
VARIABLE INSURANCE PRODUCTS:
EQUITY-INCOME
INITIAL CLASS 12/31/97 8,495.3 0.50
SERVICE CLASS 12/31/97 1,479.1 0.50
VARIABLE INSURANCE PRODUCTS II:
ASSET MANAGER ((POUND))
INITIAL CLASS 12/31/97 4,020.8 0.55
SERVICE CLASS ((SUNBURST)) 12/31/97 0.0 0.55
INDEX 500 12/31/97 1,493.1 0.15*
VARIABLE INSURANCE PRODUCTS III:
BALANCED PORTFOLIO ((POUND))
INITIAL CLASS 12/31/97 $ 162.0 0.45%
SERVICE CLASS ((SUNBURST)) 12/31/97 0.0 0.45
GROWTH & INCOME ((POUND))
INITIAL CLASS 12/31/97 174.8 0.49
SERVICE CLASS (SUNBURST)) 12/31/97 0.0 0.49
EQUITY-INCOME ((POUND)) 1/31/98 18,442.4 0.46
REAL ESTATE INVESTMENT ((POUND)) 1/31/98 2,267.1 0.60
UTILITIES FUND ((POUND)) 1/31/98 1,333.6 0.60
SPARTAN U.S. EQUITY INDEX 2/28/98 8,560.9 0.19*
SPARTAN MARKET INDEX 4/30/98 3,734.1 0.19*
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of May 31, 1998, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets
of each fund at the close of business on each business day throughout
its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*).
** Less than a complete fiscal year
((sunburst)) Average net assets for the period shown were less than
$100,000
((Rex-all)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management &
Research (Far East) Inc. (FMR Far East), Fidelity Investments Japan
Ltd. (FIJ), Fidelity International Investment Advisors (FIIA), and
Fidelity International Investment Advisors (U.K.) Limited (FIIA (U.K.)
L), with respect to the fund.
((pound)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect
to the fund.
((hollow diamond)) The ratio of net advisory fees to average net
assets paid to FMR represents the amount as of the prior fiscal year
end. Updated ratios will be presented for each class of shares of the
fund when the next fiscal year end figures are available.
EXHIBIT 7
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
TAXABLE BOND
THE NORTH CAROLINA CAPITAL
MANAGEMENT TRUST:
TERM PORTFOLIO 6/30/97 $ 66.5 0.36%
GINNIE MAE ((POUND)) 7/31/97 794.2 0.44
SPARTAN LIMITED MATURITY 7/31/97 702.1 0.54*
GOVERNMENT ((POUND))
TARGET TIMELINE FUNDS: ((POUND))
1999 7/31/97 9.7 0.00*
2001 7/31/97 8.2 0.00*
2003 7/31/97 10.6 0.00*
SPARTAN GINNIE MAE 8/31/97 461.8 0.51*
GOVERNMENT SECURITIES 9/30/97 978.5 0.44
SHORT-INTERMEDIATE GOVERNMENT 9/30/97 122.2 0.44
SPARTAN INVESTMENT GRADE BOND ((POUND)) 9/30/97 404.0 0.48*
SPARTAN SHORT-TERM BOND ((POUND)) 9/30/97 306.6 0.50*
ADVISOR MORTGAGE SECURITIES:
CLASS A 10/31/97 1.6 0.4 4*
CLASS B 10/31/97 1.2 0.4 4*
CLASS T 10/31/97 13.0 0.4 4*
INSTITUTIONAL CLASS 10/31/97 15.2 0.4 4*
INITIAL CLASS 10/31/97 497.7 0.44
ADVISOR GOVERNMENT INVESTMENT:
CLASS A 10/31/97 0.7 0.44*
CLASS B 10/31/97 17.3 0.44*
CLASS T 10/31/97 171.0 0.44*
CLASS C ((HOLLOW DIAMOND)) 10/31/98** 1.3 0.44*
INSTITUTIONAL CLASS 10/31/97 22.0 0.44*
ADVISOR HIGH YIELD: ((POUND))
CLASS A 10/31/97 19.7 0.59
CLASS B 10/31/97 460.7 0.59
CLASS T 10/31/97 1,972.7 0.59
CLASS C ((HOLLOW DIAMOND)) 10/31/98** 82.8 0.59
INSTITUTIONAL CLASS 10/31/97 54.6 0.59
ADVISOR SHORT FIXED-INCOME: ((POUND))
CLASS A 10/31/97 $ 3.1 0.44%*
CLASS T 10/31/97 380.2 0.44
CLASS C ((HOLLOW DIAMOND)) 10/31/98** 0.8 0.44*
INSTITUTIONAL CLASS 10/31/97 5.9 0.44*
ADVISOR INTERMEDIATE BOND: ((POUND))
CLASS A 11/30/97 2.1 0.44*
CLASS B 11/30/97 19.6 0.44*
CLASS T 11/30/97 262.1 0.44
CLASS C ((SUNBURST)) 11/30/97 0.0 0.44*
INSTITUTIONAL CLASS 11/30/97 192.5 0.44
INSTITUTIONAL SHORT-INTERMEDIATE 11/30/97 342.8 0.45
GOVERNMENT
REAL ESTATE HIGH INCOME 11/30/97 46.1 0.74
ADVISOR EMERGING MARKETS
INCOME: ((REX-ALL))
CLASS A 12/31/97 1.3 0.69*
CLASS B 12/31/97 22.3 0.69
CLASS T 12/31/97 92.2 0.69
CLASS C ((SUNBURST)) 12/31/97 0.0 0.69*
INSTITUTIONAL CLASS 12/31/97 3.6 0.69*
ADVISOR STRATEGIC INCOME: ((REX-ALL))
CLASS A 12/31/97 1.7 0.59*
CLASS B 12/31/97 45.5 0.59
CLASS T 12/31/97 110.6 0.59
CLASS C 12/31/97 0.3 0.59*
INSTITUTIONAL CLASS 12/31/97 6.2 0.59*
GLOBAL BOND ((EPSLON)) 12/31/97 92.5 0.69
NEW MARKETS INCOME ((REX-ALL)) 12/31/97 386.4 0.69
REAL ESTATE HIGH INCOME II 12/31/97 73.9 0.74
VARIABLE INSURANCE PRODUCTS:
HIGH INCOME ((POUND))
INITIAL CLASS 12/31/97 1,936.9 0.59
SERVICE CLASS ((SUNBURST)) 12/31/97 0.0 0.59
VARIABLE INSURANCE PRODUCTS II:
INVESTMENT GRADE BOND 12/31/97 262.9 0.44
U.S. BOND INDEX 2/2 8 /98 632.8 0.32*
CAPITAL & INCOME ((POUND)) 4/30/98 2,144.9 0.59
INTERMEDIATE BOND ((POUND)) 4/30/98 3,139.1 0.44
INVESTMENT GRADE BOND ((POUND)) 4/30/98 $ 1,617.5 0.44%
SHORT-TERM BOND ((POUND)) 4/30/98 883.0 0.44
SPARTAN GOVERNMENT INCOME 4/30/98 275.9 0.60*
SPARTAN HIGH INCOME ((POUND)) 4/30/98 2,412.2 0.80
SPARTAN SHORT-INTERMEDIATE 4/30/98 72.8 0.65
GOVERNMENT
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of May 31, 1998, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets
of each fund at the close of business on each business day throughout
its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*).
** Less than a complete fiscal year
((sunburst)) Average net assets for the period shown were less than
$100,000
((Rex-all)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management &
Research (Far East) Inc. (FMR Far East), Fidelity Investments Japan
Ltd. (FIJ), Fidelity International Investment Advisors (FIIA), and
Fidelity International Investment Advisors (U.K.) Limited (FIIA(U.K.)
L), with respect to the fund.
((epslon)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: FMR U.K., FMR
Far East, FIIA, and FIIA (U.K.) L, with respect to the fund.
((pound)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect
to the fund.
((hollow diamond)) The ratio of net advisory fees to average net
assets paid to FMR represents the amount as of the prior fiscal year
end. Updated ratios will be presented for each class of shares of the
fund when the next fiscal year end figures are available.
EXHIBIT 8
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
TAXABLE MONEY MARKET ((YEN))
THE NORTH CAROLINA CAPITAL
MANAGEMENT TRUST:
CASH PORTFOLIO 6/30/97 $ 2,068.9 0.35%
DAILY INCOME TRUST 8/31/97 2,359.0 0.32
MONEY MARKET TRUST:
RETIREMENT GOVERNMENT 8/31/97 2,740.6 0.42
MONEY MARKET
RETIREMENT MONEY MARKET 8/31/97 5,941.5 0.42
RATED MONEY MARKET
CLASS I 9/30/97 304.9 0.20*
CLASS II 9/30/97 10.4 0.20*
CLASS III 9/30/97 34.3 0.20*
PRIME
DAILY MONEY CLASS 10/31/97 2,528.1 0.39*
CAPITAL RESERVES CLASS 10/31/97 1,737.8 0.39
TREASURY
DAILY MONEY CLASS 10/31/97 1,442.2 0.41*
CAPITAL RESERVES CLASS 10/31/97 265.8 0.41
ADVISOR B CLASS 10/31/97 23.1 0.41*
ADVISOR C CLASS ((HOLLOW DIAMOND) )
((SUNBURST)) 10/31/98** 0.0 0.41*
U.S. GOVERNMENT RESERVES 11/30/97 1,217.2 0.21
CASH RESERVES 11/30/97 22,411.1 0.21
VIP: MONEY MARKET 12/31/97 1,112.7 0.21
SELECT MONEY MARKET 2/28/98 816.3 0.20
COLCHESTER STREET TRUST:
DOMESTIC PORTFOLIO
CLASS I 3/31/98 1,147.3 0.20*
CLASS II 3/31/98 10.8 0.20*
CLASS III 3/31/98 85.0 0.20*
GOVERNMENT PORTFOLIO
CLASS I 3/31/98 3,407.7 0.20*
CLASS II 3/31/98 115.8 0.20*
CLASS III 3/31/98 692.3 0.20*
MONEY MARKET PORTFOLIO
CLASS I 3/31/98 $ 9,433.6 0.18%*
CLASS II 3/31/98 97.1 0.18*
CLASS III 3/31/98 692.3 0.18*
TREASURY PORTFOLIO
CLASS I 3/31/98 4,786.4 0.20*
CLASS II 3/31/98 293.2 0.20*
CLASS III 3/31/98 3,326.2 0.20*
TREASURY ONLY PORTFOLIO
CLASS I 3/31/98 1,086.2 0.20*
CLASS II 3/31/98 50.6 0.20*
CLASS III 3/31/98 63.7 0.20*
SPARTAN MONEY MARKET 4/30/98 8,943.9 0.45
SPARTAN U.S. GOVERNMENT 4/30/98 792.2 0.45
MONEY MARKET
SPARTAN U.S. TREASURY 4/30/98 1,891.4 0.45
MONEY MARKET
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of May 31, 1998, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets
of each fund or class at the close of business on each business day
throughout its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*).
((sunburst)) Average net assets for the period shown were less than
$100,000
((yen)) Fidelity Management & Research Company has entered into a
sub-advisory agreement with Fidelity Investments Money Manangement
Inc., with respect to each fund.
((hollow diamond)) The ratio of net advisory fees to average net
assets paid to FMR represents the amount as of the prior fiscal year
end. Updated ratios will be presented for each class of shares of the
fund when the next fiscal year end figures are available.
** Less than a complete fiscal year
VIP-PXS-0798 CUSIP#922174305/FUND#150
704822 CUSIP#922174602/FUND#471
CUSIP#922174404/FUND#151
CUSIP#922174701/FUND#472
CUSIP#922174206/FUND#152
CUSIP#922174800/FUND#492
CUSIP#922174107/FUND#153
CUSIP#922174503/FUND#154
CUSIP#922174883/FUND#495
Vote this proxy card TODAY! Your prompt response will
save Variable Insurance Products Fund: Equity-Income Portfolio 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.
- ---------------------------------------------------------------------
- -------------------------
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s)
Edward C. Johnson 3d, Eric D. Roiter, and Robert M. Gates, or any one
or more of them, attorneys, with full power of substitution, to
vote all shares of Variable Insurance Products Fund: Equity-Income
Portfolio (the Fund), which are held in the account of the undersigned
in the Variable Account, at the Special Meeting of persons having a
voting interest in Variable Insurance Products Fund (the Trust), to be
held at the office of the Fund at 82 Devonshire St., Boston, MA 02109,
on September 16, 1998, at 9:00 a.m. and at any adjournments thereof.
This proxy shall be voted on the proposals described in the
Proxy Statement as specified on the reverse side. Receipt of the
Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 922174305/fund#150
cusip # 922174602/fund#471
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- ---------------------------------------------------------------------
- -------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. TO ELECT THE TWELVE NOMINEES SPECIFIED BELOW AS [ ] FOR ALL [ ] 1.
TRUSTEES: RALPH F. COX, PHYLLIS BURKE DAVIS, NOMINEES LISTED WITHHOLD
ROBERT M. GATES, EDWARD C. JOHNSON 3D, E. (EXCEPT AS MARKED TO AUTHORITY TO
BRADLEY JONES, DONALD J. KIRK, PETER S. LYNCH, THE CONTRARY BELOW). VOTE FOR ALL
WILLIAM O. MCCOY, GERALD C. MCDONOUGH, MARVIN NOMINEES.
L. MANN, ROBERT C. POZEN, AND THOMAS R.
WILLIAMS.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
_____________________________________________________________________
________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP. AS INDEPENDENT ACCOUNTANTS OF THE FUNDS.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
RESTATED DECLARATION OF TRUST.
4. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
THE FUND.
7. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
CONCERNING DIVERSIFICATION FOR THE FUND.
</TABLE>
VEI-PXC-0698 cusip # 922174305/fund#150
cusip # 922174602/fund#471
Vote this proxy card TODAY! Your prompt response will
save Variable Insurance Products Fund: Growth Portfolio 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.
- ---------------------------------------------------------------------
- -------------------------
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s)
Edward C. Johnson 3d, Eric D. Roiter, and Robert M. Gates, or any one
or more of them, attorneys, with full power of substitution , to
vote all shares of Variable Insurance Products Fund: Growth Portfolio
(the Fund), which are held in the account of the undersigned in the
Variable Account, at the Special Meeting of persons having a voting
interest in Variable Insurance Products Fund (the Trust), to be held
at the office of the Fund at 82 Devonshire St., Boston, MA 02109, on
September 16, 1998, at 9:00 a.m. and at any adjournments thereof.
This proxy shall be voted on the proposals described in the
Proxy Statement as specified on the reverse side. Receipt of the
Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 922174404/fund#151
cusip # 922174701/fund#472
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- ---------------------------------------------------------------------
- -------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. TO ELECT THE TWELVE NOMINEES SPECIFIED BELOW AS [ ] FOR ALL [ ] 1.
TRUSTEES: RALPH F. COX, PHYLLIS BURKE DAVIS, NOMINEES LISTED WITHHOLD
ROBERT M. GATES, EDWARD C. JOHNSON 3D, E. (EXCEPT AS MARKED TO AUTHORITY TO
BRADLEY JONES, DONALD J. KIRK, PETER S. LYNCH, THE CONTRARY BELOW). VOTE FOR ALL
WILLIAM O. MCCOY, GERALD C. MCDONOUGH, MARVIN NOMINEES.
L. MANN, ROBERT C. POZEN, AND THOMAS R.
WILLIAMS.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
_____________________________________________________________________
________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP AS INDEPENDENT ACCOUNT ANTS OF THE FUNDS.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
RESTATED DECLARATION OF TRUST.
4. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
THE FUND.
7. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
CONCERNING DIVERSIFICATION FOR THE FUND.
</TABLE>
VGR-PXC-0698 cusip # 922174404/fund#151
cusip # 922174701/fund#472
Vote this proxy card TODAY! Your prompt response will
save Variable Insurance Products Fund: High Income Portfolio 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.
- ---------------------------------------------------------------------
- -------------------------
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s)
Edward C. Johnson 3d, Eric D. Roiter, and Robert M. Gates, or any one
or more of them, attorneys, with full power of substitution, to
vote all shares of Variable Insurance Products Fund: High Income
Portfolio (the Fund), which are held in the account of the
undersigned in the Variable Account, at the Special Meeting of persons
having a voting interest in Variable Insurance Products Fund (the
Trust), to be held at the office of the Fund at 82 Devonshire St.,
Boston, MA 02109, on September 16, 1998, at 9:00 a.m. and at any
adjournments thereof. This proxy shall be voted on the
proposals described in the Proxy Statement as specified on the reverse
side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 922174206/fund#152
cusip # 922174800/fund#492
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- ---------------------------------------------------------------------
- -------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. TO ELECT THE TWELVE NOMINEES SPECIFIED BELOW AS [ ] FOR ALL [ ] 1.
TRUSTEES: RALPH F. COX, PHYLLIS BURKE DAVIS, NOMINEES LISTED WITHHOLD
ROBERT M. GATES, EDWARD C. JOHNSON 3D, E. (EXCEPT AS MARKED TO AUTHORITY TO
BRADLEY JONES, DONALD J. KIRK, PETER S. LYNCH, THE CONTRARY BELOW). VOTE FOR ALL
WILLIAM O. MCCOY, GERALD C. MCDONOUGH, MARVIN NOMINEES.
L. MANN, ROBERT C. POZEN, AND THOMAS R.
WILLIAMS.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
_____________________________________________________________________
________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP AS INDEPENDENT ACCOUNTANTS OF THE FUNDS.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
RESTATED DECLARATION OF TRUST.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
THE FUND.
7. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
CONCERNING DIVERSIFICATION FOR THE FUND.
</TABLE>
VHI-PXC-0698 cusip # 922174206/fund#152
cusip # 922174800/fund#492
Vote this proxy card TODAY! Your prompt response will
save Variable Insurance Products Fund: Money Market Portfolio 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.
- ---------------------------------------------------------------------
- -------------------------
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s)
Edward C. Johnson, Eric D. Roiter, and Robert M. Gates, or any one or
more of them, attorneys, with full power of substitution , to vote
all shares of Variable Insurance Products Fund: Money Market Portfolio
(the Fund), which are held in the account of the undersigned in the
Variable Account, at the Special Meeting of persons having a voting
interest in Variable Insurance Products Fund (the Trust), to be held
at the office of the Fund at 82 Devonshire St., Boston, MA 02109, on
September 16, 1998, at 9:00 a.m. and at any adjournments thereof.
This proxy shall be voted on the proposals described in the
Proxy Statement as specified on the reverse side. Receipt of the
Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 922174107/fund#153
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- ---------------------------------------------------------------------
- -------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. TO ELECT THE TWELVE NOMINEES SPECIFIED BELOW AS [ ] FOR ALL [ ] 1.
TRUSTEES: RALPH F. COX, PHYLLIS BURKE DAVIS, NOMINEES LISTED WITHHOLD
ROBERT M. GATES, EDWARD C. JOHNSON 3D, E. (EXCEPT AS MARKED TO AUTHORITY TO
BRADLEY JONES, DONALD J. KIRK, PETER S. LYNCH, THE CONTRARY BELOW). VOTE FOR ALL
WILLIAM O. MCCOY, GERALD C. MCDONOUGH, MARVIN NOMINEES.
L. MANN, ROBERT C. POZEN, AND THOMAS R.
WILLIAMS.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
_____________________________________________________________________
________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP AS INDEPENDENT ACCOUNTANTS OF THE FUNDS.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
RESTATED DECLARATION OF TRUST.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
THE FUND.
8. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
CONCERNING DIVERSIFICATION FOR THE FUND.
</TABLE>
VMM-PXC-0698 cusip # 922174107/fund#153
Vote this proxy card TODAY! Your prompt response will
save Variable Insurance Products Fund: Overseas Portfolio 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.
- ---------------------------------------------------------------------
- -------------------------
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s)
Edward C. Johnson 3d, Eric D Roiter, and Robert M. Gates, or any one
or more of them, attorneys, with full power of substitution, to
vote all shares of Variable Insurance Products Fund: Overseas
Portfolio (the Fund), which are held in the account of the undersigned
in the Variable Account, at the Special Meeting of persons having a
voting interest in Variable Insurance Products Fund (the Trust), to be
held at the office of the Fund at 82 Devonshire St., Boston, MA 02109,
on September 16, 1998, at 9:00 a.m. and at any adjournments thereof.
This proxy shall be voted on the proposals described in the
Proxy Statement as specified on the reverse side. Receipt of the
Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 922174503/fund#154
cusip # 922174883/fund#495
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- ---------------------------------------------------------------------
- -------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. TO ELECT THE TWELVE NOMINEES SPECIFIED BELOW AS [ ] FOR ALL [ ] 1.
TRUSTEES: RALPH F. COX, PHYLLIS BURKE DAVIS, NOMINEES LISTED WITHHOLD
ROBERT M. GATES, EDWARD C. JOHNSON 3D, E. (EXCEPT AS MARKED TO AUTHORITY TO
BRADLEY JONES, DONALD J. KIRK, PETER S. LYNCH, THE CONTRARY BELOW). VOTE FOR ALL
WILLIAM O. MCCOY, GERALD C. MCDONOUGH, MARVIN NOMINEES.
L. MANN, ROBERT C. POZEN, AND THOMAS R.
WILLIAMS.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
_____________________________________________________________________
________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
LLP AS INDEPENDENT ACCOUNTANTS OF THE FUNDS.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
RESTATED DECLARATION OF TRUST.
4. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
THE FUND.
7. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
CONCERNING DIVERSIFICATION FOR THE FUND.
</TABLE>
VOV-PXC-0698 cusip # 922174503/fund#154
cusip # 922174883/fund#495
(PHOTO_OF_EDWARD_C_JOHNSON_3D)PROXY MATERIALS
I M P O R T A N T
PLEASE CAST YOUR VOTE NOW!
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO, GROWTH
PORTFOLIO, HIGH INCOME PORTFOLIO, MONEY MARKET PORTFOLIO, AND OVERSEAS
PORTFOLIO
Dear Contract Holder:
I am writing to let you know that a special shareholder meeting of
Variable Insurance Products Fund trust will be held in September. The
purpose of the meeting is to vote on several important proposals that
affect the trust and/or funds. As a contract holder, you have the
opportunity to voice your opinion on the matters that affect your
trust and/or fund(s). This package contains information about the
proposals and the materials to use when voting by mail.
Please read the enclosed materials and cast your vote on the proxy
card(s). PLEASE VOTE AND RETURN YOUR CARD(S) PROMPTLY. YOUR VOTE IS
EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE.
All of the proposals have been carefully reviewed by the Board of
Trustees. The Trustees, most of whom are not affiliated with Fidelity,
are responsible for protecting the interests of shareholders of each
fund and the trust. The Trustees believe these proposals are in the
best interest of shareholders, and recommend that you vote for each
proposal.
The following Q&A is provided to assist you in understanding the
proposals. Each proposal is described in the enclosed proxy statement.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED. To
cast your vote, simply complete the appropriate proxy card or cards
enclosed in this package. Be sure to sign the card(s) before mailing
it/them in the postage-paid envelope.
If you have any questions before you vote, please contact your
insurance company. They'll be glad to help you get your vote in
quickly. Thank you for your participation in this important
initiative.
Sincerely,
Edward C. Johnson 3d
President
PLEASE READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT. BELOW IS A
BRIEF OVERVIEW OF THE PROPOSALS FOUND IN THE PROXY STATEMENT THAT ARE
TO BE VOTED ON AT THE SPECIAL SHAREHOLDER MEETING. IF YOU HAVE ANY
QUESTIONS REGARDING THE PROPOSALS PLEASE CALL YOUR INSURANCE COMPANY.
IMPORTANT INFORMATION TO HELP YOU
UNDERSTAND AND VOTE ON THE PROPOSALS
WHY ARE THE FUNDS PROPOSING TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST (THE NEW DECLARATION OF TRUST)?
The New Declaration of Trust is a more modern form of trust instrument
for a Massachusetts business trust. It gives the Trustees more
flexibility and, subject to the applicable requirements of Federal and
state law, broader authority to act. This increased flexibility may
allow the Trustees' to react more quickly to changes in competitive
and regulatory conditions. Adoption of the New Declaration of Trust
will not alter the Trustees existing fiduciary obligations to act in
the best interests of the shareholders. Before utilizing any new
flexibility that the New Declaration of Trust may afford, the Trustees
must first consider the shareholders' interests and act in accordance
with such interests. The New Declaration of Trust amends the current
Declaration of Trust in a number of significant ways. Please review
the Proxy Statement for specific details.
WHY ARE THE FUNDS PROPOSING TO ADOPT AN AMENDED MANAGEMENT CONTRACT?
Each amended contract is principally designed to modify the management
fee that FMR receives by providing for lower fees when FMR's assets
under management exceed certain levels (the Group Fee Rate). The
amended contract will result in a management fee that is lower than
the fee payable under the present management contract. The Board of
Trustees believes that the existing management fee structure is fair
and reasonable and that the proposed modifications to the fee are in
the best interest of the fund's shareholders. Please review the Proxy
Statement for specific details.
WILL THE AMENDMENT TO CHANGE THE FUNDAMENTAL INVESTMENT LIMITATIONS
CONCERNING DIVERSIFICATION AFFECT MY FUND'S INVESTMENT OBJECTIVE?
No. The Board of Trustees believes that this proposal is in the best
interest of each fund's shareholders, and will not affect the funds'
investment philosophies. The proposal will allow each fund to invest
without limit in the securities of other investment companies.
WHY IS THE PROPOSAL TO CHANGE THE FUNDAMENTAL INVESTMENT LIMITATIONS
CONCERNING DIVERSIFICATION FOR MONEY MARKET PORTFOLIO SEPARATE FROM
THE OTHER FUNDS' PROPOSAL?
The Money Market Portfolio is a diversified company within the meaning
of the 1940 Act. The proposal to change the limit is separate from the
other funds' similar proposal because diversified money market funds
have additional SEC diversification requirements. These requirements
are amended from time to time, and the proposed limitation would give
the fund flexibility to react to any changes concerning
diversification without requiring a shareholder vote. Please review
the Proxy Statement for specific details.
WHAT ABOUT THE OTHER PROPOSALS IN THIS PROXY?
The other proposals that require your vote have been unanimously
approved by each fund's Board of Trustees. Proposals regarding the
election of a new Board of Trustees and the ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants of
the funds are explained clearly in the funds' Proxy Statement.
THE PROXY SAYS THAT THE BOARD OF TRUSTEES HAS APPROVED THESE CHANGES.
WHAT ROLE DOES THE BOARD PLAY?
The Trustees of each fund oversee the investment policies and
operations of each fund, most trustees are disinterested, ie: not
officers or otherwise affiliated with Fidelity. Members of the Board
are fiduciaries and have an obligation to serve the best interests of
the funds shareholders, including approving policy changes such as
those proposed for your trust and fund. In addition, the Trustees
review fund performance, oversee a fund's activities, and review
contractual arrangements with companies that provide services to a
fund.
HOW MANY VOTES AM I ENTITLED TO CAST?
In accordance with current law and interpretations thereof, a
participating insurance company is required to request voting
instructions from policyowners and must vote shares in the separate
account in proportion to the voting instructions received. A contract
holder is entitled to one vote per share as to any matter on which it
is entitled to vote, and each fractional share shall be entitled to a
proportionate fractional vote. The record date is July 20, 1998.
WHAT IF THERE ARE NOT ENOUGH VOTES TO REACH QUORUM BY THE SCHEDULED
SHAREHOLDER MEETING DATE?
In the event the fund does not reach a quorum, the persons named as
proxies may propose one or more adjournments of the meeting to permit
further solicitation of proxies. The Trustees expect that each
insurance company will vote all of the shares it holds, so please vote
so that the insurance company knows how to vote. Your insurance
company is required to vote the shares that it holds in accordance
with instructions received from its variable annuity and variable life
insurance policy holders. Any shares for which instructions are not
given by policy holders will be voted by the insurance company in the
same proportion as the shares for which instructions are received.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage paid envelope. If you
need assistance, or have any questions regarding the proposals, please
contact your insurance company representative.
HOW DO I SIGN THE PROXY CARD?
Individual Accounts: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
Joint Accounts: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
All Other Accounts: The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."
(registered trademark)
VIP-pxl-0798
