SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
</TABLE>
FIDELITY FINANCIAL TRUST
(IF YOU CHECKED "FILED BY REGISTRANT ABOVE" DO NOT FILL THIS IN:
NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE
REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11:
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(5) TOTAL FEE PAID:
<TABLE>
<CAPTION>
<S> <C>
[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE 0-11(A) (2)
AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID PREVIOUSLY. IDENTIFY THE
PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF
ITS FILING.
</TABLE>
(1) AMOUNT PREVIOUSLY PAID:
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
(3) FILING PARTY:
(4) DATE FILED:
FIDELITY CONVERTIBLE SECURITIES FUND
FIDELITY RETIREMENT GROWTH FUND
FIDELITY EQUITY-INCOME II FUND
FUNDS OF
FIDELITY FINANCIAL TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Convertible Securities Fund, Fidelity Retirement
Growth Fund, and Fidelity Equity-Income II Fund (the funds), will be
held at the office of Fidelity Financial Trust (the trust), 82
Devonshire Street, Boston, Massachusetts 02109 on November 18, 1998,
at 10:00 a.m. The purpose of the Meeting is to consider and act upon
the following proposals, and to transact such other business as may
properly come before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an Amended and Restated
Declaration of Trust.
4. To adopt a new fundamental investment policy for each fund
permit ting each fund to invest all of its assets in another
open-end investment company managed by FMR or an affiliate with
substantially the same investment objective and policies.
5. To approve an amended management contract for Fidelity Convertible
Securities Fund.
6. To approve an amended management contract for Fidelity Retirement
Growth Fund.
7. To approve an amended management contract for Fidelity
Equity-Income II Fund.
8. To eliminate certain fundamental policies of Fidelity Retirement
Growth Fund.
9. To replace Fidelity Retirement Growth Fund's fundamental
investment policy concerning investment for temporary defensive
purposes with a non-fundamental investment policy.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
10. To amend each fund's fundamental investment limitation concerning
diversification.
11. To amend Fidelity Equity-Income II Fund's fundamental investment
limitation concerning borrowing.
12. To amend Fidelity Retirement Growth Fund's and Fidelity
Equity-Income II Fund's fundamental investment limitation concerning
the concentration of its investments in a single industry.
13. To amend Fidelity Convertible Securities Fund's fundamental
investment limitation concerning underwriting.
The Board of Trustees has fixed the close of business on September
21, 1998 as the record date for the determination of the shareholders
of each of the funds entitled to notice of, and to vote at, such
Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
September 21, 1998
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC CORP. JOHN SMITH, TREASURER
2) ABC CORP. JOHN SMITH, TREASURER
C/O JOHN SMITH, TREASURER
B. 1) ABC CORP. PROFIT SHARING PLAN ANN B. COLLINS,
TRUSTEE
2) ABC TRUST ANN B. COLLINS,
TRUSTEE
3) ANN B. COLLINS, TRUSTEE ANN B. COLLINS,
TRUSTEE
U/T/D 12/28/78
C. 1) ANTHONY B. CRAFT, CUST. ANTHONY B. CRAFT
F/B/O ANTHONY B. CRAFT, JR.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY CONVERTIBLE SECURITIES FUND
FIDELITY RETIREMENT GROWTH FUND
FIDELITY EQUITY-INCOME II FUND
This Proxy Statement is furnished in connection with a solicitation
of proxies made by, and on behalf of, the Board of Trustees of
Fidelity Financial Trust (the trust) to be used at the Special Meeting
of Shareholders of Fidelity Convertible Securities Fund, Fidelity
Retirement Growth Fund, and Fidelity Equity-Income II Fund (the funds)
and at any adjournments thereof (the Meeting), to be held on November
18, 1998 at 10:00 a.m. at 82 Devonshire Street, Boston, Massachusetts
02109, the principal executive office of the trust and Fidelity
Management & Research Company (FMR), the funds' investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is being made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about September 21,
1998. Supplementary solicitations may be made by mail, telephone,
telegraph, facsimile, electronic means or by personal interview by
representatives of the trust. In addition, Management Information
Services Corp. (MIS) and D.F. King & Co., Inc. may be paid on a
per-call basis to solicit shareholders on behalf of the funds at an
anticipated cost of approximately $2,000 (Fidelity Convertible
Securities Fund), $5,000 (Fidelity Retirement Growth Fund), and $4,000
(Fidelity Equity-Income II Fund), respectively. The expenses in
connection with preparing this Proxy Statement and its enclosures and
of all solicitations will be paid by the funds. The funds will
reimburse brokerage firms and others for their reasonable expenses in
forwarding solicitation material to the beneficial owners of shares.
The principal business address of Fidelity Distributors Corporation
(FDC), the funds' principal underwriter and distribution agent, and
Fidelity Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity
Management & Research (Far East) Inc. (FMR Far East), subadvisers to
the funds, is 82 Devonshire Street, Boston, Massachusetts 02109.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written
notification received by the trust, by the execution of a later-dated
proxy card, by the trust's receipt of a subsequent valid telephonic
vote , or by attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and are
not revoked, will be voted at the Meeting. Shares represented by such
proxies will be voted in accordance with the instructions thereon. If
no specification is made on a proxy card, it will be voted FOR the
matters specified on the proxy card. Only proxies that are voted will
be counted towards establishing a quorum. Broker non-votes are not
considered voted for this purpose. Shareholders should note that while
votes to ABSTAIN will count toward establishing a quorum, passage of
any proposal being considered at the Meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly,
votes to ABSTAIN and votes AGAINST will have the same effect in
determining whether the proposal is approved.
The funds may also arrange to have votes recorded by telephone. The
expenses in connection with telephone voting will be paid by the
funds. If the funds record votes by telephone, they will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance
with their instructions, and to confirm that their instructions have
been properly recorded. Proxies voted by telephone may be revoked at
any time before they are voted in the same manner that proxies voted
by mail may be revoked. D.F. King & Co., Inc. may be paid on a
per-call basis for vote-by-phone solicitations on behalf of the funds
at an anticipated cost of approximately $2,000 (Fidelity Convertible
Securities Fund) , $7,000 (Fidelity Retirement Growth Fund), and
$5,000 (Fidelity Equity-Income II Fund).
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
AGAINST the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate.
Shares of each fund of the trust issued and outstanding as of July
31, 1998 are indicated in the following table:
FIDELITY CONVERTIBLE SECURITIES FUND 56,116,332
FIDELITY RETIREMENT GROWTH FUND 228,349,397
FIDELITY EQUITY-INCOME II FUND 622,499,693
To the knowledge of the trust, substantial (5% or more) record or
beneficial ownership of each fund on July 31, 1998 was as follows: for
Convertible Securities Fund: Charles Schwab & Co., San Francisco, CA
(8.17%) and for Retirement Growth Fund: Washington State Deferred
Compensation Program, Spokane, WA (5.12%). To the knowledge of the
trust, no other shareholder owned of record or beneficially more than
5% of the outstanding shares of any of the funds on that date.
Shareholders of record at the close of business on September 21, 1998
will be entitled to vote at the Meeting. Each such shareholder will be
entitled to one vote for each dollar of net asset value held on that
date.
The following tables summarize the proposals applicable to each fund.
<TABLE>
<CAPTION>
<S> <C> <C>
PROPOSAL # PROPOSAL DESCRIPTION APPLICABLE FUND (S)
1. TO ELECT AS TRUSTEES THE FIDELITY CONVERTIBLE SECURITIES FUND
TWELVE NOMINEES PRESENTED FIDELITY RETIREMENT GROWTH FUND
IN PROPOSAL 1. FIDELITY EQUITY-INCOME II FUND
2. TO RATIFY THE SELECTION OF FIDELITY CONVERTIBLE SECURITIES FUND
PRICEWATERHOUSECOOPERS FIDELITY RETIREMENT GROWTH FUND
LLP AS INDEPENDENT FIDELITY EQUITY-INCOME II FUND
ACCOUNTANTS OF THE FUNDS.
3. TO AUTHORIZE THE TRUSTEES FIDELITY CONVERTIBLE SECURITIES FUND
TO ADOPT AN AMENDED AND FIDELITY RETIREMENT GROWTH FUND
RESTATED DECLARATION OF FIDELITY EQUITY-INCOME II FUND
TRUST.
4. TO ADOPT A NEW FUNDAMENTAL FIDELITY CONVERTIBLE SECURITIES FUND
INVESTMENT POLICY FOR THE FIDELITY RETIREMENT GROWTH FUND
FUND THAT WOULD PERMIT IT TO FIDELITY EQUITY-INCOME II FUND
INVEST ALL OF ITS ASSETS IN
ANOTHER OPEN-END
INVESTMENT COMPANY
MANAGED BY FMR OR AN
AFFILIATE WITH SUBSTANTIALLY
THE SAME INVESTMENT
OBJECTIVE AND POLICIES.
5. TO APPROVE AN AMENDED FIDELITY CONVERTIBLE SECURITIES FUND
MANAGEMENT CONTRACT.
6. TO APPROVE AN AMENDED FIDELITY RETIREMENT GROWTH FUND
MANAGEMENT CONTRACT.
7. TO APPROVE AN AMENDED FIDELITY EQUITY-INCOME II FUND
MANAGEMENT CONTRACT.
8. TO ELIMINATE CERTAIN FIDELITY RETIREMENT GROWTH FUND
FUNDAMENTAL INVESTMENT
POLICIES.
9. TO REPLACE THE FUND'S FIDELITY RETIREMENT GROWTH FUND
FUNDAMENTAL INVESTMENT
POLICY CONCERNING
INVESTMENT FOR TEMPORARY
DEFENSIVE PURPOSES WITH A
NON-FUNDAMENTAL
INVESTMENT POLICY.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
PROPOSAL # PROPOSAL DESCRIPTION APPLICABLE FUND(S)
10. DIVERSIFICATION: TO AMEND FIDELITY CONVERTIBLE SECURITIES FUND
THE DIVERSIFICATION LIMITATION FIDELITY RETIREMENT GROWTH FUND
TO EXCLUDE "SECURITIES OF FIDELITY EQUITY-INCOME II FUND
OTHER INVESTMENT
COMPANIES" FROM ISSUER
DIVERSIFICATION LIMITS.
11. BORROWING: TO AMEND THE FIDELITY EQUITY-INCOME II FUND
BORROWING LIMITATION TO
REQUIRE A REDUCTION IN
BORROWING IF BORROWINGS
EXCEED THE 33 1/3% LIMIT
FOR ANY REASON RATHER THAN
SOLELY BECAUSE OF A DECLINE
IN NET ASSETS.
12. CONCENTRATION: TO FIDELITY RETIREMENT GROWTH FUND
STANDARDIZE THE LANGUAGE OF FIDELITY EQUITY-INCOME II FUND
THE LIMITATION ON INDUSTRY
CONCENTRATION AND MODIFY IT
TO REFER TO "COMPANIES WITH
PRINCIPAL BUSINESS ACTIVITIES
IN THE SAME INDUSTRY"
RATHER THAN "ISSUERS IN THE
SAME INDUSTRY."
13. UNDERWRITING: TO CLARIFY FIDELITY CONVERTIBLE SECURITIES FUND
THE FUNDAMENTAL LIMITATION
WITH RESPECT TO
UNDERWRITING.
</TABLE>
FOR A FREE COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED NOVEMBER 30, 1997 AND THE SEMIANNUAL REPORT FOR THE FISCAL
PERIOD ENDED MAY 31, 1998 CALL 1-800-544-8888 OR WRITE TO FIDELITY
DISTRIBUTORS CORPORATION AT 82 DEVONSHIRE STREET, BOSTON,
MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS
SUFFICIENT TO APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE
APPROPRIATE FUND CAST AT THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL
2. APPROVAL OF PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" OF THE ENTIRE TRUST. APPROVAL OF
PROPOSALS 4 THROUGH 13 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF
THE OUTSTANDING VOTING SECURITIES" OF THE APPROPRIATE FUNDS. UNDER THE
INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), THE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF
THE LESSER OF (A) 67% OR MORE OF THE VOTING SECURITIES PRESENT AT THE
MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR
(B) MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES. BROKER
NON-VOTES ARE NOT CONSIDERED "PRESENT" FOR THIS PURPOSE.
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the
Trust. Pursuant to the provisions of the Declaration of Trust of
Fidelity Financial Trust, the Trustees have determined that the number
of Trustees shall be fixed at twelve. It is intended that the enclosed
proxy card will be voted for the election as Trustees of the twelve
nominees listed below, unless such authority has been withheld in the
proxy card.
All nominees named below are currently Trustees of Fidelity Financial
Trust and have served in that capacity continuously since originally
elected or appointed. Ro bert M. Gates, Marvin L. Mann,
William O. McCoy, and Robert C. Pozen were selected by
the trust's Nominating and Administration Committee (see page ) and
were appointed to the Board in March 1997, October 1993, January 1997,
and August 1997, respectively. None of the nominees are related to one
another. Those nominees indicated by an asterisk (*) are "interested
persons" of the trust by virtue of, among other things, their
affiliation with either the trust, the funds' investment adviser (FMR,
or the Adviser), or the funds' distribution agent, FDC. The business
address of each nominee who is an "interested person" is 82 Devonshire
Street, Boston, Massachusetts 02109, and the business address of all
other nominees is Fidelity Investments, P.O. Box 9235, Boston,
Massachusetts 02205-9235. Except for Robert M. Gates, William O.
McCoy, and Robert C. Pozen, each of the nominees is currently a
Trustee or General Partner, as the case may be, of 57
registered investment companies (trusts or partnerships) advised by
FMR. Mr. Gates and Mr. McCoy are currently Trustees or General
Partners, as the case may be, of 5 4 registered investment
companies (trusts or partnerships) advised by FMR. Mr. Pozen is
currently a Trustee or General Partner, as the case may be, of
5 1 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.
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) ELECTION OR
APPOINTMENT
<S> <C> <C>
RALPH F. COX PRESIDENT OF RABAR ENTERPRISES 1991
(66) (MANAGEMENT CONSULTING-ENGINEERING
INDUSTRY, 1994). PRIOR TO FEBRUARY
1994, HE WAS PRESIDENT OF GREENHILL
PETROLEUM CORPORATION (PETROLEUM
EXPLORATION AND PRODUCTION). UNTIL
MARCH 1990, MR. COX WAS PRESIDENT
AND CHIEF OPERATING OFFICER OF UNION
PACIFIC RESOURCES COMPANY
(EXPLORATION AND PRODUCTION). HE IS A
DIRECTOR OF USA WASTE SERVICES, INC.
(NON-HAZARDOUS WASTE, 1993), CH2M
HILL COMPANIES (ENGINEERING), RIO
GRANDE, INC. (OIL AND GAS PRODUCTION),
AND DANIEL INDUSTRIES (PETROLEUM
MEASUREMENT EQUIPMENT
MANUFACTURER). IN ADDITION, HE IS A
MEMBER OF ADVISORY BOARDS OF TEXAS
A&M UNIVERSITY AND THE UNIVERSITY OF
TEXAS AT AUSTIN.
PHYLLIS BURKE DAVIS PRIOR TO HER RETIREMENT IN 1992
(66) SEPTEMBER 1991, MRS. DAVIS WAS
THE SENIOR VICE PRESIDENT OF
CORPORATE AFFAIRS OF AVON PRODUCTS,
INC. SHE IS CURRENTLY A DIRECTOR OF
BELLSOUTH CORPORATION
(TELECOMMUNICATIONS), EATON
CORPORATION (MANUFACTURING, 1991),
AND THE TJX COMPANIES, INC. (RETAIL
STORES), AND PREVIOUSLY SERVED AS A
DIRECTOR OF HALLMARK CARDS, INC.
(1985-1991) AND NABISCO BRANDS,
INC. IN ADDITION, SHE IS A MEMBER OF
THE PRESIDENT'S ADVISORY COUNCIL OF
THE UNIVERSITY OF VERMONT SCHOOL
OF BUSINESS ADMINISTRATION.
ROBERT M. GATES CONSULTANT, AUTHOR, AND LECTURER 1997
(55) (1993). MR. GATES WAS DIRECTOR OF
THE CENTRAL INTELLIGENCE AGENCY
(CIA) FROM 1991-1993. FROM 1989
TO 1991, MR. GATES SERVED AS
ASSISTANT TO THE PRESIDENT OF THE
UNITED STATES AND DEPUTY NATIONAL
SECURITY ADVISOR. MR. GATES IS A
DIRECTOR OF LUCASVARITY PLC
(AUTOMOTIVE COMPONENTS AND DIESEL
ENGINES), CHARLES STARK DRAPER
LABORATORY (NON-PROFIT), NACCO
INDUSTRIES, INC. (MINING AND
MANUFACTURING), AND TRW INC.
(ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS). MR. GATES
ALSO IS A TRUSTEE OF THE FORUM FOR
INTERNATIONAL POLICY AND OF THE
ENDOWMENT ASSOCIATION OF THE
COLLEGE OF WILLIAM AND MARY. IN
ADDITION, HE IS A MEMBER OF THE
NATIONAL EXECUTIVE BOARD OF THE BOY
SCOUTS OF AMERICA.
*EDWARD C. JOHNSON 3D PRESIDENT, IS CHAIRMAN, CHIEF 1982
(68) EXECUTIVE OFFICER AND A DIRECTOR OF
FMR CORP.; A DIRECTOR AND
CHAIRMAN OF THE BOARD AND OF THE
EXECUTIVE COMMITTEE OF FMR;
CHAIRMAN AND A DIRECTOR OF FIDELITY
INVESTMENTS MONEY MANAGEMENT,
INC. (1998), FIDELITY MANAGEMENT &
RESEARCH (U.K.) INC., AND FIDELITY
MANAGEMENT & RESEARCH (FAR EAST)
INC.
E. BRADLEY JONES PRIOR TO HIS RETIREMENT IN 1984, 1990
(71) MR. JONES WAS CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF LTV STEEL
COMPANY. HE IS A DIRECTOR OF TRW
INC. (ORIGINAL EQUIPMENT AND
REPLACEMENT PRODUCTS),
CONSOLIDATED RAIL CORPORATION,
BIRMINGHAM STEEL CORPORATION, AND
RPM, INC. (MANUFACTURER OF
CHEMICAL PRODUCTS), AND HE
PREVIOUSLY SERVED AS A DIRECTOR OF
NACCO INDUSTRIES, INC. (MINING AND
MANUFACTURING, 1985-1995),
HYSTER-YALE MATERIALS HANDLING, INC.
(1985-1995), AND CLEVELAND-CLIFFS
INC. (MINING), AND AS A TRUSTEE OF
FIRST UNION REAL ESTATE INVESTMENTS.
IN ADDITION, HE SERVES AS A TRUSTEE
OF THE CLEVELAND CLINIC FOUNDATION,
WHERE HE HAS ALSO BEEN A MEMBER
OF THE EXECUTIVE COMMITTEE AS WELL
AS CHAIRMAN OF THE BOARD AND
PRESIDENT, A TRUSTEE AND MEMBER OF
THE EXECUTIVE COMMITTEE OF
UNIVERSITY SCHOOL (CLEVELAND), AND A
TRUSTEE OF CLEVELAND CLINIC FLORIDA.
DONALD J. KIRK EXECUTIVE-IN-RESIDENCE (1995) AT 1987
(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 NATIONAL ARTS
STABILIZATION INC., CHAIRMAN OF THE
BOARD OF TRUSTEES OF THE GREENWICH
HOSPITAL ASSOCIATION, DIRECTOR OF THE
YALE-NEW HAVEN HEALTH SERVICES
CORP. (1998), A MEMBER OF THE
PUBLIC OVERSIGHT BOARD OF THE
AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS' SEC PRACTICE
SECTION (1995), AND AS A PUBLIC
GOVERNOR OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS,
INC. (1996).
*PETER S. LYNCH VICE CHAIRMAN AND DIRECTOR OF 1990
(55) FMR. PRIOR TO MAY 31, 1990, HE WAS
A DIRECTOR OF FMR AND EXECUTIVE
VICE PRESIDENT OF FMR (A POSITION
HE HELD UNTIL MARCH 31, 1991); VICE
PRESIDENT OF FIDELITY MAGELLAN FUND
AND FMR GROWTH GROUP LEADER; AND
MANAGING DIRECTOR OF FMR CORP.
MR. LYNCH WAS ALSO VICE PRESIDENT
OF FIDELITY INVESTMENTS CORPORATE
SERVICES (1991-1992). IN ADDITION,
HE SERVES AS A TRUSTEE OF BOSTON
COLLEGE, MASSACHUSETTS EYE & EAR
INFIRMARY, HISTORIC DEERFIELD (1989)
AND SOCIETY FOR THE PRESERVATION OF
NEW ENGLAND ANTIQUITIES, AND AS AN
OVERSEER OF THE MUSEUM OF FINE
ARTS OF BOSTON.
WILLIAM O. MCCOY VICE PRESIDENT OF FINANCE FOR THE 1997
(65) UNIVERSITY OF NORTH CAROLINA
(16-SCHOOL SYSTEM, 1995). PRIOR TO
HIS RETIREMENT IN DECEMBER 1994, MR.
MCCOY WAS VICE CHAIRMAN OF THE
BOARD OF BELLSOUTH CORPORATION
(TELECOMMUNICATIONS, 1984) AND
PRESIDENT OF BELLSOUTH ENTERPRISES
(1986). HE IS CURRENTLY A DIRECTOR OF
LIBERTY CORPORATION (HOLDING
COMPANY, 1984), WEEKS CORPORATION
OF ATLANTA (REAL ESTATE, 1994),
CAROLINA POWER AND LIGHT COMPANY
(ELECTRIC UTILITY, 1996) AND THE KENAN
TRANSPORT CO. (1996). PREVIOUSLY, HE
WAS A DIRECTOR OF FIRST AMERICAN
CORPORATION (BANK HOLDING COMPANY,
1979-1996). IN ADDITION, MR. MCCOY
SERVES AS A MEMBER OF THE BOARD OF
VISITORS FOR THE UNIVERSITY OF NORTH
CAROLINA AT CHAPEL HILL (1994) AND FOR
THE KENAN-FLAGER BUSINESS SCHOOL
(UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL, 1988).
GERALD C. MCDONOUGH CHAIRMAN OF G.M. MANAGEMENT 1989
(70) GROUP (STRATEGIC ADVISORY SERVICES).
MR. MCDONOUGH IS A DIRECTOR OF
YORK INTERNATIONAL CORP. (AIR
CONDITIONING AND REFRIGERATION),
COMMERCIAL INTERTECH CORP.
(HYDRAULIC SYSTEMS, BUILDING
SYSTEMS, AND METAL PRODUCTS,
1992), CUNO, INC. (LIQUID AND GAS
FILTRATION PRODUCTS, 1996), AND
ASSOCIATED ESTATES REALTY
CORPORATION (A REAL ESTATE
INVESTMENT TRUST, 1993). MR.
MCDONOUGH SERVED AS A DIRECTOR OF
ACME-CLEVELAND CORP. (METAL
WORKING, TELECOMMUNICATIONS, AND
ELECTRONIC PRODUCTS) FROM
1987-1996 AND BRUSH-WELLMAN INC.
(METAL REFINING) FROM 1983-1997).
MARVIN L. MANN CHAIRMAN OF THE BOARD OF LEXMARK 1993
(65) INTERNATIONAL, INC. (OFFICE MACHINES,
1991). PRIOR TO 1991, HE HELD THE
POSITIONS OF VICE PRESIDENT OF
INTERNATIONAL BUSINESS MACHINES
CORPORATION ("IBM") AND PRESIDENT
AND GENERAL MANAGER OF VARIOUS
IBM DIVISIONS AND SUBSIDIARIES. MR.
MANN IS A DIRECTOR OF M.A. HANNA
COMPANY (CHEMICALS, 1993), AND
IMATION CORP. (IMAGING AND
INFORMATION STORAGE, 1997).
*ROBERT C. POZEN SENIOR VICE PRESIDENT, IS ALSO 1997
(52) PRESIDENT AND A DIRECTOR OF FMR
(1997); AND PRESIDENT AND A DIRECTOR
OF FIDELITY INVESTMENTS MONEY
MANAGEMENT, INC. (1998), FIDELITY
MANAGEMENT & RESEARCH (U.K.) INC.
(1997), AND FIDELITY MANAGEMENT &
RESEARCH (FAR EAST) INC. (1997).
PREVIOUSLY, MR. POZEN SERVED AS
GENERAL COUNSEL, MANAGING DIRECTOR,
AND SENIOR VICE PRESIDENT OF FMR
CORP.
THOMAS R. WILLIAMS PRESIDENT OF THE WALES GROUP, INC. 1989
(70) (MANAGEMENT AND FINANCIAL ADVISORY
SERVICES). PRIOR TO RETIRING IN 1987,
MR. WILLIAMS SERVED AS CHAIRMAN OF
THE BOARD OF FIRST WACHOVIA
CORPORATION (BANK HOLDING COMPANY),
AND CHAIRMAN AND CHIEF EXECUTIVE
OFFICER OF THE FIRST NATIONAL BANK OF
ATLANTA AND FIRST ATLANTA CORPORATION
(BANK HOLDING COMPANY). HE IS
CURRENTLY A 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).
</TABLE>
** Except as otherwise indicated, each individual has held the office
shown or other offices in the same company for the last five years.
As of July 31, 1998, the nominees and officers of the t rust
owned, in the aggregate, less than 1 % of the
funds ' outstanding shares.
If elected, the Trustees will hold office without limit in time
except that (a) any Trustee may resign; (b) any Trustee may be removed
by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal; (c) any Trustee who requests to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees; and (d) a Trustee may be removed at any Special Meeting of
shareholders by a two-thirds vote of the outstanding voting securities
of the trust. In case a vacancy shall for any reason exist, the
remaining Trustees will fill such vacancy by appointing another
Trustee, so long as, immediately after such appointment, at least
two-thirds of the Trustees have been elected by shareholders. If, at
any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly
call a shareholders' meeting for the purpose of electing a Board of
Trustees. Otherwise, there will normally be no meeting of shareholders
for the purpose of electing Trustees.
The trust's Board, which is currently composed of 3 interested and 9
non-interested Trustees, met eleven times during the fiscal year ended
November 30, 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 fiscal year ended November 30, 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
fiscal year ended November 30, 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 November 30,
1997, or calendar year ended December 31, 1997, if applicable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMPENSATION TABLE
TRUSTEES AND AGGREGATE AGGREGATE AGGREGATE TOTAL
MEMBERS OF THE COMPENSATION COMPENSATION COMPENSATION COMPENSATION
ADVISORY BOARD FROM FIDELITY FROM FIDELITY FROM FROM THE
CONVERTIBLE RETIREMENT FIDELITY EQUITY- FUND
SECURITIES GROWTH INCOME II COMPLEX*,A
FUNDB,C FUNDB,D,F FUNDB, E, F
J. GARY BURKHEAD**,# $ 0 $ 0 $ 0 $ 0
RALPH F. COX 450 1669 6553 214,500
PHYLLIS BURKE DAVIS 440 1631 6411 210,000
RICHARD J. FLYNN*** 31 111 410 0
ROBERT M. GATES**** 341 1287 5112 176,000
EDWARD C. JOHNSON 3D** 0 0 0 0
E. BRADLEY JONES 443 1644 6461 211,500
DONALD J. KIRK 443 1644 6461 211,500
PETER S. LYNCH** 0 0 0 0
WILLIAM O. MCCOY***** 460 1720 6740 214,500
GERALD C. MCDONOUGH 545 2022 7945 264,500
EDWARD H. MALONE*** 29 104 398 0
MARVIN L. MANN 450 1669 6553 214,500
ROBERT C. POZEN** 0 0 0 0
THOMAS R. WILLIAMS 451 1671 6560 214,500
</TABLE>
* Information is for the calendar year ended December 31, 1997 for 230
funds in the complex.
** Interested Trustees of the fund and Mr. Burkhead are compensated by
FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 1996.
**** Mr. Gates was appointed to the Board of Trustees of Fidelity
Financial Trust effective March 1, 1997.
***** During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a Member of the Advisory Board of the
trust. Mr. McCoy was appointed to the Board of Trustees of Fidelity
Financial Trust effective January 1, 1997.
# J. Gary Burkhead served on the Board of Trustees through July 31,
1997. Effective August 1, 1997, Mr. Burkhead serves as a Member of the
Advisory Board of each trust.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1997, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $62,500; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $53,699; Marvin L. Mann, $53,699; and Thomas R.
Williams, $62,462.
B Compensation figures include cash, and may include amounts required
to be deferred, a pro rata portion of benefits accrued under the
retirement program for the period ended December 30, 1996 and required
to be deferred, and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $1, Phyllis Burke Davis, $1, Richard J. Flynn, $0, Robert M.
Gates, $0, E. Bradley Jones, $1, Donald J. Kirk, $1, William O. McCoy,
$0, Gerald C. McDonough, $1, Edward H. Malone, $1, Marvin L. Mann, $1,
and Thomas R. Williams, $1.
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $745, Phyllis Burke Davis, $745, Richard J. Flynn, $0, Robert M.
Gates, $606, E. Bradley Jones, $745, Donald J. Kirk, $745, William O.
McCoy, $760, Gerald C. McDonough, $869, Edward H. Malone, $4, Marvin
L. Mann, $745, and Thomas R. Williams, $745.
E The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $2,931, Phyllis Burke Davis, $2,931, Richard J. Flynn, $0, Robert
M. Gates, $2,406, E. Bradley Jones, $2,931, Donald J. Kirk, $2,931,
William O. McCoy, $2,990, Gerald C. McDonough, $3,413, Edward H.
Malone, $15, Marvin L. Mann, $2,931, and Thomas R. Williams, $2,931.
F For the fiscal year ended November 30, 1997, certain of the
non-interested Trustees' aggregate compensation from a fund includes
accrued voluntary deferred compensation as follows: Ralph F. Cox,
$707, Retirement Growth; Edward H. Malone, $104, Retirement Growth;
Marvin L. Mann, $707, Retirement Growth; Thomas R. Williams, $617,
Retirement Growth; Ralph F. Cox, $2,760. Equity-Income II; Edward H.
Malone, $383, Equity-Income II; Marvin L. Mann, $2,760, Equity-Income
II; and Thomas R. Williams, $2,427, Equity-Income II.
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee fees
and length of service. The obligation of a fund to make such payments
is neither secured nor funded. A Trustee became eligible to
participate in the program at the end of the calendar year in which he
or she reached age 72, provided that, at the time of retirement, he or
she had served as a Fidelity fund Trustee for at least five years.
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.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF THE FUNDS.
By a vote of the non-interested Trustees, the firm of
PricewaterhouseCoopers LLP has been selected as independent accountant
for each fund to sign or certify any financial statements of each fund
required by any law or regulation to be certified by an independent
accountant and filed with the Securities and Exchange Commission (SEC)
or any state. Pursuant to the 1940 Act, such selection requires the
ratification of shareholders. In addition, as required by the 1940
Act, the vote of the Trustees is subject to the right of each fund, by
vote of a majority of its outstanding voting securities at any meeting
called for the purpose of voting on such action, to terminate such
employment without penalty. PricewaterhouseCoopers LLP has advised
each fund that it has no direct or material indirect ownership
interest in each fund.
For the funds' most recently completed fiscal year, the firm of Price
Waterhouse LLP acted as each fund's independent accountant. Effective
July 1, 1998, Coopers & Lybrand L.L.P. and Price Waterhouse LLP
combined their businesses and practices and began doing business as
PricewaterhouseCoopers LLP.
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. In
recommending the selection of each fund's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such
services would affect the accountants' independence. Representatives
of PricewaterhouseCoopers LLP are not expected to be present at the
Meeting, but have been given the opportunity to make a statement if
they so desire and will be available should any matter arise requiring
their presence.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST.
The Board of Trustees has approved and recommends that the
shareholders of the trust authorize them to adopt and execute an
Amended and Restated Declaration of Trust for the trust and the funds
of the trust in the form attached to this Proxy Statement as Exhibit 1
(New Declaration of Trust). The attached New Declaration of Trust has
been marked to show changes from the trust's existing Declaration of
Trust (Current Declaration of Trust). The New Declaration of Trust is
a more modern form of trust instrument for a Massachusetts business
trust, and, going forward, will be used as the standard Declaration of
Trust for all new Fidelity Massachusetts business trusts.
The New Declaration of Trust gives the Trustees more flexibility and,
subject to applicable requirements of the 1940 Act and Massachusetts
law, broader authority to act. This increased flexibility may allow
the Trustees to react more quickly to changes in competitive and
regulatory conditions and, as a consequence, may allow the funds to
operate in a more efficient and economical manner. ADOPTION OF THE NEW
DECLARATION OF TRUST WILL NOT ALTER IN ANY WAY THE TRUSTEES' EXISTING
FIDUCIARY OBLIGATIONS TO ACT WITH DUE CARE AND IN THE SHAREHOLDERS'
INTERESTS. BEFORE UTILIZING ANY NEW FLEXIBILITY THAT THE NEW
DECLARATION OF TRUST MAY AFFORD, THE TRUSTEES MUST FIRST CONSIDER THE
SHAREHOLDERS' INTERESTS AND THEN ACT IN ACCORDANCE WITH SUCH
INTERESTS.
Adoption of the New Declaration of Trust will NOT result in any
changes in the funds' Trustees or officers or in the investment
policies and shareholder services described in the funds' current
prospectuses.
Generally, a majority of the Trustees may amend the Current
Declaration of Trust when authorized by a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the trust. On
October 16, 1997, the Trustees approved the form of the New
Declaration of Trust. On December 18, 1997, the Board approved several
additional changes to the form of the New Declaration of Trust, which
changes have been incorporated into the form attached to this Proxy
Statement. On October 16, 1997, the Board authorized the submission of
the New Declaration of Trust to the trust's shareholders for their
authorization at this Meeting.
The New Declaration of Trust amends the Current Declaration of Trust
in a number of significant ways. The following discussion summarizes
some of the more significant amendments to the Current Declaration of
Trust effected by the New Declaration of Trust.
IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER
SUBSTANTIVE AND STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF
TRUST AND THE CURRENT DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE NEW DECLARATION OF TRUST
ITSELF, WHICH IS ATTACHED AS EXHIBIT 1 TO THIS PROXY STATEMENT.
SIGNIFICANT CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
REORGANIZATION OR TERMINATION OF THE TRUST OR ITS SERIES. Unlike the
Current Declaration of Trust, the New Declaration of Trust generally
permits the Trustees, subject to applicable Federal and state law, to
reorganize or terminate the trust or any of its series. The Current
Declaration of Trust requires shareholder approval in order to
reorganize or terminate the trust or any of its series.
Under certain circumstances, it may not be in the shareholders'
interest to require a shareholder meeting to permit the trust or a
fund to reorganize into another entity. For example, in order to
reduce the cost and scope of state regulatory constraints or to take
advantage of a more favorable tax treatment offered by another state,
the Trustees may determine that it would be in the shareholders'
interests to reorganize a fund to domicile it in another state or to
change its legal form. Under the Current Declaration of Trust, the
Trustees cannot effectuate such a potentially beneficial
reorganization without first conducting a shareholder meeting and
incurring the attendant costs and delays. In contrast, the New
Declaration of Trust gives the Trustees the flexibility to reorganize
the trust or any of its series and achieve potential shareholder
benefits without incurring the delay and potential costs of a proxy
solicitation. Such flexibility should help to assure that the trust
and its funds operate under the most appropriate form of organization.
Similarly, under certain circumstances, it may not be in the
shareholders' interest to require a shareholder meeting to permit the
Trustees to terminate a fund. For example, a fund may have
insufficient assets to invest effectively or excessively high expense
levels due to operational needs. Under such circumstances, absent
viable alternatives, the Trustees may determine that terminating the
fund is in the shareholders' interest and the only appropriate course
of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the
fund's liquidation and termination and, in general, will increase the
costs associated with the termination. In such a case, it may be in
the shareholders' interest to permit fund termination without
incurring the costs and delays of a shareholder meeting.
As discussed above, before allowing a trust or fund reorganization or
termination to proceed without shareholder approval, the Trustees have
a fiduciary responsibility to first determine that the proposed
transaction is in the shareholders' interest. Any exercise of the
Trustees' increased authority under the New Declaration of Trust is
also subject to any applicable requirements of the 1940 Act and
Massachusetts law. Of course, in all cases, the New Declaration of
Trust would require that shareholders receive written notification of
any transaction.
The New Declaration of Trust does NOT give the Trustees the authority
to merge a fund with another operating mutual fund or sell all of a
fund's assets to another operating mutual fund without first seeking
shareholder approval. Under the New Declaration of Trust, shareholder
approval is still required for these transactions.
FUTURE AMENDMENTS OF THE DECLARATION OF TRUST. The New Declaration of
Trust permits the Trustees, with certain exceptions, to amend the
Declaration of Trust without shareholder approval. Under the New
Declaration of Trust, shareholders generally have the right to vote on
any amendment affecting their right to vote, on any amendment altering
the maximum number of permitted Trustees, on any amendment affecting
the New Declaration of Trust's amendment provisions, on any amendment
required by law or the trust's registration statement, and on any
matter submitted to shareholders by the Trustees. The Current
Declaration of Trust, on the other hand, generally gives shareholders
the exclusive power to amend the Declaration of Trust. By allowing
amendment of the Declaration of Trust without shareholder approval,
the New Declaration of Trust gives the Trustees the necessary
authority to react quickly to future contingencies. As mentioned
above, such increased authority remains subordinate to the Trustees'
continuing fiduciary obligations to act with due care and in the
shareholders' interest.
MASTER FEEDER FUND STRUCTURE. The New Declaration of Trust clarifies
that the Trustees may authorize the investment of all of a fund's
assets in another open-end investment company (Master Feeder Fund
Structure). The Current Declaration of Trust does not specifically
provide the Trustees the ability to authorize the Master Feeder Fund
Structure. The purpose of a Master Feeder Fund Structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. In order
to implement a Master Feeder Fund Structure, both the Declaration of
Trust and the funds' policies must permit the structure. Currently,
each fund's policies do not allow for such investments. Proposal 4 on
page seeks the approval of each fund's shareholders to adopt a
fundamental investment policy to permit investment in another open-end
investment company with substantially the same investment objective
and policies. For more information on the Master Feeder Fund
Structure, see proposal 4 on page .
FMR and the Board of Trustees continually review methods of
structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees has determined that a
fund should invest in a master fund, the Trustees believe it could be
in the best interest of each fund to adopt such a structure at a
future date. If approved, the New Declaration of Trust would provide
the Trustees with the power to authorize a fund to invest all of its
assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Master Feeder Fund Structure is
permitted under the fund's investment policies (see Proposal 4), if
they determine that a Master Feeder Fund Structure is in the best
interest of a fund, and if, upon advice of counsel, they determine
that the investment will not have material adverse tax consequences to
each fund or its shareholders. The Trustees will specifically consider
the impact, if any, on fees paid by the fund as a result of adopting a
Master Feeder Fund Structure.
OTHER CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
In addition to the significant changes above, the New Declaration of
Trust modifies the Current Declaration of Trust in a number of
important ways, including the following:
1. The New Declaration of Trust modifies the Current Declaration of
Trust to allow FMR and the trust, on behalf of each fund, to amend a
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, short-term trading fees) may be
imposed upon redemption of a fund's shares.
3. The New Declaration of Trust confirms and clarifies various
existing Trustee powers. For example, the New Declaration of Trust
clarifies that the Trustees, in addition to banks and trust companies,
may employ as fund custodians companies that are members of a national
securities exchange or other entities permitted under the 1940 Act;
delegate authority to investment advisers and other agents; adopt and
offer dividend reinvestment and related plans; operate and carry on
the business of an investment company; and interpret the investment
policies, practices, and limitations of any fund.
4. The New Declaration of Trust clarifies that no shareholder of a
trust series shall have a claim on the assets of another series and
further clarifies that, by virtue of investing in a fund, a
shareholder is deemed to have assented to and agreed to be bound by
the terms of the New Declaration of Trust.
5. The New Declaration of Trust deletes various technical and/or
antiquated requirements from the Current Declaration of Trust,
including existing requirements that a Trustee vacancy be deemed to
occur when a Trustee is absent from his or her state of residence,
that Trustee vacancies must be filled within six calendar months, and
that portfolio securities be held pursuant to safeguards prescribed by
usual Massachusetts practice.
6. As a general matter, the New Declaration of Trust modifies the
Current Declaration of Trust to incorporate appropriate references to
classes of shares.
7. Lastly, the New Declaration of Trust generally expands various
1940 Act defined terms to encompass SEC modifications and
interpretations. Specific references to discrete sections of the 1940
Act that are contained in the New Declaration of Trust have likewise
been expanded to include SEC modifications and interpretations.
CONCLUSION. The Board of Trustees has concluded that the proposed
adoption of the New Declaration of Trust is in the best interests of
the trust's shareholders. Accordingly, the Trustees unanimously
recommend that the shareholders vote FOR the proposal to authorize
them to adopt and execute the New Declaration of Trust. If the
proposal is not approved, the Current Declaration of Trust will remain
unchanged and in effect.
4. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND
PERMITTING EACH FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END
INVESTMENT COMPANY MANAGED BY FMR OR AN AFFILIATE WITH SUBSTANTIALLY
THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders
of each fund approve, the adoption of a new fundamental investment
policy that would permit each fund to invest all of its assets in
another open-end investment company managed by FMR or an affiliate
with substantially the same investment objective and policies.
Adoption of the policy would allow the Fund to participate in a
so-called "Master Feeder Fund" organizational format (Master Feeder
Fund Structure).
Participation in a Master Feeder Fund Structure would allow each fund
to combine its assets with other funds having substantially the same
investment objective and policies, but differing distribution or
servicing arrangements. By combining its assets in a central "Master
Fund" with other participating "Feeder Funds," each fund would be able
to maintain its unique distribution and servicing structure while
potentially achieving operational efficiencies through the
consolidation of portfolio management. For example, if FMR managed
three funds all with the same investment objective and policies, a
Master Feeder Fund Structure would allow FMR to manage one combined
fund (rather th a n three), but still offer three distinct
products each having different servicing features and pricing (e.g.,
one distinct product for retail investors, a second for institutional
investors , and a third for foreign investors). The purpose of a
Master Feeder Fund Structure would be to allow FMR to manage only one
fund in each investment discipline (Master Fund), but still be able to
offer that investment discipline with a variety of different servicing
features and pricing (Feeder Funds). The Master Feeder Fund Structure
is explained in more detail below. A diagram comparing a typical
"stand alone" fund structure to a Master Feeder Fund Structure is
attached to this Proxy Statement as Exhibit 2.
If the proposal is approved by shareholders, THE TRUSTEES WILL ONLY
AUTHORIZE INVESTING EACH FUND'S ASSETS IN A MASTER FUND IF THEY
DETERMINE THAT a MASTER FEEDER FUND STRUCTURE IS IN THE BEST INTERESTS
OF EACH FUND'S SHAREHOLDERS, and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to each fund or its shareholders.
THE MASTER FEEDER FUND STRUCTURE. The term "Master Feeder Fund
Structure" refers to a two-tiered arrangement in which typically one
or more mutual funds with substantially identical investment
objectives (the Feeder Funds) combine their assets by investing in a
single investment company having the same investment objective (the
Master Fund). The Feeder Funds sell their shares to the public and
invest all of their assets in shares of the Master Fund. In turn, the
Master Fund, in accordance with its and the Feeder Funds' common
investment objective, invests its assets in appropriate portfolio
securities (e.g., stocks, bonds, or money market instruments). The
Master Fund is not offered to the public: it sells its shares only to
the Feeder Funds. The individual Feeder Funds are generally sold
through different distribution channels to discrete targeted markets,
such as retail investors, institutional investors or foreign
investors. Administrative and service features will vary among Feeder
Funds depending upon the level of service sought by the fund's
investors. Simply stated, the Master Feeder Fund Structure
consolidates portfolio management and related functions at the Master
Fund (or bottom tier) level and segregates marketing and distribution
to the Feeder Fund (or top tier) level.
The Master Feeder Fund Structure may offer certain advantages over
more traditional "stand alone" funds. For example, participating
Feeder Funds may achieve economies of scale by sharing among a greater
number of investment dollars fixed expenses of portfolio management
and fund administration. Feeder Funds may also be able to achieve
greater diversification by means of a larger portfolio of securities
than could be achieved by individual funds. In short, the Master
Feeder Fund Structure gives participating Feeder Funds the ability to
tailor services and fees for particular market segments while
providing the economies of scale available to a larger fund.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually
review methods of structuring mutual funds to take advantage of
potential efficiencies. While neither the Board nor FMR has determined
that each fund should invest in a Master Fund, the Trustees believe it
could be in the best interests of each fund to adopt such a structure
at a future date.
At present, certain of each fund's fundamental investment policies
and limitations would prevent each fund from investing all of its
assets in a Master Fund and would require a vote of shareholders
before each fund could participate in a Master Feeder Fund Structure.
These policies include each fund's limitations on concentration,
diversification, and underwriting. To avoid the costs associated with
a subsequent shareholder meeting, the Trustees recommend that
shareholders approve the proposal to permit each fund to invest its
assets in a single Master Fund, without a further vote of
shareholders. If shareholders approve this proposal, the
above-mentioned restrictive policies would no longer preclude each
fund's investment in a Master Fund.
To allow possible future implementation of a Master Feeder Fund
Structure, an amendment to the Declaration of Trust is also proposed.
Proposal 3 requests approval for the adoption of an amended and
restated Declaration of Trust (New Declaration of Trust) that would
allow the Trustees to authorize each fund's conversion to a Master
Feeder Fund Structure when permitted by its policies. This proposal
would add a fundamental investment policy for each fund that
permits the Master Feeder Fund Structure.
DISCUSSION. As discussed above, FMR may manage a number of mutual
funds with similar investment objectives, policies, and limitations,
but with different features and services. Were these comparable funds
to combine their assets, operational efficiencies could be achieved,
offering the opportunity to reduce costs. Similarly, FMR anticipates
that a Master Feeder Fund Structure would facilitate the introduction
of new Fidelity mutual funds, increasing the investment options
available to shareholders.
Each fund's method of operation and shareholder services would not be
materially affected by its investment in a Master Fund, except that
the assets of each fund would be managed as part of a larger fund.
Were each fund to invest all of its assets in a Master Fund, it would
hold only a single investment security (i.e., shares of the Master
Fund). The Master Fund, in turn, would directly invest in individual
securities pursuant to its investment objective (which would be
identical to each fund's investment objective). The Master Fund would
be managed by FMR or an affiliate, such as Fidelity Investments Money
Management, Inc. in the case of a money market fund.
The Trustees would retain the right to withdraw each fund's
investments from a Master Fund at any time and would do so if the
Master Fund's investment objective and policies were no longer
appropriate for each fund. Each fund would then resume investing
directly in individual securities as it does currently.
If, as a Feeder Fund, each fund is asked to vote at a shareholder
meeting of the Master Fund, the fund, if required by applicable law or
its policies, would hold a meeting of its shareholders to vote on the
matters to be considered at the Master Fund shareholder meeting. The
fund would cast its votes at the Master Fund meeting in the same
proportion as the fund's shareholders voted at their meeting.
At present, the Trustees have not considered any specific proposal to
authorize a Master Feeder Fund Structure. As mentioned, the Trustees
will authorize investing each fund's assets in a Master Fund only if
they determine that a Master Feeder Fund Structure is in the best
interests of each fund's shareholders and if, upon advice of counsel,
they determine that the investment will not have material adverse tax
consequences to each fund or its shareholders. In determining whether
to invest in a Master Fund, the Trustees will consider, among other
things, the opportunity to reduce costs and to achieve operational
efficiencies. The Trustees will not authorize investment in a Master
Fund if doing so would materially increase costs (including fees) to
shareholders.
FMR may benefit from the use of a Master Feeder Fund Structure if
overall assets under management are increased (since FMR's fees are
based on assets). Also, FMR's expenses of providing investment and
other services to each fund may be reduced. If a fund's investment in
a Master Fund were to reduce FMR's expenses materially, the Trustees
would consider whether a reduction in FMR's management fee would be
appropriate if and when a Master Feeder Fund Structure is implemented.
PROPOSED FUNDAMENTAL POLICY. To allow each fund to invest in a Master
Fund at a future date, the Trustees recommend that each fund adopt the
following fundamental policy:
"The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
If the proposal is adopted, the Trustees intend to adopt a
non-fundamental investment limitation for each fund that states:
"The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund."
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the fundamental
limitation will become effective when 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 investment
policies will remain unchanged with respect to potential investment in
Master Funds.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY CONVERTIBLE
SECURITIES FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies (i) two aspects of the
management fee that FMR receives from the fund for managing its
investments and business affairs, and (ii) one other provision of the
fund's existing management contract with FMR (the Present Contract).
CURRENT MANAGEMENT FEE. The fund's current management fee is
calculated and paid monthly and is normally expressed as an annual
percentage of the fund's average net assets. The fee has two
components: a Basic Fee and a Performance Adjustment. The Basic Fee is
an annual percentage of the fund's average net assets for the current
month. The Basic Fee rate is the sum of a Group Fee rate, which
declines as FMR's fund assets under management increase, and a fixed
individual fund fee rate of 0.20%. The Basic Fee rate for the fund's
fiscal year ended November 30, 1997 (not including the fee amendments
discussed below) was 0.51 14 %.
The Performance Adjustment is a positive or negative dollar amount
applied to the Basic Fee and is based on the fund's performance and
assets for the most recent 36 months. If the fund outperforms its
current comparative securities index, the Merrill Lynch Convertible
Securities Ex Mandatory Index (formerly called the Merrill Lynch
Convertible Securities Index) (the Current Index), over 36 months, FMR
receives a positive Performance Adjustment, which increases the
management fee. If the fund underperforms the Current Index, FMR's
management fee is reduced by a negative Performance Adjustment. The
Performance Adjustment is an annual percentage of the fund's average
net assets over the 36-month performance period. The Performance
Adjustment rate is 0.02% for each percentage point of outperformance
or underperformance, subject to a maximum rate of 0.15% if the fund
outperforms or underperforms the Current Index by 7.5% or more over
the performance period. Performance of the fund and the Current Index
are rounded to the nearest 0.01% for purposes of the calculation.
Under the Present Contract, the Performance Adjustment for the fund's
fiscal year ended November 30, 1997 equaled (0.0361%) of the fund's
average net assets for the year.
PROPOSED MANAGEMENT CONTRACT AMENDMENTS. The Amended Contract would
(1) reduce the Group Fee rate further if FMR's assets under management
remain over $210 billion; (2) PROSPECTIVELY change the comparative
securities index used to calculate the fund's Performance Adjustment
from the Current Index to the Merrill Lynch All Convertible Securities
Index (the Proposed Index); and (3) allow FMR and the trust, on behalf
of the fund, to modify the Amended Contract, subject to the
requirements of the 1940 Act (the Present Contract requires the vote
of a majority of the fund's outstanding voting securities to authorize
all amendments - see "Modification of Management Contract Amendment
Provisions" on page for more details). The financial impact of the
proposed changes to the management fee is summarized briefly in the
following paragraphs. The changes are discussed in more detail in the
remainder of the proposal.
IMPACT OF PROPOSED GROUP FEE RATE REDUCTION. At FMR's current level
of assets under management ( approximately $625 billion as of
May 31, 1998), the proposed changes to the Group Fee rate reduce FMR's
management fee. (FMR has already voluntarily implemented the proposed
Group Fee reductions pending shareholder approval, and the Fund has
paid lower management fees as a result.) For the fund's fiscal year
ended November 30, 1997, the management fee using the proposed Group
Fee reductions (and including the Performance Adjustment as calculated
under the Present Contract) was 0.4623% of the fund's average net
assets. The proposed Group Fee reductions lower the management fee
rate by 0.013 0 % of the fund's average net assets for the year
compared to the rate FMR was entitled to receive under the Present
Contract (0.475 3 %).
IMPACT OF PROPOSED CHANGE IN PERFORMANCE ADJUSTMENT INDEX. To more
fully depict the financial effect of the proposed index change, the
following figures assume, for fiscal 1997, a complete substitution of
the Proposed Index's rolling 36-month historical performance for the
rolling 36-month historical performance of the Current Index. Under
the terms of the Amended Contract, the proposed change in the fund's
Performance Adjustment index will actually occur on a gradual basis
over the 36-month period after shareholder approval of the Amended
Contract. See "Implementation of Change in Performance Adjustment
Index" on page for details.
For the fund's fiscal year ended November 30, 1997, using the rolling
36-month historical performance of the Proposed Index instead of the
historical performance of the Current Index produces a Performance
Adjustment of (0.0814)% of the fund's average net assets for the year.
Thus, for fiscal 1997, substituting the Proposed Index's historical
performance for the Current Index's performance (and using the Present
Contract's Group Fee breakpoints without the proposed reductions)
reduces the fund's management fee by $489,651 and lowers the
management fee rate by 0.0453% of the fund's average net assets for
the year compared to the rate FMR was entitled to receive under the
Present Contract (0.475 3 %).
COMBINED EFFECT OF PROPOSED FEE CHANGES. Assuming both the proposed
Group Fee reductions and the proposed change in Performance Adjustment
index had been in effect during fiscal 1997, the fund's total
management fee for fiscal 1997 would have decreased by 0.058 3 %
of the fund's average net assets for the year. The future impact of
the proposed fee changes will depend on many different factors and may
represent an increase or decrease from the management fee under the
Present Contract. The Group Fee rate reductions will either reduce the
management fee or leave it unchanged, depending on the level of FMR's
assets under management. The proposed change to the Performance
Adjustment index will either increase the management fee or reduce it,
depending on the performance of the fund and the relative performance
of the Proposed Index.
PRESENT AND AMENDED CONTRACTS. FMR is the fund's investment adviser
pursuant to a management contract dated December 1, 1993, which was
approved by shareholders on November 17, 1993. (For information on
FMR, see the section entitled "Activities and Management of FMR," on
page .) A copy of the Amended Contract, marked to indicate the
proposed amendments, is supplied as Exhibit 3 on page . Except for the
modifications discussed above, the Amended Contract is substantially
identical to the fund's Present Contract with FMR. (For a detailed
discussion of the fund's Present Contract, refer to the section
entitled "Present Management Contracts," on page .) If approved by
shareholders, the Amended Contract will take effect on the first day
of the first month following approval and will remain in effect
through July 31, 1999 and thereafter, but only as long as its
continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the
Independent Trustees and (ii) the vote of either a majority of the
Trustees or a majority of the outstanding shares of the fund. If the
Amended Contract is not approved, the Present Contract will continue
in effect through July 31, 1999, and thereafter only as long as its
continuance is approved at least annually as described above.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on
the aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets
increase, the Group Fee rate declines. The Amended Contract would not
change the Group Fee rate if group assets are $210 billion or less.
Above $210 billion in group assets, the Group Fee rate declines under
both contracts, but it declines faster under the Amended Contract.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets.
The rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets
increase. The Amended Contract would add ten new, lower breakpoints
applicable when group assets are above $210 billion. (For an
explanation of how the Group Fee rate is used to calculate the
management fee, see the section entitled "Present Management
Contracts" on page .)
GROUP FEE RATE BREAKPOINTS
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
OVER 174 .3000% 174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
OVER 534 .2500%
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are
combined to arrive at the Group Fee rate, see "Present Management
Contracts" on page .)
EFFECTIVE GROUP FEE RATES
GROUP PRESENT AMENDED
ASSETS CONTRACT* CONTRACT
($ BILLIONS)
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
FMR voluntarily adopted the various additional Group Fee breakpoints
for group assets over $210 billion listed above in 1993, 1994, and
1996. Although the new fee breakpoints have not been added to the
management contract pending shareholder approval, FMR has voluntarily
based its management fee on the Group Fee schedule contained in the
Amended Contract since January 1, 1996. Group assets for May 31, 1998
were approximately $625 billion.
CHANGE IN PERFORMANCE ADJUSTMENT INDEX.
COMPARISON OF PROPOSED AND CURRENT INDICES. Under the Present
Contract, the fund's Performance Adjustment is based on a comparison
of the fund's performance (including expenses) to the performance of
its Current Index, the Merrill Lynch Convertible Securities Ex
Mandatory Index. If the proposal is approved, the fund will change its
Performance Adjustment index prospectively to the Proposed Index, the
Merrill Lynch All Convertible Securities Index.
The Proposed Index is broader in scope than the Current Index and is
more representative of the fund's possible investment universe. The
convertible bond market has experienced significant growth and change
in recent years. The Current Index covers approximately 85% of the
convertible securities market by tracking the performance of
traditional convertible bonds and preferred securities and liquid
yield option notes. The Proposed Index tracks the performance of the
same securities as the Current Index as well as "mandatory"
convertible securities, a relatively new type of convertible security.
Mandatory convertible securities, which represent a significant
proportion of new convertible issues, are bonds or preferred
securities that convert into stock or its equivalent value at
maturity. The holder of many types of mandatory convertibles does not
have the option of converting the instrument into stock prior to its
maturity. The fund had approximately 6.55% of its assets in mandatory
convertibles as of May 31, 1998. By including mandatory convertible
securities, the Proposed Index provides coverage of the entire
convertible securities market and is, therefore, a more appropriate
performance benchmark in light of the fund's investment policies.
RELATED CHANGE IN INVESTMENT POLICY. If the proposal is approved, the
Trustees intend to modify the definition of "convertible securities"
that is currently disclosed in the fund's prospectus. The fund
currently has a non-fundamental policy of investing at least 65% of
its assets in convertible securities. The prospectus currently defines
convertible securities as securities that are convertible into common
stock at the option of the holder. Because this definition includes
some, but not all, mandatory convertible securities, the Trustees
intend to change the definition to include all mandatory convertibles
if the fund's shareholders approve the change to the Proposed Index.
IMPLEMENTATION OF CHANGE IN PERFORMANCE ADJUSTMENT INDEX. If the
proposal is approved, the change in the fund's Performance Adjustment
index will be implemented on a prospective basis beginning with the
first day of the month following shareholder approval. However,
because the Performance Adjustment is based on a rolling 36-month
measurement period, comparisons to the Proposed Index will not be
fully implemented for 36 months after shareholder approval. During
this transition period, the fund's returns will be compared to a
36-month blended index return that reflects the performance of the
Proposed Index for the portion of the performance period subsequent to
its adoption and the performance of Current Index for the remainder of
the period. For example, the Performance Adjustment for the first full
month following shareholder approval would be calculated by comparing
the fund's performance over the 36-month performance period to a
blended index return calculated using the Current Index's performance
for the first 35 months of the performance period and the Proposed
Index's performance for the 36th month. Each month for the following
35 months, the blended index return would reflect an additional month
of the Proposed Index's performance and one less month of the Current
Index's performance. At the conclusion of the transition period, the
performance of the Current Index would be eliminated from the
Performance Adjustment calculation, and the calculation would include
only the performance of the Proposed Index.
COMPARISON OF MANAGEMENT FEES. The following table compares the
fund's management fee for the fiscal year ended November 30, 1997
under the terms of the Present Contract (not including FMR's voluntary
implementation of the Group Fee reductions) to the management fee the
fund would have incurred if both the proposed Group Fee reductions and
the proposed change in Performance Adjustment index had been in
effect. For this purpose, the Performance Adjustment amounts presented
for the Amended Contract for fiscal 1997 have been calculated using
the rolling 36-month historical performance of the Proposed Index
during the period. Management fees are expressed in dollars and as
percentages of the fund's average net assets for the year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PRESENT CONTRACT AMENDED CONTRACT DIFFERENCE
$ % $ % $ %
BASIC FEE 5,524,573 . 5114 5,383,356 .4984 (141,217) (.0130)
PERFORMANCE (389,516) (.0361) (879,167) (.0814) (489,651) (.0453)
ADJUSTMENT
TOTAL 5,135,057 .475 3 4,504,189 .4170 (630,868) (.058 3 )
</TABLE>
The following table provides data concerning the fund's management
fees and expenses as a percentage of average net assets for the fiscal
year ended November 30, 1997 under the Present Contract (not including
FMR's voluntary implementation of Group Fee reductions) and if both
the proposed Group Fee reductions and the proposed change in
Performance Adjustment index had been in effect during the same
period. As with the table above, the Performance Adjustment
incorporated in the management fee expense listed for the Amended
Contract has been calculated using the rolling 36-month historical
performance of the Proposed Index during fiscal 1997.
The following figures are based on historical expenses adjusted to
reflect current fees of the fund and are calculated as a percentage of
the fund's average net assets.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
PRESENT CONTRACT AMENDED CONTRACT
MANAGEMENT FEE .4 753 % .4 170 %
12B-1 FEE NONE NONE
OTHER EXPENSES .2 762 % .2 762 %
TOTAL FUND OPERATING EXPENSES .7 515 % . 6932 %
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. The fund has entered into arrangements
with its custodian and transfer agent whereby credits realized as a
result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total operating expenses presented in the table would have been
0.7 419 % under the Present Contract and 0.6 836 % under the
Amended Contract.
EXAMPLE: The following illustrates the expenses on a $1,000
investment under the fees and expenses stated above, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
PRESENT CONTRACT $ 8 $ 24 $ 42 $ 9 3
AMENDED CONTRACT $ 7 $ 22 $ 39 $ 8 6
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of
the fund. The example above should not be considered a representation
of past or future expenses of the fund. Actual expenses may vary from
year to year and may be higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees, on October 16, 1997. 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, and the change to
the Performance Adjustment index from June to July 1998. The Board of
Trustees received materials relating to the Amended Contract in
advance of the meeting at which the Amended Contract was considered,
and had the opportunity to ask questions and request further
information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings, the Trustees receive d materials that relate to
the Amended Contract. These materials include d: (i) information
on the investment performance of the fund, a peer group of funds and
an appropriate index or combination of indices, (ii) sales and
redemption data in respect of the fund, (iii) the economic outlook and
the general investment outlook in the markets in which the fund
invests, and (iv) notable changes in the fund's investments. The Board
of Trustees and the Independent Trustees also consider periodically
other material facts such as (1) FMR's results and financial
condition, (2) arrangements in respect of the distribution of the
fund's shares, (3) the procedures employed to determine the value of
the fund's assets, (4) the allocation of the fund's brokerage, if any,
including allocations to brokers affiliated with FMR and the use of
"soft" commission dollars to pay fund expenses and to pay for research
and other similar services, (5) FMR's management of the relationships
with the fund's custodian and subcustodians, (6) the resources devoted
to and the record of compliance with the fund's investment policies
and restrictions and with policies on personal securities transactions
and (7) the nature, cost and character of non-investment management
services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees review at least annually the background of the
fund's portfolio manager and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations and the
senior management of Fidelity's equity group. Among other things they
considered the size, education and experience of FMR's investment
staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory
and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the Amended
Contract and under separate agreements covering transfer agency
functions and pricing, bookkeeping and securities lending services, if
any. The Board of Trustees and the Independent Trustees have also
considered the nature and extent of FMR's supervision of third party
service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded it would be appropriate to change the group fee structure as
proposed herein. The Independent Trustees also considered factors
bearing on the choice of the fund's Performance Adjustment index,
including the nature of securities involved in such index and the
nature of securities held and permitted to be held by the fund.
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, the
proposed change to the fund's Performance Adjustment index, and the
proposed modification to the Present Contract's amendment provisions,
are in the best interest of the fund's shareholders. The Board of
Trustees, including the Independent Trustees, voted to approve the
submission of the Amended Contract to shareholders of the fund and
recommends that shareholders of the fund vote FOR the Amended
Contract. If approved, the Amended Contract will take effect on the
first day of the first month following shareholder approval.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY RETIREMENT
GROWTH FUND
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the Fidelity Retirement
Growth Fund approve, a proposal to adopt an amended management
contract with FMR (the Amended Contract). The Amended Contract
modifies several aspects of the management fee that FMR receives from
the fund for managing its investments and business affairs. (For
information on FMR, see the section entitled "Activities and
Management of FMR," on page .)
CURRENT MANAGEMENT FEE. The fund's management fee is calculated and
paid monthly, and is normally expressed as an annual percentage of the
fund's average net assets. The fee has two components: a Basic Fee and
a Performance Adjustment. The Basic Fee is an annual percentage of the
fund's average net assets for the current month. The Basic Fee rate is
the sum of a Group Fee rate, which declines as FMR's fund assets under
management increase, and a fixed individual fund fee rate of 0.30%.
The Basic Fee rate for the fund's fiscal year ended November 30, 1997
(not including the fee amendments discussed below) was 0.61 13 %.
The Performance Adjustment is a positive or negative dollar amount
applied to the Basic Fee and is based on the fund's performance and
assets for the most recent 36 months. If the fund outperforms the
Standard & Poor's 500 Index (formerly known as Standard & Poor's Daily
Stock Price Index of 500 Common Stocks) (the Index) over 36
months, FMR receives a positive Performance Adjustment which increases
the management fee, and if the fund underperforms the Index, the
management fee is reduced by a negative Performance Adjustment. The
Performance Adjustment is an annual percentage of the fund's average
net assets over the 36-month performance period. The Performance
Adjustment rate is 0.02% for each percentage point of outperformance
or underperformance, subject to a maximum of 0.20% if the fund
outperforms or underperforms the Index by more than ten percentage
points. Performance of the fund and the Index are rounded to the
nearest whole percentage point for purposes of the calculation.
PROPOSED MANAGEMENT CONTRACT AMENDMENTS. The Amended Contract would
(1) reduce the Group Fee rate further if FMR's assets under management
remain over $210 billion, (2) modify the Performance Adjustment
calculation to round the performance of the fund and the Index to the
nearest 0.01%, rather than the nearest 1.00%, and (3) allow FMR and
the trust, on behalf of the fund, to modify the Amended Contract
subject to the requirements of the 1940 Act (the existing Management
Contract (Present Contract) currently requires the vote of a majority
of the fund's outstanding voting securities to authorize all
amendments - see "Modification of Management Contract Amendment
Provisions" on page for more details).
IMPACT OF GROUP FEE RATE REDUCTION. At FMR's current level of assets
under management ( approximately $625 billion as of May 31,
1998), the changes to the Group Fee rate reduce the management fee.
FMR has voluntarily implemented the Group Fee reductions pending
shareholder approval, and the fund has paid lower management fees as a
result. For the fund's fiscal year ended November 30, 1997, the
management fee using the proposed Group Fee reductions (including the
Performance Adjustment) was 0.4119% of the fund's average net assets.
The Group Fee reductions lowered the management fee rate by 0.0131%
compared to the rate FMR was entitled to receive under the Present
Contract (0.4250%).
IMPACT OF PERFORMANCE ADJUSTMENT CHANGES. The more precise rounding
method for the Performance Adjustment would not have changed the
management fee rate for the fiscal year ended November 30, 1997.
COMBINED EFFECT OF FEE CHANGES. In the fiscal year ended November 30,
1997, the Group Fee reductions and the changes to the Performance
Adjustment would have resulted in a 0.0131% reduction in the total
management fee. The future impact of the proposed fee changes will
depend on many different factors, and may represent an increase or
decrease from the management fee under the Present Contract. The Group
Fee rate reductions will either reduce the management fee or leave it
unchanged, depending on the level of FMR's assets under management.
Calculating performance to the nearest 0.01% may increase or decrease
the Performance Adjustment, depending on whether performance would
have been rounded up or down.
A copy of the Amended Contract, marked to indicate the proposed
amendments, is supplied as Exhibit 4 on page . Except for the
modifications discussed above, the Amended Contract is substantially
identical to the fund's Present Contract with FMR. (For a detailed
discussion of the fund's Present Contract, refer to the section
entitled "Present Management Contracts," on page . ) If approved
by shareholders, the Amended Contract will take effect on the first
day of the first month following approval and will remain in effect
through July 31, 1999 and thereafter, but only as long as its
continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the
Independent Trustees and (ii) the vote of either a majority of the
Trustees or a majority of the outstanding shares of the fund. If the
Amended Contract is not approved, the Present Contract will continue
in effect through July 31, 1999, and thereafter only as long as its
continuance is approved at least annually as described above.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on
the aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets
increase, the Group Fee rate declines. The Amended Contract would not
change the Group Fee rate if group assets are $210 billion or less.
Above $210 billion in group assets, the Group Fee rate declines under
both contracts, but under the Amended Contract, it declines faster.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets.
The rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets
increase. The Amended Contract would add ten new, lower breakpoints
applicable when group assets are above $210 billion as illustrated in
the following table. (For an explanation of how the Group Fee rate is
used to calculate the management fee see the section entitled "Present
Management Contracts" on page .)
GROUP FEE RATE BREAKPOINTS
AVERAGE GROUP PRESENT GROUP AMENDED
ASSETS CONTRACT ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
OVER 174 .3000% 174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
OVER 534 .2500%
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are
combined to arrive at the Group Fee rate, see "Present Management
Contracts" on page .)
EFFECTIVE GROUP FEE RATES
GROUP PRESENT AMENDED
ASSETS CONTRACT CONTRACT
($ BILLIONS)
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
FMR voluntarily adopted various additional Group Fee breakpoints for
group assets over $210 billion in 1993, 1994, and 1996. Although the
new fee breakpoints have not been added to the management contract
pending shareholder approval, FMR has voluntarily based its management
fee on the Group Fee schedule contained in the Amended Contract since
January 1, 1996. Group assets for May 31, 1998 were approximately $625
billion.
MODIFICATIONS TO PERFORMANCE ADJUSTMENT - ROUNDING METHOD. The annual
Performance Adjustment rate equals 0.02% for each percentage point by
which the fund outperforms or underperforms the Index over a 36-month
performance period. Under the Present Contract, the investment
performance of both the fund and the Index are rounded to the nearest
full percentage point (for example, 15.5123% is rounded to
16%) . Rounding to full percentage points results in the
Performance Adjustment rate being applied in 0.02% increments. In
comparison, under the Amended Contract, the investment performance of
both the fund and Index are rounded to the nearest 0.01% (using the
prior example, 15.5123% is rounded to 15.51%) prior to calculating the
difference in investment performance. The more precise rounding method
results in a more accurate measure of the difference in investment
performance and allows for the Performance Adjustment to be applied in
0.0002% increments. This reduces the chance of minor changes in
performance resulting in significant changes to the Performance
Adjustment, and ultimately the fund's management fee.
During fiscal 1997, using the more precise rounding methodology had
no impact on the annual P erformance Adjustment rate.
COMPARISON OF MANAGEMENT FEES. The following table compares the
fund's management fee as calculated under the terms of the Present
Contract (not including FMR's voluntary implementation of the Group
Fee reductions) for the fiscal year ended November 30, 1997 to the
management fee the fund would have incurred if the Amended Contract
had been in effect. Management fees are expressed in dollars and as
percentages of the fund's average net assets for the year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PRESENT CONTRACT AMENDED CONTRACT DIFFERENCE
$ % $ % $ %
BASIC FEE 24,714,526 .6113 24,182,740 .5982 (531,786) (.0131)
PERFORMANCE (7,529,499) (.1863) (7,529,499) (.1863) 0 .0000
ADJUSTMENT
TOTAL 17,185,027 .4250 16,653,241 .4119 (531,786) (.0131)
MANAGEMENT
FEE
</TABLE>
The following table provides data concerning the fund's management
fees and expenses as a percentage of average net assets for the fiscal
year ended November 30, 1997 under the Present Contract (not including
FMR's voluntary implementation of the Group Fee reductions) and if the
Amended Contract had been in effect during the same period.
The following figures are based on historical expenses adjusted to
reflect current fees of the fund and are calculated as a percentage of
average net assets.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
PRESENT CONTRACT AMENDED
CONTRACT
MANAGEMENT FEE .4 250 % .41 19 %
12B-1 FEE NONE NONE
OTHER EXPENSES .2 232 % .2 232 %
TOTAL FUND OPERATING EXPENSES .6 482 % .6 351 %
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. The fund has entered into arrangements
with its custodian and transfer agent whereby credits realized as a
result of uninvested cash balances are used to reduce
custodian and transfer agent expenses . Including these reductions,
the total operating expenses presented in the table would have been
0.6 080 % under the Present Contract and 0.59 49 % under the
Amended Contract.
EXAMPLE: The following illustrates the expenses on a $1,000
investment under the fees and expenses stated above, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
PRESENT CONTRACT $ 7 $ 21 $ 36 $ 8 1
AMENDED CONTRACT $ 6 $ 2 0 $ 3 5 $ 79
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of
the fund. The example above should not be considered a representation
of past or future expenses of the fund. Actual expenses may vary from
year to year and may be higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees, on October 16, 1997. 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, and the
modifications to the Performance Adjustment calculation during the
period from June to July 1995. The Board of Trustees received
materials relating to the Amended Contract in advance of the meeting
at which the Amended Contract was considered, and had the opportunity
to ask questions and request further information in connection with
such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their monthly meetings, the Trustees receive d materials
specifically relating to the Amended Contract. These materials
include d : (i) information on the investment performance of the
fund, a peer group of funds and an appropriate index or combination of
indices, (ii) sales and redemption data in respect of the fund, (iii)
the economic outlook and the general investment outlook in the markets
in which the fund invests, and (iv) notable changes in the fund's
investments. The Board of Trustees and the Independent Trustees also
consider periodically other material facts such as (1) FMR's results
and financial condition, (2) arrangements in respect of the
distribution of the fund's shares, (3) the procedures employed to
determine the value of the fund's assets, (4) the allocation of the
fund's brokerage, if any, including allocations to brokers affiliated
with FMR and the use of "soft" commission dollars to pay fund expenses
and to pay for research and other similar services, (5) FMR's
management of the relationships with the fund's custodian and
subcustodians, (6) the resources devoted to and the record of
compliance with the fund's investment policies and restrictions and
with policies on personal securities transactions and (7) the nature,
cost, and character of non-investment management services provided by
FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all of the matters considered. Matters considered by the Board
of Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees review at least annually the background of the
fund's portfolio manager, and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations, and
the senior management of Fidelity's equity group. Among other things
they considered the size, education and experience of FMR's investment
staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory
and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the
Amended Contract and under separate agreements covering transfer
agency functions and pricing, bookkeeping and securities lending
services, if any. The Board of Trustees and the Independent Trustees
have also considered the nature and extent of FMR's supervision of
third party service providers, principally custodians and
subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. In considering the Amended Contract, the Board of
Trustees and the Independent Trustees did not identify any single
factor as all-important or controlling, and the foregoing summary does
not detail all of the matters considered. Based on their evaluation of
all material factors and assisted by the advice of independent
counsel, the Trustees concluded (i) that the existing management fee
structure is fair and reasonable and (ii) that the proposed
modifications to the management fee rates, that is the reduction of
the Group Fee Rate schedule and the modifications to the performance
adjustment calculation, and the proposed modification to the Present
Contract's amendment provisions, are in the best interest of the
fund's shareholders. The Board of Trustees, including the Independent
Trustees, voted to approve the submission of the Amended Contract to
shareholders of the fund and recommends that shareholders of the fund
vote FOR the Amended Contract.
7. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY
EQUITY-INCOME II FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the Fidelity
Equity-Income II 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 (Present 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 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 amendments, is
supplied as Exhibit 5 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
December 1, 1998 (or, if later, the first day of the first month
following approval) and will remain in effect through July 31, 1999
and thereafter, but only as long as its continuance is approved at
least annually by (i) the vote, cast in person at a meeting called for
the purpose, of a majority of the Independent Trustees and (ii) the
vote of either a majority of the Trustees or by the vote of a majority
of the outstanding shares of the fund. If the Amended Contract is not
approved, the Present Contract will continue in effect through 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 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 $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 Contact, 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 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 fee 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 174 .3000% 174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462- 498 .2600%
498 - 534 .2550%
OVER 534 .2500%
The result at various levels of group net assets is illustrated by the
table below.
EFFECTIVE ANNUAL GROUP FEE RATES
Group Net Present Amended
Assets Contract* Contract
($ billions)
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1,
1996.
Average assets under FMR's management for May 1998 were approximately
$625 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended May 1998, average
assets under management by FMR were approximately $625 billion.
The fund's management fee rate under the Amended Contract, for the
month ended May 1998, would have been 0.4889%, compared to 0.5091%
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 the fund's management fee under the
terms of the Present Contract for the fiscal year ended November 30,
1997 to the management fee the fund would have incurred if the Amended
Contract had been in effect.
Present Contract Amended Contract Percentage
Management Fee* Management Fee Difference
$81,703,033 $79,594,523 (2. 58 %)
* 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 the fund's management fee 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 Fee* Management Fee Difference
$88,072,125 $85,166,246 (3. 30 %)
* 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 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 October 16, 1997. 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, the Trustees receive d materials specifically
relating to the Amended Contract. These materials include d: (i)
information on the investment performance of the fund, a peer group of
funds and an appropriate index or combination of indices, (ii) sales
and redemption data in respect of the fund, (iii) the economic outlook
and the general investment outlook in the markets in which the fund
invests, and (iv) notable changes in the fund's investments. The Board
of Trustees and the Independent Trustees also consider periodically
other material facts such as (1) FMR's results and financial
condition, (2) arrangements in respect of the distribution of the
fund's shares, (3) the procedures employed to determine the value of
the fund's assets, (4) the allocation of the fund's brokerage, if any,
including allocations to brokers affiliated with FMR and the use of
"soft" commission dollars to pay fund expenses and to pay for research
and other similar services, (5) FMR's management of the relationships
wit h the fund's custodian and subcustodians, (6) the resources
devoted to and the record of compliance with the fund's investment
policies and restrictions and with policies on personal securities
transactions and (7) the nature, cost and character of non-investment
management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees review at least annually the background of the
fund's portfolio manager and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations and the
senior management of Fidelity's equity group. Among other things they
considered the size, education and experience of FMR's investment
staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory
and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the
Amended Contract and under separate agreements covering transfer
agency functions and pricing, bookkeeping and securities lending
services, if any. The Board of Trustees and the Independent Trustees
have also considered the nature and extent of FMR's supervision of
third party service providers, principally custodians and
subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense 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.
8. TO ELIMINATE CERTAIN FUNDAMENTAL POLICIES OF FIDELITY RETIREMENT
GROWTH FUND.
The Board of Trustees has approved, and recommends that shareholders
of the fund approve, a proposal that would eliminate certain
fundamental investment policies of Fidelity Retirement Growth Fund.
The elimination of these policies will allow the fund to more clearly
communicate its investment strategy in conformity with the
requirements of newly revised Form N-1A (the form used by open-end
investment companies like the fund to register under the Investment
Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to affect the way in
which the fund is managed, the investment performance of the fund, or
the securities or instruments in which the fund invests.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment objective
and related policies have remained essentially unchanged since the
fund commenced operations in 1983. As a result, the fund's investment
strategies and policies, as currently disclosed, are lengthier and
less well defined than the strategies and policies currently disclosed
for other Fidelity funds already conforming with revised Form N-1A.
The fund's investment objective is to seek capital appreciation. The
fund's related investment policies describing its investment
strategies currently read as follows:
"FMR will usually invest the fund's assets substantially in common
stock. However, investments are not restricted to any one type of
security. The fund does not place any emphasis on dividend or interest
income, except when FMR believes this income will have a favorable
influence on the market value of a security. It is the fund's policy
to invest in the securities of both well-known and established
companies and in securities of smaller, less well-known and
established companies. The emphasis placed on a particular type of
security will depend on FMR's interpretation of underlying economic,
financial, and security trends."
The fund's objective and the foregoing policies are fundamental,
which means they cannot be modified without a vote of the fund's
shareholders.
If the proposal is approved, the fund's investment objective would
remain unchanged while the related fundamental investment policies
enumerated above would be eliminated. Eliminating these policies will
allow the fund to comply with the requirements of revised Form N-1A
for concise, understandable descriptions of its investment objectives
and policies, and will allow the fund to more clearly communicate its
investment strategy to shareholders. The elimination of these policies
will not materially affect the manner in which the fund is managed.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will
benefit the fund and its shareholders. The Trustees recommend voting
FOR the proposal. If approved by shareholders, the elimination of the
policies will become effective when the disclosure is revised
to reflect the changes. If the proposal is not approved by the fund's
shareholders, the fund's current fundamental investment policies will
remain unchanged.
9. TO REPLACE FIDELITY RETIREMENT GROWTH FUND'S FUNDAMENTAL INVESTMENT
POLICY CONCERNING INVESTMENT FOR TEMPORARY DEFENSIVE PURPOSES WITH A
NON-FUNDAMENTAL INVESTMENT POLICY.
The Trustees recommend that the fund's fundamental investment
policy regarding temporary defensive investments be replaced with
a non-fundamental investment policy that is standard for all
Fidelity equity funds. Fundamental policies can be changed or
eliminated only with shareholder approval, while non-fundamental
policies may be changed without shareholder approval.
The fund's fundamental temporary defensive policy currently states:
"When, in FMR's judgment, economic or market conditions warrant a
more conservative approach to investment, the fund's portfolio may be
temporarily adjusted to favor more defensive securities, including
investment grade, fixed income securities of all types."
The Trustees recommend that the shareholders of the fund approve the
elimination of the foregoing policy. If the proposal is approved, the
Trustees intend to replace the fund's current fundamental temporary
defensive policy with the following non-fundamental policy:
"The fund also reserves the right to invest without limitation in
preferred stocks and investment-grade debt instruments for temporary,
defensive purposes."
Mutual funds are permitted, for temporary defensive purposes, to
invest substantially in investments that fall outside of the fund's
normal investment parameters. Temporary defensive policies essentially
permit mutual funds to invest more conservatively than they otherwise
would under certain circumstances.
The proposed non-fundamental temporary defensive policy would add
preferred stocks as possible investments for temporary defensive
purposes in addition to investment in any type of investment-grade
debt security. The fund usually invests in common stocks. Preferred
stocks are generally considered to be more conservative than common
stocks since many pay a fixed dividend. In the event that a
corporation is liquidated, the claims of owners of preferred stock
take precedence over claims of common stock owners.
Approval of this proposal would permit the fund to react to changing
market conditions by altering its temporary defensive policy, subject
to the supervision of the Trustees and applicable regulatory
requirements. Replacement of the fund's current fundamental temporary
defensive policy with the standard non-fundamental policy would also
permit the fund to conform the fund's policy to possible future
regulatory changes without having to incur the potential costs and
delays of conducting a shareholder meeting. Furthermore, the Board of
Trustees believes that the standardization of the fund's temporary
defensive policies will facilitate FMR's investment compliance efforts
and is in the best interests of shareholders.
If this proposal is adopted, the Board of Trustees may change the
non-fundamental temporary defensive policy without shareholder
approval. Adopting the proposed policy will not have a material impact
on the way the fund is managed.
CONCLUSION. The Board of Trustees believes that adopting the proposed
non-fundamental investment policy is in the best interests of the fund
and its shareholders. The Trustees recommend that shareholders vote
FOR the proposal. Upon shareholder approval, the changes will become
effective when the disclosure is revised to reflect the changes. If
the proposal is not approved by the fund's shareholders, the fund's
current fundamental temporary defensive investment policy will remain
unchanged.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 10 through 13 is to revise several
of the funds' investment limitations to conform to limitations which
are standard for similar types of funds managed by FMR. The Board of
Trustees asked FMR to analyze the various fundamental and
non-fundamental investment limitations of the Fidelity funds, and,
where practical and appropriate to a fund's investment objective and
policies, propose to shareholders adoption of standard fundamental
limitations and elimination of certain other fundamental limitations.
Generally, when fundamental limitations are eliminated, Fidelity's
standard non-fundamental limitations replace them. By making these
limitations non-fundamental, the Board of Trustees may amend a
limitation as they deem appropriate, without seeking shareholder
approval. The Board of Trustees would amend the limitations to
respond, for instance, to developments in the marketplace, or changes
in federal or state law. The costs of shareholder meetings called for
these purposes are generally borne by a fund and its shareholders.
It is not anticipated that these proposals will substantially affect
the way a fund is currently managed. However, FMR is presenting them
to you for your approval because FMR believes that increased
standardization will help to promote operational efficiencies and
facilitate monitoring of compliance with fundamental and
non-fundamental investment limitations. Although adoption of a new or
revised limitation is not likely to have any impact on the current
investment techniques employed by a fund, it will contribute to the
overall objectives of standardization.
10. TO AMEND EACH FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION.
Fidelity Convertible Securities Fund'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 by the United States government or
its agencies or instrumentalities) if, as a result thereof, more than
5% of the fund's total assets would be invested in the securities of
such issuer, or it would hold more than 10% of the voting securities
of such issuer, except that up to 25% of the value of the fund's total
assets may be invested without regard to these limitations."
Fidelity Retirement Growth 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."
Fidelity Equity-Income II 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 obligations issued
or guaranteed by the government of the United States, or any of its
agencies or instrumentalities) if, as a result thereof, (a) more than
5% of the fund's total assets would be invested in the securities of
such issuer, or (b) the fund would hold more than 10% of the voting
securities of such issuer."
The Trustees recommend that shareholders of each fund vote to replace
each fund's current fundamental investment limitation with the
following amended fundamental investment limitation governing
diversification:
"The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, (( or securities of other investment
companies )) ) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer."
The percentage limits in the proposed fundamental limitation
concerning diversification are the percentage limitations imposed by
the 1940 Act for diversified investment companies. The amended
fundamental diversification limitation makes one change from the
current limitation: subject to applicable 1940 Act requirements, it
would permit each fund to invest without limit in the securities of
other investment companies. Pursuant to an order of exemption granted
by the SEC, each fund may invest up to 25% of total assets in
non-publicly offered money market or short-term bond funds (the
Central Funds) managed by FMR or an affiliate of FMR. The Central
Funds do not currently pay investment advisory, management, or
transfer agent fees, but do pay minimal fees for services, such as
custodian, auditor, and Independent Trustees fees. FMR anticipates
that making use of the Central Funds will benefit each fund by
enhancing the efficiency of cash management and by providing increased
short-term investment opportunities. If the proposal is approved, the
Central Funds are expected to serve as a principal option for cash
investment for each fund.
If this proposal is approved, the amended fundamental diversification
limitation cannot be changed without the approval of the shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit each fund and its shareholders. The Trustees
recommend voting FOR the proposal. The amended fundamental
diversification limitation, upon shareholder approval, will become
effective when the disclosure is revised to reflect the changes. If
the proposal is not approved by the shareholders of a fund, that
fund's current fundamental diversification limitation will remain
unchanged.
11. TO AMEND FIDELITY EQUITY-INCOME II FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING BORROWING.
Fidelity Equity-Income II Fund's current fundamental investment
limitation concerning borrowing states:
"The fund may not borrow money, except that the fund may borrow money
for temporary or emergency purposes (not for leveraging or investment)
in an amount not exceeding 33 1/3% of the value of its total assets
(including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that come to exceed 33 1/3% of the value
of the fund's total assets by reason of a decline in net assets will
be reduced within three days (exclusive of Sundays and holidays) to
the extent necessary to comply with the 33 1/3% limitation."
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
borrowing:
"The fund may not borrow money, except that the fund may borrow money
for temporary or emergency purposes (not for leveraging or investment)
in an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation."
The primary purpose of the proposal is to revise the fund's
fundamental borrowing limitation to conform to a limitation that is
expected to become standard for all funds managed by FMR. (See
"Adoption of Standardized Investment Limitations" on page .) If the
proposal is approved, the amended fundamental borrowing limitation
cannot be changed without the approval of shareholders.
Adoption of the proposed fundamental limitation concerning borrowing
is not expected to affect the way in which the fund is managed, the
investment performance of the fund, or the securities or instruments
in which the fund invests. However, the proposed fundamental
limitation would clarify one point. Under the proposed limitation, the
fund must reduce borrowings that come to exceed 33 1/3% of its total
assets for any reason. While under the current limitation, the fund
must reduce borrowings that come to exceed 33 1/3% of total assets
only when there is a decline in net assets.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the amended
fundamental limitation will become effective when the
disclosure is revised to reflect the changes. If the proposal is not
approved by the shareholders of the fund, that fund's current
fundamental imitation will remain unchanged.
12. TO AMEND FIDELITY RETIREMENT GROWTH FUND'S AND FIDELITY
EQUITY-INCOME II FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
THE CONCENTRATION OF ITS INVESTMENTS IN A SINGLE INDUSTRY.
Fidelity Retirement Growth Fund's current fundamental investment
limitation concerning the concentration of its investments within a
single industry states:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United
States or its agencies or instrumentalities) if, as a result thereof,
more than 25% of the fund's total assets (taken at current value)
would be invested in securities of one or more issuers having their
principal business activities in the same industry."
Fidelity Equity-Income II Fund's current fundamental investment
limitation concerning the concentration of its investments within a
single industry states:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United
States or any of its agencies or instrumentalities) if, as a result,
more than 25% of the fund's total assets (taken at current value)
would be invested in the securities of issuers having their principal
business activities in the same industry."
The Trustees recommend that shareholders of Fidelity Retirement
Growth Fund and Fidelity Equity-Income II Fund vote to replace each
fund's fundamental investment limitation with the following amended
fundamental investment limitation governing concentration:
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry."
The primary purpose of the proposal is to revise each fund's
fundamental concentration limitation to conform to a limitation which
is expected to become standard for all funds managed by FMR. (See
"Adoption of Standardized Investment Limitations" on page .) If the
proposal is approved, the new fundamental concentration limitation
could not be changed without the approval of shareholders.
Adoption of the proposed amended limitation on concentration is not
expected to affect the way each fund is managed, the investment
performance of each fund, or the securities or instruments in which
each fund invests.
The proposed amended limitation is not substantially different from
the current policy and is not likely to have any impact on the
investment techniques employed by each fund.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the amended
fundamental limitation 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
limitation will remain unchanged.
13. TO AMEND FIDELITY CONVERTIBLE SECURITIES FUND'S FUNDAMENTAL
INVESTMENT LIMITATION CONCERNING UNDERWRITING.
The Fidelity Convertible Securities Fund's current fundamental
investment limitation concerning underwriting states:
"The fund may not underwrite securities issued by others, except to
the extent that the sale of restricted securities or the purchase of
bonds in accordance with the fund's investment objective, policies,
and limitations, either directly from the issuer, or from an
underwriter for an issuer, may be deemed to be underwriting."
The trustees recommend that shareholders of the fund vote to replace
this limitation with the following fundamental limitation governing
underwriting:
"The fund may not underwrite securities issued by others, except to
the extent that the fund may be considered an underwriter within the
meaning of the Securities Act of 1933 in the disposition of restricted
securities."
The primary purpose of the proposed amendment is to clarify the
fund's fundamental policy with respect to underwriting. The proposal
also serves to conform the fund's fundamental investment limitation
concerning underwriting to a limitation which is expected to become
standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page .) If the proposal is approved, the
new limitation may not be changed without the approval of
shareholders.
Adoption of the proposed limitation concerning underwriting is not
expected to affect the way in which the fund is managed, the
investment performance of the fund, or the securities or instruments
in which the fund invests.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the amended
fundamental limitation 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
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 advisory
fees, net assets, and total expenses of funds with investment
objectives similar to Fidelity Convertible Securities Fund, Fidelity
Retirement Growth Fund, and Fidelity Equity-Income II Fund and advised
by FMR is contained in the Table of Average Net Assets and Expense
Ratios in Exhibit s 6 and 7 beginning on page .
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions that have occurred to date have included mortgages
and personal and general business loans. In the judgment of FMR, the
terms and conditions of those transactions were not influenced by
existing or potential custodial or other fund relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter
S. Lynch, Vice Chairman. Each of the Directors is also a Trustee of
the trust. Messrs. Johnson 3d, Pozen, J. Gary Burkhead, John H.
Costello, Eric D. Roiter, Richard A. Silver, Leonard M. Rush, Ms.
Abigail Johnson, Richard A. Spillane Jr., David Felman (Fidelity
Convertible Securities Fund), and Fergus Shiel (Fidelity Retirement
Growth Fund) and Ms. Bettina Doulton (Fidelity Equity-Income II Fund)
are currently officers of the trust and officers or employees of FMR
or FMR Corp. With the exception of Mr. Costello , Mr. Silver,
and Mr. Felman, all of these persons hold or have options to
acquire stock of FMR Corp. The principal business address of each of
the Directors of FMR is 82 Devonshire Street, Boston, Massachusetts
02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore,
under the 1940 Act may be deemed to form a controlling group with
respect to FMR Corp.
During the period December 1, 1996 through July 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 FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed
in 1986 to provide research and investment advice with respect to
companies based outside the United States for certain funds for which
FMR acts as investment adviser. FMR may also grant the sub-advisers
investment management authority as well as authority to buy and sell
securities for certain of the funds for which it acts as investment
adviser, if FMR believes it would be beneficial to a fund.
Funds with investment objectives similar to Fidelity Convertible
Securities Fund, Fidelity Retirement Growth Fund, and Fidelity
Equity-Income II Fund managed by FMR with respect to which FMR
currently has sub-advisory agreements with either FMR U.K. or FMR Far
East, and the net assets of each of these funds, are indicated in the
Table of Average Net Assets and Expense Ratios in Exhibits 6 and 7
beginning on page .
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is
President and a Trustee of the trust and other funds advised by FMR;
Chairman and a Director of Fidelity Investments Money Management, Inc.
(FIMM); Chairman, Chief Executive Officer, President, and a Director
of FMR Corp., and a Director and Chairman of the Board and of the
Executive Committee of FMR. In addition, Mr. Pozen is Senior Vice
President and a Trustee of the trust and of other funds advised by
FMR; President and a Director of FMR; and President and a Director of
FIMM. Each of the Directors is a stock holder of FMR Corp. The
principal business address of the Directors is 82 Devonshire Street,
Boston, Massachusetts 02109.
PRESENT MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other
services. Under its management contract with each fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of each fund in accordance with its
investment objective, policies, and limitations. FMR also provides
each fund with all necessary office facilities and personnel for
servicing each fund's investments, compensates all officers of each
fund and all Trustees who are "interested persons" of the trust or of
FMR, and all personnel of each fund or FMR performing services
relating to research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal and state laws;
developing management and shareholder services for each fund; and
furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees. Services provided by affiliates of FMR will continue
under the proposed management contracts described in proposals 5, 6,
and 7.
In addition to the management fee payable to FMR, each fund pays
transfer agent and pricing and bookkeeping fees to Fidelity Service
Company, Inc. (FSC), an affiliate of FMR, its transfer, dividend
disbursing, and shareholder servicing agent. Although each fund's
current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders, the
trust, on behalf of each fund has entered into a revised transfer
agent agreement with FSC, pursuant to which FSC bears the costs of
providing these services to existing shareholders. Other expenses paid
by each fund include interest, taxes, brokerage commissions, and each
fund's proportionate share of insurance premiums and Investment
Company Institute dues. Each fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation
to which each fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including
reimbursement for out-of-pocket expenses, paid to FSC by the funds for
fiscal 1997 were as follows:
Fund Transfer Pricing &
Agency Fees Bookkeeping
Fidelity Convertible Securities Fund $ 2,258,000 $ 474,000
Fidelity Retirement Growth Fund $ 7,710,000 $ 811,000
Fidelity Equity-income II Fund $ 30,084,000 $ 841,000
FSC also received fees for administering each fund's securities
lending program. Securities lending fees are based on the number and
duration of individual securities loans. Securities lending fees for
fiscal 1997 for Fidelity Convertible Securities Fund, Fidelity
Retirement Growth Fund, and Fidelity Equity-Income II F und were
$4,000, $0, and $0, respectively.
Each fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. Each
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
FMR is each fund's manager pursuant to management contracts, each
dated dated December 1, 1993, which were approved by shareholders of
each fund on November 17, 1993.
For the services of FMR under Fidelity Equity-Income II Fund's
management contract, the fund pays FMR a monthly management fee which
has two components: a group fee rate and an individual fund fee rate.
For the services of FMR under Fidelity Convertible Securities Fund's
and Fidelity Retirement Growth Fund's management contract, each fund
pays FMR a monthly management fee which has two components: a basic
fee, which is the sum of a group fee rate and an individual fund fee
rate, and a performance adjustment based on a comparison of the
funds ' performance to that of the Merrill Lynch Convertible
Securities Index and the Standard & Poor's 500 Index (the Index),
respectively.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown below on the left. The schedule
below on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $543 billion of group net assets - the approximate level for
November 30, 1997 - was 0.2947%, which is the weighted average of the
respective fee rates for each level of group net assets up to $543
billion.
On November 1, 1993, August 1, 1994, and January 1, 1996, FMR
voluntarily modified the breakpoints in each fund's group fee rate
schedule. The revised group fee rate schedule for each fund, depicted
below, provides for lower management fee rates as FMR's assets under
management increase.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
The individual fund fee rate for each of Fidelity Convertible
Securities Fund and Fidelity Equity-Income II Fund is 0.20%. The
individual fund fee rate for Fidelity Retirement Growth Fund is 0.30%.
Based on the average group net assets of the funds advised by FMR for
November 30, 1997 the funds' annual management/basic fee rate would be
calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Management Fee
Fee Rate Rate
Fidelity 0.2947% + 0.20% = 0.4947%
Equity-Income II
Fund
Group Fee Rate Individual Fund Basic Fee Rate
Fee Rate
Fidelity 0.2947% + 0.20% = 0.4947%
Convertible
Securities Fund
Fidelity 0.2947% + 0.30% = 0.5947%
Retirement
Growth Fund
</TABLE>
One-twelfth of this annual management or basic fee rate is applied to
a fund's net assets averaged for the most recent month, giving a
dollar amount, which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Fidelity
Convertible Securities Fund and Fidelity Retirement Growth Fund is
subject to upward or downward adjustment, depending upon whether, and
to what extent, each fund's investment performance for the performance
period exceeds, or is exceeded by, the record of their respective
Index over the same period. The performance period consists of the
most recent month plus the previous 35 months. For Fidelity Retirement
Growth Fund, each percentage point of difference, calculated to the
nearest 1.00% (up to a maximum difference of +/-10.00 ) is multiplied
by a performance adjustment rate of 0.02%. Thus, the maximum
annualized adjustment rate is +/-0.20%. For Fidelity Convertible
Securities Fund, each percentage point of difference, calculated to
the nearest 0.01%, (up to a maximum difference of +/-7.50) is
multiplied by a performance adjustment rate of 0.02%. Thus, the
maximum annualized adjustment rate is +/-0.15%. This performance
comparison is made at the end of each month. One twelfth (1/12) of
this rate is then applied to that fund's average net assets for
the entire performance period, giving a dollar amount which will be
added to (or subtracted from) the basic fee.
Each fund's performance is calculated based on change in net asset
value (NAV). For purposes of calculating the performance adjustment,
any dividends or capital gain distributions paid by a fund are
treated as if reinvested in fund shares at the NAV as of the record
date for payment. The record of each fund's Index is based on change
in value and is adjusted for any cash distributions from the companies
whose securities compose the Index.
Because the adjustment to the basic fee is based on Fidelity
Convertible Securities Fund's and Fidelity Retirement Growth Fund's
performance compared to the investment record of their respective
Index, the controlling factor is not whether Fidelity Convertible
Securities Fund's and Fidelity Retirement Growth Fund's performance is
up or down per se, but whether it is up or down more or less than the
record of the Index. Moreover, the comparative investment performance
of Fidelity Convertible Securities Fund and Fidelity Retirement Growth
Fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
During fiscal 1997, FMR received $ 79,594,523 fo r its services
as investment adviser to Fidelity Equity-Income II Fund. This fee was
equivalent to 0.4980% of the average net assets of the fund.
During fiscal 1997, FMR received $ 4,993,840 and
$ 16,653,241 , respectively, for its services as investment
adviser to Fidelity Convertible Securities Fund and Fidelity
Retirement Growth Fund. These fees, which include both the basic fee
and the performance adjustment, were equivalent to 0.4623% and
0.4119%, respectively, of the average net assets of Fidelity
Convertible Securities Fund and Fidelity Retirement Growth Fund. For
1997, the downward performance adjustments amounted to $389,516
and $ 7,529,499 , respectively, for Fidelity Convertible
Securities Fund and Fidelity Retirement Growth Fund.
FMR may, from time to time, agree to reimburse all or a portion of
each fund's total operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
SUB-ADVISORY AGREEMENTS
On behalf of Fidelity Convertible Securities Fund, Fidelity
Retirement Growth Fund, and Fidelity Equity-Income II Fund, FMR has
entered into sub-advisory agreements with FMR U.K. and FMR Far East.
Pursuant to the sub-advisory agreements, FMR may receive investment
advice and research services outside the United States from the
sub-advisers. On behalf of each fund, FMR may also grant the
sub-advisers investment management authority as well as the authority
to buy and sell securities if FMR believes it would be beneficial to
the funds. The funds' sub-advisory agreements, each dated December 1,
1993, were approved by shareholders of each fund on November 17, 1993.
Currently, FMR U.K. and FMR Far East each focus on issuers in
countries other than the United States such as those in Europe, Asia,
and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. Under the sub-advisory agreements FMR pays
the fees of FMR U.K. and FMR Far East. For providing non-discretionary
investment advice and research services, FMR pays FMR U.K. and FMR Far
East fees equal to 110% and 105%, respectively, of FMR U.K.'s and FMR
Far East's costs incurred in connection with providing investment
advice and research services.
On behalf of each fund, for providing discretionary investment
management and executing portfolio transactions, FMR pays FMR U.K. and
FMR Far East a fee equal to 50% of its monthly management fee rate
with respect to each fund's average net assets managed by the
sub-adviser on a discretionary basis.
For providing investment advice and research services, on behalf of
each fund, the fees paid to the sub-advisers for the fiscal year ended
November 30, 1997 were as follows:
FMR U.K. FMR Far East
Fidelity Convertible Securities Fund $ 21,267 $ 18,901
Fidelity Retirement Growth Fund $ 294,620 $ 280,051
Fidelity Equity-Income II Fund $ 918,505 $ 867,163
For discretionary investment management and execution of portfolio
transactions, no fees were paid to the sub-advisers by FMR on behalf
of the funds for the past three fiscal years.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by FMR pursuant to authority contained
in the fund's management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (Japan), LLC
(FBSJ), indirect subsidiaries of FMR Corp., if the commissions are
fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. Prior
to December 9, 1997, FMR used research services provided by and placed
agency transactions with Fidelity Brokerage Services (FBS), an
indirect subsidiary of FMR Corp.
The following table shows the amount of brokerage commissions paid by
each fund to NFSC and FBS, and the approximate percentage of brokerage
commissions paid by each fund to NFSC and FBS, during fiscal 1997.
Fund Total % of Total % of
Amount Aggregate Amount Aggregate
Paid to Commissions Paid to Commissions
NFSC Paid to NFSC FBS Paid to FBS
Fidelity Convertible $ 130,000 8.25% $ 0 0.0%
Securities Fund
Fidelity Retirement $ 2,759,000 25. 0 % $ 176,000 1.6%
Growth Fund
Fidelity $ 3,464,000 17.8% $ 228,000 1.2%
Equity-Income II
Fund
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to
the Secretary of the Trust, 82 Devonshire Street, Boston,
Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Service Company, Inc.,
P.O. Box 789, Boston, Massachusetts 02102, whether other persons are
beneficial owners of shares for which proxies are being solicited and,
if so, the number of copies of the Proxy Statement and Annual Reports
you wish to receive in order to supply copies to the beneficial owners
of the respective shares.
EXHIBIT 1
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
AMENDED AND RESTATED DECLARATION OF TRUST
DATED [JANUARY 19, 1995] ((_____________))
AMENDED AND RESTATED DECLARATION OF TRUST, made [January 19, 1995]
((_________)) by each of the Trustees whose signature is affixed
hereto (the "Trustees").
WHEREAS, the Trustees desire to amend and restate this Declaration of
Trust for the sole purpose of supplementing the Declaration ((of
Trust)) to incorporate amendments duly adopted; [and]
WHEREAS, this Trust was initially made on October 20, 1982 by Edward
C. Johnson 3d, Caleb Loring, Jr., and Frank Nesvet in order to
establish a trust fund for the investment and reinvestment of funds
contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in
[Trust] ((trust)) under this Amended and Restated Declaration of Trust
as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "Fidelity Financial Trust."
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;] ((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 Fidelity Financial Trust;]
(((b) "Bylaws" shall mean the bylaws of the Trust, if any, as amended
from time to time;
(c) "Class" refers to the class of Shares of a Series of the Trust
established in accordance with the provisions of Article III;
(d) "Declaration of Trust" means this Amended and Restated
Declaration of Trust, as further amended or restated, from time to
time;))
[(c)](((e))) "Net Asset Value" means the net asset value of each
Series of the Trust ((or Class thereof)) determined in the manner
provided in Article X, Section 3;
[(d)] (((f))) "Shareholder" means a record owner of Shares of the
Trust;
[f] (((g))) "Shares" means the equal proportionate transferable units
of interest into which the beneficial interest of ((the Trust or))
each Series shall be divided from time to time, ((including such class
or classes of shares as the Trustees may from time to time create and
establish including)) [and includes] fractions of Shares as well as
whole Shares consistent with the requirements of Federal and/or
[other] ((state)) securities laws [and]
(h) "Series" refers to ((any)) series of Shares of the Trust
established in accordance with the provisions of Article III;
(((i) "Trust" refers to and reference to the Trust, when applicable
to one or more Series of the Trust, shall refer to any such Series;))
[(e)](((j))) [The]"Trustees" refer to the individual trustees in
their capacity as trustees hereunder of the Trust and their successor
or successors for the time being in office as such trustee or
trustees; ((and))
[(g)](((k))) [The]"1940 Act" refers to the Investment Company Act of
1940, as amended from time to time[; and]((.))
ARTICLE II
PURPOSE OF TRUST
The 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]((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 ((of any Series or
Class)) of the Trust (((a))) to create and establish (and to change in
any manner) Shares ((or any Series or Classes thereof)) with such
preferences, voting powers, rights((,)) and privileges as the Trustees
may((,)) from time to time((,))determine((; (b))) to divide or combine
the Shares ((or any Series or Classes thereof)) into a greater or
lesser number((; (c))) to classify or reclassify any issued Shares
into one or more Series ((or Classes)) of Shares((; (d))) to abolish
any one or more Series or ((Classes)) of Shares((;)) and (((e))) to
take such other action with respect to the Shares as the Trustees may
deem desirable.
[ESTABLISHMENT OF SERIES]
((ESTABLISHMENT OF SERIES AND CLASSES))
Section 2. The establishment of any Series ((or Class thereof)) shall
be effective upon the adoption of a resolution by a majority of the
then Trustees setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series ((or
Class)). At any time that there are no Shares outstanding of any
particular Series ((or Class)) previously established and designated,
the Trustees may by a majority vote abolish [that] ((such)) Series
((or Class)) and the establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of
the Trust[.] ((or a transfer or similar agent.)) The Trustees may make
such rules as they consider appropriate for the transfer of Shares and
similar matters. The record books of ((the Trust as kept by)) the
Trust ((or by any transfer or similar agent, as the case may be,))
shall be conclusive as to who are the holders of Shares and as to the
number of Shares held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from
such persons and on such terms as they may((,)) from time to time((,))
authorize. Such investments may be in the form of cash [or]((,
securities, or other property)) in which the appropriate Series is
authorized to invest, valued as provided in Article X, Section 3.
After the date of the initial contribution of capital, the number of
Shares to represent the initial contribution may in the Trustees'
discretion be considered as outstanding((,)) and the amount received
by the Trustees on account of the contribution shall be treated as an
asset of the Trust. Subsequent investments in the Trust shall be
credited to each Shareholder's account in the form of full Shares at
the Net Asset Value per Share next determined after the investment is
received; provided, however, that the Trustees may, in their sole
discretion[,] (a) impose a sales charge ((or other fee)) upon
investments in the Trust ((or Series or any Classes thereof,)) and (b)
issue fractional Shares.
[ASSETS AND LIABILITIES OF SERIES]
((ASSETS AND LIABILITIES OF SERIES AND CLASSES))
Section 5. All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange, or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be referred to as "assets
belonging to" that Series. In addition, any assets, income, earnings,
profits, and proceeds thereof, funds, or payments [which] ((that)) are
not readily identifiable as belonging to any particular Series ((or
Class)), shall be allocated by the Trustees between and among one or
more of the Series ((or Classes)) in such manner as they, in their
sole discretion, deem fair and equitable. Each such allocation shall
be conclusive and binding upon the Shareholders of all Series ((or
Classes)) for all purposes and shall be referred to as assets
belonging to that Series ((or Class)). The assets belonging to a
particular Series shall be so recorded upon the books of the Trust [or
of its agent or agents] and shall be held by the Trustees in [Trust]
((trust)) for the benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with
the liabilities of that Series and all expenses, costs, charges, and
reserves attributable to that Series((, except that liabilities and
expenses may, in the Trustees' discretion, be allocated solely to a
particular Class and, in which case, shall be borne by that Class)).
Any general liabilities, expenses, costs, charges, or reserves of the
Trust [which] ((that)) are not readily identifiable as belonging to
any particular Series ((or Class)) shall be allocated and charged by
the Trustees between or among any one or more of the Series ((or
Classes)) in such manner as the Trustees, in their sole discretion,
deem fair and equitable ((and shall be referred to as "liabilities
belonging to" that Series or Class)). Each such allocation shall be
conclusive and binding upon the Shareholders of all Series ((or
Classes)) for all purposes. Any creditor of any Series may look only
to the assets of that Series to satisfy such creditor's debt. ((No
Shareholder or former Shareholder of any Series shall have a claim on
or any right to any assets allocated or belonging to any other
Series.))
NO PREEMPTIVE RIGHTS
Section 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the
Trust or the Trustees.
[LIMITATION OF PERSONAL LIABILITY]
((STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY))
((Section 7. Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every shareholder by
virtue of having become a shareholder shall be held to have expressly
assented and agreed to be bound by the terms hereof. No Shareholder of
the Trust and of each Series shall be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or by or on behalf of
any Series.)) The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum
of money or assessment whatsoever other than such as the Shareholder
may, at any time, personally agree to pay by way of subscription for
any Shares or otherwise. Every note, bond, contract, or other
undertaking issued by or on behalf of the Trust or the Trustees
relating to the Trust ((or to a Series)) shall include a recitation
limiting the obligation represented thereby to the Trust ((or to one
or more Series)) and its ((or their)) assets (but the omission of such
a recitation shall not operate to bind any Shareholder ((or
Trustee))).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable
to carry out that responsibility.
[ELECTION: INITIAL TRUSTEES]
((INITIAL TRUSTEES; ELECTION))
Section 2. ((The initial Trustees shall be at least three individuals
who shall affix their signatures hereto.)) On a date fixed by the
Trustees, the Shareholders shall elect not less than three Trustees. A
Trustee shall not be required to be a Shareholder of the Trust. [The
initial Trustees shall be Edward C. Johnson 3d, Caleb Loring, Jr. and
Frank Nesvet and such other individuals as the Board of Trustees shall
appoint pursuant to Section 4 of the Article IV.]
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a)
that any Trustee may resign his trust by written instrument signed by
him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds (((2/3))) of the number of Trustees
prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (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, ((or)) removal, [incapacity, or inability] of any of the
Trustees, or in case a vacancy shall, by reason of an increase in
number ((of the Trustees,)) or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the
limitations under the [Investment Company Act of] 1940 ((Act)). Such
appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by recording in the records of
the Trust, whereupon the appointment shall take effect. An appointment
of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement,
resignation((,)) or increase in number of Trustees effective at a
later date, provided that said appointment shall become effective only
at or after the effective date of said retirement, resignation((,)) or
increase in number of Trustees. As soon as any Trustee so appointed
shall have accepted this [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] ((TRUSTEES))
Section 5. Any Trustee may, by power of attorney, delegate his power
for a period not exceeding six (((6))) months at any one time to any
other Trustee or Trustees, provided that in no case shall less than
two (((2))) Trustees personally exercise the other powers hereunder
except as herein otherwise expressly provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees, not less than three (3) nor more
than twelve (12), serving hereunder at any time shall be determined by
the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is [absent from the
Commonwealth of Massachusetts or, if not a domiciliary of
Massachusetts, is absent from his state of domicile, or is] physically
or mentally incapacitated by reason of disease or otherwise, the other
Trustees shall have all the powers hereunder and the certificate of
the other Trustees of such vacancy, [absence] or incapacity[,] shall
be conclusive[, provided, however, that no vacancy shall remain
unfilled for a period longer than six calendar months].
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart
from any assets now or hereafter held in any capacity other than as
Trustee hereunder by the Trustees or any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in
the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees((,)) in all instances((,)) shall act as
principals[,] and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and
instruments that they may consider necessary or appropriate in
connection with the management of the Trust. ((Except as otherwise
provided herein or in the 1940 Act,)) [The] ((the)) Trustees shall not
in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power
to make any and all investments [which] ((that)) they, in their
[uncontrolled] discretion, shall deem proper to accomplish the purpose
of this Trust. Subject to any applicable limitation in [the] ((this))
Declaration of Trust or the Bylaws of the Trust, ((if any,)) the
Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested[,]without((,)) in any event, being bound
or limited by any present or future law or custom in regard to
investments by Trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on((,)) and lease any or all of
the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to
the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ [a bank or trust company] ((one or more banks, trust
companies, companies that are members of a national securities
exchange, or other entities permitted under the 1940 Act, as modified
by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted or interpretative releases of the
Commission thereunder,)) as custodian((s)) of any assets of the Trust
subject to any conditions set forth in this Declaration of Trust or in
the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or
both.
(f) To provide for the distribution of interests of the Trust either
through a [principal] ((Principal)) [underwriter] ((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 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].
(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 from a bank for temporary or emergency purposes
and not for investment purposes. The Trustees shall not pledge,
mortgage, or hypothecate the assets of the Trust except that, to
secure borrowings, the Trustees may pledge securities.]
(((r) To borrow money, and to pledge,mortgage, or hypothecate the
assets of the Trust, subject to the applicable requirements of the
1940 Act.))
(s) To establish, from time to time, a minimum total investment for
Shareholders[,] and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving
notice to such Shareholder.
(((t) To operate as and carry on the business of an investment
company and to exercise all the powers necessary and appropriate to
the conduct of such operations.
(u) To interpret the investment policies, practices or limitations of
any Series.
(v) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects or powers.
(w) Notwithstanding any other provision hereof, to invest all of the
assets of any Series in a single open-end investment company,
including investment by means of transfer of such assets in exchange
for an interest or interests in such investment company.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees.
Any action by one or more of the Trustees in their capacity as such
hereunder shall be deemed an action on behalf of the Trust or the
applicable Series and not an action in an individual capacity.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust or any Series or
Class thereof.))
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see
to the application of any payments made or property transferred to the
Trustees or upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may issue and sell
or cause to be issued and sold Shares to and buy such Shares from any
such person of any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and
purchase of such Shares; and all subject to any restrictions which may
be contained in the Bylaws[.]((, if any.))
ACTION BY THE TRUSTEES
Section 3. [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((, telefax,)) [or]
telegram((,)) or ((other electro-mechanical means)) sent to his home
or business address at least twenty-four (((24))) hours in advance of
the meeting or by written notice mailed to his home or business
address at least seventy-two (((72))) hours in advance of the meeting.
Notice need not be given to any Trustee who attends the meeting
without objecting to the lack of notice or who executes a written
waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may
delegate to any one of their number their authority to approve
particular matters or take particular actions on behalf of the Trust.
((Written consents or waivers of Trustees may be executed in one or
more counterparts. Execution of a written consent or waiver and
delivery thereof to the Trust may be accomplished by telefax or other
electro-mechanical means.))
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees may appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all
meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the
Trust, and may be the chief executive, financial and accounting
officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets
belonging to the appropriate Series for their expenses and
disbursements, including, without limitation, fees and expenses of
Trustees who are not Interested Persons of the Trust((;)) interest
expense, taxes, fees and commissions of every kind[,]((;)) expenses of
pricing Trust portfolio securities[,]((;)) expenses of issue,
repurchase and redemption of shares including expenses attributable to
a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and
[State] ((state)) laws and regulations[,]((;)) charges of custodians,
transfer agents, and registrars[,]((;)) expenses of preparing and
setting up in type [Prospectuses] ((prospectuses)) and [Statements]
((statements)) of [Additional] ((additional)) [Information,]
((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[,]((;)) 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] ((Such)) [contract] ((contracts)) shall be
on such terms and conditions as the Trustees may((,)) in their
discretion((,)) determine not inconsistent with the provisions of this
Declaration of Trust or of the Bylaws, if any. Such services may be
provided by one or more entities.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2
and 3 of this Article VII or in Article IX hereof may be entered into
with any corporation, firm, partnership, trust or association,
although one or more of the Trustees or officers of the Trust may be
an officer, director, trustee, shareholder, or member of such other
party to the contract, and no such contract shall be invalidated or
rendered voidable by reason of the existence of any relationship, nor
shall any person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when
entered into was reasonable and fair and not inconsistent with the
provisions of this Article VII or the Bylaws, if any. The same person
(including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections
1, 2 and 3 above or Article IX, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any
or all of the contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
Section 5. Any contract entered into pursuant to Sections 1 and 2 of
this Article VII shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act ((as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretative releases of the
Commission)) ([including any amendments thereof] or other applicable
Act of Congress hereafter enacted) with respect to its continuance in
effect, ((its amendment,)) its termination, and the method of
authorization and approval of such contract or renewal thereof [and no
amendment to any contract, entered into pursuant to Section 1 shall be
effective unless assented to by a Majority Shareholder Vote].
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote [(i)] (((a)))
for the election of Trustees as provided in Article IV, Section 2[,
(ii)]((; (b))) for the removal of Trustees as provided in Article IV,
Section 3(d)[, (iii)]((; (c))) with respect to any investment advisory
or management contract as provided in Article VII, Section 1[, (iv)]
((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[, (v)]((; (f))) to the same extent as the shareholders of a
Massachusetts business corporation, as to whether or not a court
action, proceeding or claim should be brought or maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders, provided, however, that a Shareholder of a particular
Series shall not be entitled to bring any derivative or class action
on behalf of any other Series of the Trust[, and (vi)]((; 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
[Securities and Exchange] Commission [(the "Commission")] or any
[State] ((state)), as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all [shares]
((Shares)) shall be voted by individual Series, except [(i)] ((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 [(ii)] (((b))) when the Trustees have
determined that the matter affects only the interests of one or more
Series, then only the Shareholders of such Series shall be entitled to
vote thereon. ((The Trustees may also determine that a matter affects
only the interests of one or more Classes of a Series, in which case,
any such matter shall be voted on by such Class or Classes.)) A
Shareholder of each Series ((or Class)) 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 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 [the
same may be amended from time to time] ((modified by or interpreted by
any applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission,))
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] ((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 [or
such other entity] as shall be allowed by the Commission or by the
1940 Act, as custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may
be contained in the Bylaws of the Trust((, if any)):
(1) to hold the securities owned by the Trust and deliver the same
upon written order or oral order[;]((,)) if confirmed in writing, or
by such electro-mechanical or electronic devices as are agreed to by
the Trust and the custodian, if such procedures have been authorized
in writing by the Trust;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(2) to compute, if authorized to do so [by the Trustees], the Net
Asset Value of any Series ((or Class thereof)) in accordance with the
provisions hereof; all upon such basis of compensation as may be
agreed upon between the Trustees and the custodian.
[If so directed by a Majority Shareholder Vote, the custodian shall
deliver and pay over all property of the Trust held by it as specified
in such vote.]
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and
services of the custodian, and upon such terms and conditions, as may
be agreed upon between the custodian and such sub-custodian and
approved by the Trustees, provided that in every case such
sub-custodian shall be a bank((, a company that is a member of a
national securities exchange,)) [or] ((trust company,)) or ((other
entity)) [organized under the laws of the United States or one of the
states thereof] ((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
[individual] ((undivided)) profits of at least two million dollars
($2,000,000)((,)) or such other [person] ((amount)) as [may] ((shall))
be [permitted] ((allowed)) by the Commission[,] or [otherwise in]
((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] ((Class)) or [series] ((Series)) of any issuer deposited
within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such
securities[,]((;)) provided that all such deposits shall be subject to
withdrawal only upon the order of the Trust ((or its custodian,
subcustodians, or other authorized agents)).
ARTICLE X
[DISTRIBUTIONS AND REDEMPTIONS]
((DISTRIBUTIONS, REDEMPTIONS AND DETERMINATION OF NET ASSET VALUE))
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in
the discretion of the Trustees.
(b) The Trustees shall have ((the)) power, to the fullest extent
permitted by the laws of Massachusetts, at any time to declare and
cause to be paid dividends on Shares of a particular Series, from the
assets belonging to that Series, which dividends, at the election of
the Trustees, may be paid daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, and may be payable in Shares of that
Series((, or Classes thereof,)) at the election of each Shareholder of
that Series.
((The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or related plans as
the Trustees shall deem appropriate.))
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute ((a stock dividend))
pro rata among the Shareholders of a particular Series((, or Class
thereof,)) as of the record date of that Series ((or Class)) fixed as
provided in ((Article XII,)) Section 3 [hereof a "stock dividend"].
REDEMPTIONS
Section 2. In case any holder of record of Shares of a particular
Series ((or Class of a Series)) desires to dispose of his Shares, he
may deposit at the office of the transfer agent or other authorized
agent of that Series a written request or such other form of request
as the Trustees may((,)) from time to time((,)) authorize, requesting
that the Series purchase the Shares in accordance with this Section 2;
and the Shareholder so requesting shall be entitled to require the
Series to purchase, and the Series or the principal underwriter of the
Series shall purchase his said Shares, but only at the Net Asset Value
thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series((,)) and payment for such
Shares ((less any applicable deferred sales charges and/or fees))
shall be made by the Series or the principal underwriter of the Series
to the Shareholder of record within seven (7) days after the date upon
which the request is effective.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
Section 3. The term "Net Asset Value" of any Series ((or Class))
shall mean that amount by which the assets of that Series[,] ((or
Class)) exceed its liabilities, all as determined by or under the
direction of the Trustees. Such value per Share shall be determined
separately for each Series ((or Class)) of Shares and shall be
determined on such days and at such times as the Trustees may
determine. Such determination shall be made with respect to securities
for which market quotations are readily available, at the market value
of such securities; and with respect to other securities and assets,
at the fair value as determined in good faith by the Trustees,
provided, however, that the Trustees, without Shareholder approval,
may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the rules, regulations((,)) and
interpretations thereof promulgated or issued by the Commission or
insofar as permitted by any [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
[par] ((per)) Share last determined to be determined again in ((a))
similar manner and may fix the time when such redetermined value shall
become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940
Act. Such suspension shall take effect at such time as the Trustees
shall specify((,)) but not later than the close of business on the
business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment until the
Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the
Net Asset Value per Share existing after the termination of the
suspension. ((In the event that any Series is divided into Classes,
the provisions of this Section, to the extent applicable as determined
in the discretion of the Trustees and consistent with applicable law,
may be equally applied to each such Class.))
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section 1. Provided they have exercised reasonable care and have
acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees shall not be responsible for or
liable in any event for neglect or wrongdoing of them or any officer,
agent, employee((,)) or investment adviser of the Trust, but nothing
contained herein shall protect any Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence((,)) or reckless disregard of the duties
involved in the conduct of his office.
[INDEMNIFICATION]
((INDEMNIFICATION OF COVERED PERSONS))
Section 2.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent permitted
by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit((,)) or
proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer and against
amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits((,)) or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties((,)) and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office((;)) or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence((,)) or reckless disregard of
the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
[interested] ((Interested)) [persons] ((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((,)) 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 [and not a
partnership] is created hereby ((and not a partnership, joint stock
association, corporation, bailment, or any form of a legal
relationship other than a trust)). No Trustee hereunder shall have any
power to ((personally)) bind [personally] either the Trust's officers
or any Shareholder. All persons extending credit to, contracting
with((,)) or having any claim against the Trust or the Trustees shall
look only to the assets of the appropriate Series for payment under
such credit, contract((,)) or claim; and neither the Shareholders nor
the Trustees, nor any of their agents, whether past, present((,)) or
future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect a Trustee against any liability to
which the Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence((,)) or reckless disregard of
the duties involved in the conduct of the office of Trustee hereunder.
[TRUSTEE'S] ((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] ((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] ((Article)) [4.] ((XII.))
[(b) Subject to a Majority Shareholder Vote of each Series affected
by the matter or, if applicable, to a Majority Shareholder Vote of the
Trust, the Trustees may
(i) sell and convey the assets of the Trust or any affected Series
to another trust, partnership, association or corporation organized
under the laws of any state which is a diversified open-end management
investment company as defined in the 1940 Act, for adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of
beneficial interest or stock of such trust, partnership, association
or corporation; or
(ii) at any time sell and convert into money all of the assets of
the Trust or any affected Series.]
((Section 4.2 Termination of the Trust, a Series or a Class. (a)
Subject to applicable Federal and state law, the Trust or any Series
or Class thereof may be terminated (i) by Majority Shareholder Vote of
the Trust, each Series affected, or each Class affected, as the case
may be; or (ii) without the vote or consent of Shareholders by a
majority of the Trustees either at a meeting or by written consent.
The Trustees shall provide written notice to the affected Shareholders
of a termination effected under clause (ii) above. Upon the
termination of the Trust or the Series or Class,
(i) the Trust or the Series or Class shall carry on no business
except for the purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the Trust
or the Series or Class, and all of the powers of the Trustees under
this Declaration of Trust shall continue until the affairs of the
Trust shall have been wound up, including the power to fulfill or
discharge the contracts of the Trust or the Series or Class thereof;
collect its assets; sell, convey, assign, exchange, transfer, or
otherwise dispose of all or any part of the remaining Trust property
or Trust property allocated or belonging to such Series or Class to
one or more persons at public or private sale for consideration that
may consist in whole or in part of cash, securities, or other property
of any kind; discharge or pay its liabilities; and do all other acts
appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer, or other disposition of
all or substantially all the Trust property or Trust property
allocated or belonging to such Series or Class (other than as provided
in (iii) below) shall require Shareholder approval in accordance with
Section 4.3 below.))
[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 thereof sells, conveys, or transfers
substantially all of its assets to another entity or merges or
consolidates with another entity.))
FILING OF COPIES, REFERENCES, AND HEADINGS
Section 5. The original or a copy of this instrument and of each
[declaration] ((Declaration)) of [trust] ((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] ((Declaration)) of [trust] ((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] ((Declarations)) of [trust] ((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]
((Declaration)) of [trust.] ((Trust.)) In this instrument or in any
such supplemental [declaration] ((Declaration)) of [trust] ((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]
((Declaration)) of [trust.] ((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((, 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 [this 19th day of
January, 1995] ((as of the date set forth above)).
[SIGNATURE LINES OMITTED]
EXHIBIT 2
COMPARISON OF STAND ALONE FUNCTION STRUCTURE
TO
MASTER FEEDER FUND STRUCTURE
STAND ALONE FUND STRUCTURE
The "Stand Alone Fund Structure" diagram contains three circles
labeled "Individual Fund A-1 (Managed by FMR)," "Individual Fund A-2
(Managed by FMR)," and "Individual Fund A-3 (Managed by FMR),"
respectively. Above each circle attached by a line is a single
rectangular box. The three rectangular boxes are labeled "Retail
Investors," "Institutional Investors," and "Retirement Investors,"
respectively.
MASTER FEEDER FUND STRUCTURE
The "Master Feeder Fund Structure" diagram contains a single circle
labeled "Master Fund (Managed by FMR)." Surrounding the circle
attached by lines are three square boxes labeled "Feeder Fund A-1,"
"Feeder Fund A-2," and "Feeder Fund A-3," respectively. Attached to
each square box a line is a single rectangular box. The three
rectangular boxes are labeled "Retail Investors," "Institutional
Investors," and Retirement Investors," respectively.
EXHIBIT 3
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY FINANCIAL TRUST:
FIDELITY CONVERTIBLE SECURITIES FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
((AMENDMENT)) [MODIFICATION] made [as of] this [1st day of December
1993] ((____ day of ________ 199_)), by and between Fidelity Financial
Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Convertible Securities Fund
(hereinafter called the "Portfolio"), and Fidelity Management &
Research Company, a Massachusetts corporation (hereinafter called the
"Adviser") ((as set forth in its entirety below)).
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract [modified] dated [January 29, 1990] ((December 1,
1993)), to a modification of said Contract in the manner set forth
below. The [Modified] ((Amended)) Management Contract shall, when
executed by duly authorized officers of the Fund and Adviser, take
effect on [the later of December 1, 1993 or the first day of the month
following approval] ((________)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser[, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund ((shall
periodically)) review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Basic Fee
and a Performance Adjustment [to the Basic Fee based upon the
investment performance of the Portfolio in relation to the Merrill
Lynch Convertible Securities Index (the "Index")]. ((Except as
otherwise provided in sub-paragraph (e) of this paragraph 3, the
Performance Adjustment is added to or subtracted from the Basic Fee
depending on whether the Portfolio experienced better or worse
performance than the Merrill Lynch All Convertible Securities Index
(the "Index"). The Performance Adjustment is not cumulative. An
increased fee will result even though the performance of the Portfolio
over some period of time shorter than the performance period has been
behind that of the Index, and, conversely, a reduction in the fee will
be made for a month even though the performance of the Portfolio over
some period of time shorter than the performance period has been ahead
of that of the Index.)) The Basic Fee and the Performance Adjustment
will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of
the Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows:
(i) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the [charter of each
investment company] ((Fund's Declaration of Trust or other
organizational document))) determined as of the close of business on
each business day throughout the month. The Group Fee Rate shall be
determined on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
[Over 174] [.30]
((174 - 210 ((.3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over - 534)) .2500))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall
be .20%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust ((or other organizational
document))) determined as of the close of business on each business
day throughout the month. The resulting dollar amount comprises the
Basic Fee. [This Basic Fee will be subject to upward or downward
adjustment on the basis of the Portfolio's investment performance as
follows:]
(c) Performance Adjustment Rate: ((Except as otherwise provided in
sub-paragraph (e) of this paragraph 3,)) [The] ((the)) Performance
Adjustment Rate is 0.02% for each percentage point (the performance of
the Portfolio and the Index each being calculated to the nearest .01%
that the Portfolio's investment performance for the performance period
was better or worse than the record of the Index as then constituted.
The maximum performance adjustment rate is 0.15%.
[The performance period will commence with the effective date of this
Contract. During the first eleven months of the performance period for
the Portfolio, there will be no performance adjustment. Starting with
the twelfth month of the performance period, the performance
adjustment will take effect. Following the twelfth month a new month
will be added to the performance period until the performance period
equals 36 months. Thereafter the performance period will consist of
the current month plus the previous 35 months.] ((The performance
period consists of the current month plus the previous 35 months.))
The Portfolio's investment performance will be measured by comparing
(i) the opening net asset value of one share of the Portfolio on the
first business day of the performance period with (ii) the closing net
asset value of one share of the Portfolio as of the last business day
of such period. In computing the investment performance of the
Portfolio and the investment record of the Index, distributions of
realized capital gains, the value of capital gains taxes per share
paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of
investment income on the part of the Portfolio, and all cash
distributions of the securities included in the Index, will be treated
as reinvested in accordance with Rule 205-1 or any other applicable
rules under the Investment Advisers Act of 1940, as the same from time
to time may be amended.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average of the net assets of
the Portfolio (computed in the manner set forth in the Fund's
Declaration of Trust or other organizational document) determined as
of the close of business on each business day throughout the month and
the performance period.
(((e) For the 35 month period commencing on __________, 199_ (the
Commencement Date) (such period hereafter referred to as the
Transition Period), the Performance Adjustment Rate shall be
calculated by comparing the Portfolio's investment performance against
the blended investment records of the Index and the Merrill Lynch
Convertible Securities Ex Mandatory Index (the index used to calculate
the Portfolio's Performance Adjustment prior to the Commencement Date
(the Prior Index)), such calculation being performed as follows:
For the first month of the Transition Period, the Performance
Adjustment Rate shall be calculated by comparing the Portfolio's
investment performance over the 36 month performance period against a
blended index investment record that reflects the investment record of
the Prior Index for the first 35 months of the performance period and
the investment record of the Index for the 36th month of the
performance period. For each subsequent month of the Transition
Period, the Performance Adjustment Rate shall be calculated by
comparing the Portfolio's investment performance over the 36 month
performance period against a blended index investment record that
reflects one additional month of the Index's performance and one less
month of the Prior Index's performance. This calculation methodology
shall continue until the expiration of the Transition Period, at which
time the investment record of the Prior Index shall be eliminated from
the Performance Adjustment calculation, and the calculation shall
include only the investment record of the Index.))
[(e)] (((f))) In case of termination of this Contract during any
month, the fee for that month shall be reduced proportionately on the
basis of the number of business days during which it is in effect for
that month. The Basic Fee Rate will be computed on the basis of and
applied to net assets averaged over that month ending on the last
business day on which this Contract is in effect. The amount of this
Performance Adjustment to the Basic Fee will be computed on the basis
of and applied to net assets averaged over the 36-month period ending
on the last business day on which this Contract is in effect provided
that if this Contract has been in effect less than 36 months, the
computation will be made on the basis of the period of time during
which it has been in effect.
4. It is understood that the Portfolio will pay all its expenses
[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, [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.]
(((b) This Contract may be modified by mutual consent subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 4
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY FINANCIAL TRUST:
FIDELITY RETIREMENT GROWTH FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
((AMENDMENT)) [MODIFICATION] made [as of] this [1st day of December
1993] ((____ day of ________ 199_)), by and between Fidelity Financial
Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Retirement Growth Fund (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser") ((as set
forth in its entirety below)).
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract [modified] ((dated)) [January 29, 1990] ((December
1, 1993)), to a modification of said Contract in the manner set forth
below. The [Modified] ((Amended)) Management Contract shall, when
executed by duly authorized officers of the Fund and Adviser, take
effect on [the later of December 1, 1993 or the first day of the month
following approval] ((________)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser[, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund ((shall
periodically)) review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Basic Fee
and a Performance Adjustment [to the Basic Fee based upon the
investment performance of the Portfolio in relation to the Standard &
Poor's Daily Stock Price Index of 500 Common Stocks (the "Index")].
((The Performance Adjustment is added to or subtracted from the Basic
Fee depending on whether the Portfolio experienced better or worse
performance than the Standard & Poor's 500 Index (the "Index"). The
Performance Adjustment is not cumulative. An increased fee will result
even though the performance of the Portfolio over some period of time
shorter than the performance period has been behind that of the Index,
and, conversely, a reduction in the fee will be made for a month even
though the performance of the Portfolio over some period of time
shorter than the performance period has been ahead of that of the
Index.)) The Basic Fee and the Performance Adjustment will be computed
as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of
the Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows:
(i) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the [charter of each
investment company] ((Fund's Declaration of Trust or other
organizational document))) determined as of the close of business on
each business day throughout the month. The Group Fee Rate shall be
determined on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
[Over 174] [.30]
((174 - 210 ((.3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over - 534)) .2500))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall
be .30%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust ((or other organizational
document))) determined as of the close of business on each business
day throughout the month. The resulting dollar amount comprises the
Basic Fee. [This Basic Fee will be subject to upward or downward
adjustment on the basis of the Portfolio's investment performance as
follows:]
(c) Performance Adjustment Rate: The Performance Adjustment Rate is
0.02% for each percentage point (the performance of the Portfolio and
the Index each being calculated to the [nearer - point (the higher
point if exactly one-half point)] ((nearest .01%)) that the
Portfolio's investment performance for the performance period was
better or worse than the record of the Index as then constituted. The
maximum performance adjustment rate is 0.20%.
The performance period will commence with the first day of the first
full month following the Portfolio's commencement of operations.
During the first eleven months of the performance period for the
Portfolio, there will be no performance adjustment. Starting with the
twelfth month of the performance period, the performance adjustment
will take effect. Following the twelfth month a new month will be
added to the performance period until the performance period equals 36
months. Thereafter the performance period will consist of the current
month plus the previous 35 months.
The Portfolio's investment performance will be measured by comparing
(i) the opening net asset value of one share of the Portfolio on the
first business day of the performance period with (ii) the closing net
asset value of one share of the Portfolio as of the last business day
of such period. In computing the investment performance of the
Portfolio and the investment record of the Index, distributions of
realized capital gains, the value of capital gains taxes per share
paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of
investment income on the part of the Portfolio, and all cash
distributions of the securities included in the Index, will be treated
as reinvested in accordance with Rule 205-1 or any other applicable
rules under the Investment Advisers Act of 1940, as the same from time
to time may be amended.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average of the net assets of
the Portfolio (computed in the manner set forth in the Fund's
Declaration of Trust or other organizational document) determined as
of the close of business on each business day throughout the month and
the performance period.
(e) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect for that
month. The Basic Fee Rate will be computed on the basis of and applied
to net assets averaged over that month ending on the last business day
on which this Contract is in effect. The amount of this Performance
Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36-month period ending on the
last business day on which this Contract is in effect provided that if
this Contract has been in effect less than 36 months, the computation
will be made on the basis of the period of time during which it has
been in effect.
4. It is understood that the Portfolio will pay all its expenses
[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, [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.]
(((b) This Contract may be modified by mutual consent subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 5
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY FINANCIAL TRUST:
FIDELITY EQUITY-INCOME II FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
((AMENDMENT)) [MODIFICATION] made [as of] this [1st day of December
1993] ____ day of ________ 199_, by and between Fidelity Financial
Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Equity-Income II Fund (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser") ((as set
forth in its entirety below)).
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [August 20, 1990] ((December 1, 1993)), to a
modification of said Contract in the manner set forth below. The
[Modified] ((Amended)) Management Contract shall, when executed by
duly authorized officers of the Fund and Adviser, take effect on [the
later of December 1, 1993 or the first day of the month following
approval] ((________)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser[, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund ((shall
periodically)) review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Group Fee
[Rate] and an Individual Fund Fee [Rate].
(a) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the [charter of each
investment company] ((Fund's Declaration of Trust or other
organizational document))) determined as of the close of business on
each business day throughout the month. The Group Fee Rate shall be
determined on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
[Over 174] [.30]
((174 - 210 ((.3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over - 534)) .2500))
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.20%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute
the Annual Management Fee Rate. One-twelfth of the Annual Management
Fee Rate shall be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration
of Trust ((or other organizational document))) determined as of the
close of business on each business day throughout the month.
(c) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect, and the fee
computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses
[other than those expressly stated to be payable by the Adviser
hereunder], which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities
laws; (vii) expenses of printing and mailing reports and notices and
proxy material to shareholders of the Portfolio; (viii) all other
expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums
for fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument)).
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until July
31, [1994] ((1999)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
[(b) This Contract may be modified by mutual consent, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.]
(((b) This Contract may be modified by mutual consent subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 6
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)
GROWTH
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 2/28/98 238.7 0.60
Communications ((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)) 6/30/98 226.3 0.59
</TABLE>
Fidelity Fifty ((pound)) 6/30/98 180.5 0.43
(a) All fund data are as of the fiscal year end noted in the chart or
as of June 30, 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 (*). The ratio for certain multi-class
funds is presented gross of expense reductions.
(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 7
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
<TABLE>
<CAPTION>
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
<S> <C> <C> <C> <C>
GROWTH AND INCOME
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*
Fidelity Fund ((pound)) 6/30/98 6,846.9 0.38%
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of June 30, 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 (*). The ratio for certain multi-class
funds is presented gross of expense reductions.
** 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.
FIN-pxs-0998 CUSIP#316145200/FUND#308
706705 CUSIP#316145101/FUND#319
CUSIP#316145309/FUND#073
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY FINANCIAL TRUST: FIDELITY CONVERTIBLE SECURITIES FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Robert M. Gates, and Eric D. Roiter, or any one or more
of them, attorneys, with full power of substitution, to vote all
shares of F idelity F inancial T rust :
F idelity C onvertible S ecurities F und which
the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on November 18, 1998 at 10:00 a.m.
and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if
only one votes and acts, then by that one. This Proxy shall be voted
on the proposals described in the Proxy Statement as specified on the
reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date_______________________________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316145200/fund# 308
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 adopt a new fundamental investment policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
permit ting the fund to invest all of its assets in
another open-end investment company managed by
FMR or an affiliate with substantially the same
investment objective and policies.
5. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
fund.
10. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
limitation concerning diversification.
13. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
limitation concerning underwriting.
</TABLE>
CVS-PXC- 0 998 cusip # 316145200/fund# 308
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY FINANCIAL TRUST: FIDELITY RETIREMENT GROWTH FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Robert M. Gates, and Eric D. Roiter, or any one or more
of them, attorneys, with full power of substitution, to vote all
shares of F idelity F inancial T rust :
F idelity R etirement G rowth F und which the
undersigned is entitled to vote at the Special Meeting of Shareholders
of the fund to be held at the office of the trust at 82 Devonshire
St., Boston, MA 02109, on November 18, 1998 at 10:00 a.m. and at any
adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the
proposals described in the Proxy Statement as specified on the reverse
side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date ______________________________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316145309/fund# 073
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 adopt a new fundamental investment policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
permit ting the fund to invest all of its assets in another
open-end investment company managed by FMR or
an affiliate with substantially the same investment
objective and policies.
6. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund.
8. To eliminate certain fundamental policies of the fund. FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
9. To replace the fund's fundamental investment policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
concerning investment for temporary defensive
purposes with a non-fundamental investment policy.
10. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
limitation concerning diversification.
12. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
limitation concerning the concentration of its
investments in a single industry.
</TABLE>
FRE-PXC- 0 998 cusip # 316145309/fund# 073
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY FINANCIAL TRUST: FIDELITY EQUITY-INCOME II FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Robert M. Gates, and Eric D. Roiter, or any one or more
of them, attorneys, with full power of substitution, to vote all
shares of F idelity F inancial T rust :
F idelity E quity -I ncome II F und which the
undersigned is entitled to vote at the Special Meeting of Shareholders
of the fund to be held at the office of the trust at 82 Devonshire
St., Boston, MA 02109, on November 18, 1998 at 10:00 a.m. and at any
adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the
proposals described in the Proxy Statement as specified on the reverse
side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date ______________________________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316145101/fund# 319
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 adopt a new fundamental investment policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
permit ting the fund to invest all of its assets in another
open-end investment company managed by FMR or
an affiliate with substantially the same investment
objective and policies.
7. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
fund.
10. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
limitation concerning diversification.
11. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
limitation concerning borrowing.
12. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
limitation concerning the concentration of its
investments in a single industry.
</TABLE>
EII-PXC- 0 998 cusip # 316145101/fund# 319
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
FIDELITY CONVERTIBLE SECURITIES FUND
FIDELITY RETIREMENT GROWTH FUND
FIDELITY EQUITY-INCOME II FUND
Dear Shareholder:
I am writing to let you know that a special meeting of shareholders of
the Fidelity funds mentioned above will be held in November. The
purpose of the meeting is to vote on several important proposals that
affect the funds and your investment in them. As a shareholder, you
have the opportunity to voice your opinion on the matters that affect
your fund(s). This package contains information about the proposals
and the materials to use when voting by mail.
Please read the enclosed materials and cast your vote on the proxy
card(s). PLEASE VOTE AND RETURN YOUR CARD(S) PROMPTLY. YOUR VOTE IS
EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE.
All of the proposals have been carefully reviewed by the Board of
Trustees. The Trustees, most of whom are not affiliated with
Fidelity, are responsible for protecting your interests as a
shareholder. The Trustees believe these proposals are in the best
interest of shareholders. They recommend that you vote for each
proposal.
The following Q&A is provided to assist you in understanding the
proposals. Each of the proposals is described in greater detail in
the enclosed proxy statement.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
To cast your vote, simply complete the proxy card(s) enclosed in this
package. Be sure to sign the card(s) before mailing it in the
postage-paid envelope.
If you have any questions before you vote, please call Fidelity at
1-800-544-8888. We'll be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposals
Please read the full text of the enclosed proxy statement. Below is a
brief overview of the proposals to be voted upon. Your vote is
important. We appreciate you placing your trust in Fidelity and look
forward to helping you achieve your financial goals.
WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
You may be asked to vote on the following proposals:
(v) To elect a Board of Trustees.
(w) To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the funds.
(x) To authorize the Trustees to adopt an Amended and Restated
Declaration of Trust.
(y) To adopt a new fundamental investment policy for each fund
permitting each fund to invest all of its assets in another open-end
investment company managed by FMR or an affiliate with substantially
the same investment objective and policies.
(z) To approve an amended management contract for Fidelity Convertible
Securities Fund.
(aa) To approve an amended management contract for Fidelity Retirement
Growth Fund.
(ab) To approve an amended management contract for Fidelity
Equity-Income II Fund.
(ac) To eliminate certain fundamental policies of Fidelity Retirement
Growth Fund.
(ad) To replace Fidelity Retirement Growth Fund's fundamental
investment policy concerning investment for temporary defensive
purposes with a non-fundamental investment policy.
(ae) To amend each fund's fundamental investment limitation concerning
diversification.
(af) To amend Fidelity Equity-Income II Fund's fundamental investment
limitation concerning borrowing.
(ag) To amend Fidelity Retirement Growth Fund's and Fidelity
Equity-Income II Fund's fundamental investment limitation concerning
the concentration of its investments in a single industry.
(ah) To amend Fidelity Convertible Securities Fund's fundamental
investment limitation concerning underwriting.
WHAT ROLE DOES THE BOARD PLAY? (PROPOSAL 1)
The Trustees oversee the investment policies of each fund. Members of
the Board are fiduciaries and have an obligation to serve the best
interests of shareholders, including approving policy changes such as
those proposed in the proxy statement. In addition, the Trustees
review fund performance, oversee fund activities, and review
contractual arrangements with companies that provide services to the
funds.
WHAT IS THE ROLE OF THE INDEPENDENT ACCOUNTANTS? (PROPOSAL 2)
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. They also
sign or certify any financial statements of the funds that are
required by law to be independently certified and filed with the
Securities and Exchange Commission (SEC).
WHY ARE THE FUNDS PROPOSING TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST? (PROPOSAL 3)
The new Declaration of Trust is a more modern form of trust instrument
for a Massachusetts business trust. It gives the Trustees more
flexibility, and, subject to the applicable requirements of federal
and state law, broader authority to act. This increased flexibility
may allow the Trustees to react more quickly to changes in competitive
and regulatory conditions.
Adoption of the new Declaration of Trust will not alter the Trustees'
existing fiduciary obligations to act in the best interests of the
funds' shareholders. Before utilizing any new flexibility that the
new Declaration of Trust may afford, the Trustees must first consider
the shareholders' interests and act in accordance with such interests.
The new Declaration of Trust amends the current Declaration of Trust
in a number of significant ways. Please review the proxy statement
for specific details.
WHAT ARE THE BENEFITS OF PERMITTING THE FUNDS TO INVEST THEIR ASSETS
IN ANOTHER OPEN-END INVESTMENT COMPANY MANAGED BY FMR OR AN AFFILIATE
WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES?
(PROPOSALS 3 AND 4)
Fidelity Management & Research Company (FMR) and the Board of Trustees
continually review methods of structuring mutual funds to take maximum
advantage of potential efficiencies. A number of mutual fund
companies have developed "master-feeder" fund structures under which
several "feeder" funds invest all of their assets in a single pooled
investment, or "master" fund. The purpose of the master-feeder fund
structure is to achieve operational efficiencies by consolidating
portfolio management while maintaining different distribution and
servicing structures. An example would be funds with the same
investment objective but different minimum investments due to the
servicing of individual shareholders versus institutional clients.
These proposals would enable the funds to invest all of their assets
in another open-end investment company, managed by FMR or an
affiliate, with substantially the same investment objective and
policies. In order to implement the master-feeder structure, both the
Declaration of Trust and the funds' policies must permit the
structure. Proposal 3 would amend the Declaration of Trust to permit
the structure and Proposal 4 would amend the policy at the fund level.
The master-feeder fund structure could generate operational
efficiencies and the opportunity to reduce costs. However, no such
plans are being contemplated at this time and the Trustees would only
allow it in the future if they determined that it would be in the best
interest of the fund and its shareholders.
WHY IS EACH FUND PROPOSING TO ADOPT AN AMENDED MANAGEMENT CONTRACT?
(PROPOSALS 5, 6, AND 7)
The amended management contract for each fund principally modifies the
fund's current contract to provide for lower management fees to be
paid to FMR when FMR's assets under management exceed certain levels.
Each fund's amended management contract also allows FMR and the trust,
on behalf of each fund, to modify the funds' management contracts
subject to the requirements of the Investment Company Act of 1940.
In addition, the amended management contract for Fidelity Convertible
Securities Fund prospectively changes the comparative securities index
used to calculate the fund's performance adjustment. The amended
management contract for Fidelity Retirement Growth Fund revises its
performance adjustment calculation by rounding the investment
performance of both the fund and the comparative index to the nearest
.01%, rather than the nearest 1.00%. This reduces the chance of minor
changes in performance resulting in significant changes to the
performance adjustment, and ultimately the fund's management fee.
The amended management contract for Fidelity Equity-Income II Fund
will result in a management fee that is the same as or lower than the
fee payable under the fund's present contract. The proposed change to
Fidelity Convertible Securities Fund's comparative securities index
and the proposed change to Fidelity Retirement Growth Fund's
performance adjustment calculation will either increase each fund's
management fee or reduce it, depending on the performance of the funds
and the relative performance of their respective index. Please refer
to the proxy statement for specific details of each fund's amended
management contract proposal.
WHY IS FIDELITY RETIREMENT GROWTH FUND PROPOSING TO ELIMINATE CERTAIN
FUNDAMENTAL POLICIES? (PROPOSAL 8)
The fund's investment objective and investment policies are
fundamental (cannot be changed without shareholder approval) and have
essentially remained the same since the fund commenced operations in
1983. As a result, the fund's investment strategies and policies are
lengthier, more complex, and less well defined than the strategies and
policies of other comparable Fidelity funds. Elimination of these
policies will enable the fund to comply with the recently revised SEC
requirements for concise, understandable descriptions of investment
objectives and policies.
If the proposal is approved, the fund's investment objective would
remain unchanged while certain fundamental policies will be
eliminated. The elimination of these investment policies is not
expected to affect the way in which the fund is managed, the
investment performance of the fund, or the securities or instruments
in which the fund invests.
WHY IS FIDELITY RETIREMENT GROWTH FUND PROPOSING TO REPLACE ITS
FUNDAMENTAL INVESTMENT POLICY CONCERNING INVESTMENT FOR TEMPORARY
DEFENSIVE PURPOSES WITH A NON-FUNDAMENTAL INVESTMENT POLICY? (PROPOSAL
9)
The fund currently has a fundamental investment policy (cannot be
changed without shareholder approval) concerning investment for
temporary defensive purposes which permits the fund to invest more
conservatively than it otherwise would under certain circumstances.
The proposed non-fundamental investment policy (can be changed by the
Board of Trustees without shareholder approval) would add preferred
stock as a possible investment for temporary defensive purposes.
Approving the proposal would permit the fund to react to changing
market conditions by altering its temporary defensive policy, subject
only to the supervision of the Trustees and applicable regulatory
requirements. It would also permit the fund to conform the fund's
policy to possible future regulatory changes without having to incur
the cost and delays of conducting a shareholder meeting. Adoption of
this proposal will not have a material impact on the way the fund is
managed.
WHAT IS THE BENEFIT OF AMENDING EACH FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING DIVERSIFICATION? (PROPOSAL 10)
This proposal would permit the funds, subject to the requirements of
the Investment Company Act of 1940, to invest without limit in the
securities of other investment companies. As a result of an order of
exemption granted by the SEC, the funds may currently invest up to 25%
of their total assets in non-publicly offered money market and
short-term bond funds (the Central Funds) managed by FMR or an
affiliate of FMR. FMR anticipates that the Central Funds will benefit
each fund by enhancing the efficiency of cash management and by
providing increased short-term investment opportunities.
WHY ARE THE FUNDS PROPOSING TO AMEND CERTAIN FUNDAMENTAL INVESTMENT
LIMITATIONS ?(PROPOSALS 11, 12, AND 13)
The primary purpose of these proposals is to revise each fund's
investment limitations to conform to limitations that are expected to
become standard for all funds managed by FMR. The Board of Trustees
feels that each proposal will benefit the funds and their
shareholders, and adoption of these proposals is not expected to
affect the way each fund is managed, the investment performance of
each fund, or the securities or instruments in which each fund
invests.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED EACH PROPOSAL?
Yes. The Board of Trustees has unanimously approved all of the
proposals and recommends that you vote to approve them.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of a fund on the record date. The record date is
September 21, 1998.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposals or
how to vote your shares, please call Fidelity at 800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."
