SUPPLEMENT TO THE FIDELITY CONVERTIBLE SECURITIES FUND
JANUARY 28, 1998 PROSPECTUS
The following information replaces similar information found in the
"Performance" section beginning on page 7.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS
FISCAL PERIODS ENDED PAST 1 PAST 5 PAST 10
NOVEMBER 30, 1997 YEAR YEARS YEARS
CONVERTIBLE SECURITIES 14.84% 13.40% 16.26%
MERRILL LYNCH CONVERTIBLE SECURITIES INDEX 16.79% 13.96% N/A
MERRILL LYNCH ALL CONVERTIBLE SECURITIES INDEX 17.71% 14.42% N/A
LIPPER CONVERTIBLE 16.37% 12.62% 13.30%
SECURITIES FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS
FISCAL PERIODS ENDED PAST 1 PAST 5 PAST 10
NOVEMBER 30, 1997 YEAR YEARS YEARS
CONVERTIBLE SECURITIES 14.84% 87.55% 351.30%
MERRILL LYNCH CONVERTIBLE SECURITIES INDEX 16.79% 92.19% N/A
MERRILL LYNCH ALL CONVERTIBLE SECURITIES INDEX 17.71% 96.16% N/A
LIPPER CONVERTIBLE 16.37% 82.19% 253.89%
SECURITIES FUNDS AVERAGE
</TABLE>
The following information supplements information found under the
heading "Explanation of Terms" in the "Performance" section beginning
on page 7.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1988 1989 1990 1991 1992 1993 1994 1995 1996
CONVERTIBLE SECURITIES 15.89% 26.28% -2.89% 38.74% 22.02% 17.79% -1.76% 19.38% 15.05%
MERRILL LYNCH CONV. SEC. INDEX 12.81% 12.46% -6.99% 31.96% 22.41% 18.91% -7.08% 24.75% 14.30%
MERRILL LYNCH ALL CONV.
SEC. INDEX 12.80% 12.46% -6.99% 32.39% 21.41% 18.14% -6.00% 24.69% 15.92%
LIPPER CONV. SEC. FUNDS AVERAGE 12.12% 14.16% -5.53% 29.39% 14.38% 15.68% -2.54% 20.81% 14.82%
CONSUMER PRICE INDEX 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 15.89
ROW: 3, COL: 1, VALUE: 26.28
ROW: 4, COL: 1, VALUE: -2.89
ROW: 5, COL: 1, VALUE: 38.74
ROW: 6, COL: 1, VALUE: 22.02
ROW: 7, COL: 1, VALUE: 17.79
ROW: 8, COL: 1, VALUE: -1.76
ROW: 9, COL: 1, VALUE: 19.38
ROW: 10, COL: 1, VALUE: 15.05
ROW: 11, COL: 1, VALUE: 0.0
(LARGE SOLID BOX) CONVERTIBLE
SECURITIES
MERRILL LYNCH ALL CONVERTIBLE SECURITIES INDEX is a market
capitalization index of domestic corporate convertible securities.
The following information replaces similar information found in the
"Investment Principles and Risks" section on page 10:
The fund seeks high total return through a combination of current
income and capital appreciation by investing in convertible
securities. FMR normally invests at least 65% of the fund's total
assets in these securities. Convertible securities are bonds,
preferred stocks, and other securities that pay interest or dividends
and are convertible into common stocks or its equivalent value at
maturity. The fund may also invest in the other types of securities,
including common stocks.
The following information replaces similar information found under
the heading "Securities and Investment Practices" in the "Investment
Principles and Risks" section beginning on page 10.
EQUITY SECURITIES may include common stocks, preferred
stocks, convertible securities, and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a
corporation. Although equity securities have a history of long-term
growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic
conditions. Smaller companies are especially sensitive to these
factors.
RESTRICTIONS: With respect to 75% of total assets, the fund
may not purchase more than 10% of the outstanding voting securities of
a single issuer. This limitation does not apply to securities of other
investment companies.
DIVERSIFICATION. Diversifying a fund's investment portfolio
can reduce the risks of investing. This may include limiting the
amount of money invested in any one issuer or, on a broader scale, in
any one industry.
RESTRICTIONS: With respect to 75% of its total assets, the
fund may not purchase a security if, as a result, more than 5% would
be invested in the securities of any issuer. This limitation does not
apply to U.S. Government securities or to securities of other
investment companies.
The fund may not invest more than 25% of its total assets in any
one industry. This limitation does not apply to U.S. Government
securities.
The following information replaces in its entirety information
found under the heading "Fundamental Investment Policies and
Restrictions" in the "Investment Principles and Risks" section
beginning on page 10.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding
pages are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
The fund seeks a high level of total return through a combination
of current income and capital appreciation. The fund seeks to achieve
this objective by investing primarily in convertible securities.
With respect to 75% of its total assets, the fund may not purchase
a security if, as a result, more than 5% would be invested in the
securities of any one issuer and may not purchase more than 10% of the
outstanding voting securities of a single issuer. These limitations do
not apply to U.S. Government securities or to securities of other
investment companies.
The fund may not invest more than 25% of its total assets in any
one industry. This limitation does not apply to U.S. Government
securities.
The fund may borrow only for temporary or emergency purposes, but
not in an amount exceeding 33% of its total assets.
Loans, in the aggregate, may not exceed 33% of the fund's total
assets.
The following information replaces similar information found under
the heading "Management Fee" in the "Breakdown of Expenses" section
beginning on page 15.
MANAGEMENT FEE
UNDERSTANDING THE
MANAGEMENT FEE
The basic fee FMR receives is
designed to be responsive to
changes in FMR's total assets
under management. Building
this variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
Another variable, the
performance adjustment,
rewards FMR when the fund
outperforms a specified
securities index and reduces
FMR's fee when the fund
underperforms this index.
(checkmark)
The management fee is calculated and paid to FMR every month. The
amount of the fee is determined by taking a BASIC FEE and then
applying a PERFORMANCE ADJUSTMENT . The performance adjustment
either increases or decreases the management fee, depending on how
well the fund has performed relative to a specified securities
index.
MANAGEMENT = BASIC +/- PERFORMANCE
FEE FEE ADJUSTMENT
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by
comparing the fund's performance over the most recent 36-month period
to a specified securities index.
Prior to December 1, 1998, the fund compared its performance to the
Merrill Lynch Convertible Securities Ex Mandatory Index (formerly
known as the Merrill Lynch Convertible Securities Index). Effective
December 1, 1998, following the approval of its shareholders, the fund
changed its comparative securities index to the Merrill Lynch All
Convertible Securities Index and began to prospectively compare its
performance to that index. Because performance adjustments are based
on a rolling 36 month measurement period, the change to the new index
will not be fully implemented until the expiration of a corresponding
36 month transition period. During the transition period, the fund's
performance will be compared to a blended index return that reflects
the performance of the new index for the portion of the 36 month
performance measurement period subsequent to November 30, 1998 and the
performance of the old index for the remainder of the period. At the
conclusion of the transition period, the performance of the Merrill
Lynch Convertible Securities Ex Mandatory Index will be eliminated
from the performance adjustment calculation, and the calculation will
include only the performance of the Merrill Lynch All Convertible
Securities Index.
The difference is translated into a dollar amount that is added to
or subtracted from the basic fee. The maximum annualized performance
adjustment rate is (plus/minus).15% of the fund's average net assets
over the performance period.
The total management fee rate for the fiscal year ended November
30, 1997 was 0.46%.
SUPPLEMENT TO THE FIDELITY
CONVERTIBLE SECURITIES FUND
JANUARY 28, 1998
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES FUNDAMENTAL INVESTMENT
LIMITATIONS (1) AND (4) IN THE "INVESTMENT LIMITATIONS AND POLICIES"
SECTION ON PAGE 2.
(1) 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.
(4) 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 FOLLOWING INFORMATION SUPPLEMENTS THE FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT LIMITATIONS AND POLICIES" SECTION ON
PAGE 2.
(9) 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.
THE FOLLOWING INFORMATION SUPPLEMENTS THE NON-FUNDAMENTAL
INVESTMENT LIMITATIONS IN THE "INVESTMENT LIMITATIONS AND POLICIES"
SECTION ON BEGINNING ON PAGE 2.
(vi) 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.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND UNDER
THE HEADING "PERFORMANCE COMPARISONS" IN THE "PERFORMANCE" SECTION
BEGINNING ON PAGE 13.
Convertible Securities may compare its performance to that of the
Merrill Lynch All Convertible Securities Index, a market
capitalization weighted index of domestic corporate convertible
securities. To be included in the index, bonds and preferred stocks
must be convertible only to common stock and have a market value or
original par value of at least $50 million.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH IN THE
"MANAGEMENT CONTRACT" SECTION ON PAGE 20.
The fund has entered into a management contract with FMR, pursuant
to which FMR furnishes investment advisory and other services.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND
UNDER THE HEADING "MANAGEMENT FEE" IN THE "MANAGEMENT CONTRACT"
SECTION BEGINNING ON PAGE 20.
MANAGEMENT FEE. For the services of FMR under the management
contract, the 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 fund's performance to a specified securities
index.
The group fee rate is based on the monthly average net assets of
all of the registered investment companies with which FMR has
management contracts.
The following is the fee schedule for the fund.
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 group fee rate is calculated on a cumulative basis pursuant to
the graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $543 billion of group net assets - the approximate level for
November 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.
The fund's individual fund fee rate is 0.20%. Based on the average
group net assets of the funds advised by FMR for November 1997, the
fund's annual basic fee rate would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE
0.2947% + 0.20% = 0.4947%
One-twelfth of this annual basic fee rate is applied to the fund's
net assets averaged for the most recent month, giving a dollar amount,
which is the fee for that month.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND UNDER
THE HEADING "COMPUTING THE PERFORMANCE ADJUSTMENT" IN THE "MANAGEMENT
CONTRACT" SECTION BEGINNING ON PAGE 22.
COMPUTING THE PERFORMANCE ADJUSTMENT. As a general matter,
the basic fee for Convertible Securities Fund is subject to upward or
downward adjustment, depending upon whether, and to what extent, the
fund's investment performance for the performance period exceeds, or
is exceeded by, the record of a specified securities index over the
same period. The performance period consists of the most recent month
plus the previous 35 months.
On November 18, 1998, shareholders approved an amendment to the
fund's management contract that changed the comparative securities
index used to calculate the performance adjustment from the Merrill
Lynch Convertible Securities Ex Mandatory Index (formerly known as the
Merrill Lynch Convertible Securities Index) (Prior Index) to the
Merrill Lynch All Convertible Securities Index (Current Index). The
amendment became effective on December 1, 1998. Under the terms of the
amended contract, the Current Index is being implemented on a
prospective basis. Because performance adjustments are based on a
rolling 36 month measurement period, the Current Index will not be
fully implemented until the expiration of a transition period that
commenced with the amendment's effectiveness. During this transition
period, the fund's performance will be compared to a 36 month blended
index return that reflects the performance of the Current Index for
the portion of the 36 month performance measurement period occurring
on and after December 1, 1998 and the performance of the Prior Index
for the remainder of the measurement period. For example, the
performance adjustment for December 1998 would be calculated by
comparing the fund's to a blended index return using the Prior Index's
performance for the first 35 months of the measurement period and the
Current Index's performance for the 36th month of the measurement
period. For the following 35 months, an additional month of the
Current Index's performance and one less month of the Prior Index's
performance would be used in the calculation. At the conclusion of the
transition period, the performance of the Prior Index would be
eliminated from the performance adjustment calculation, and the
calculation would include only the performance of the Current Index.
Each percentage point of difference, calculated to the nearest
0.01% (up to a maximum difference of (plus/minus)7.50) is multiplied
by a performance adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to the 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.
The maximum annualized adjustment rate is (plus/minus)0.15% of the
fund's average net assets over the performance period.
The fund's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if
reinvested in fund shares at the NAV as of the record date for
payment. The records of the Prior and Current Indexes are based on
changes in value and each is adjusted for any cash distributions from
the companies whose securities compose the Index.
Because the adjustment to the basic fee is based on the fund's
performance compared to the blended investment records of the Prior
and Current Indexes, the controlling factor is not whether the fund's
performance is up or down per se, but whether it is up or down more or
less than the blended records of the indexes. Moreover, the
comparative investment performance of the fund is based solely on the
relevant performance period without regard to the cumulative
performance over a longer or shorter period of time.
For the fiscal years ended November 30 , 1997, 1996, and
1995, the fund paid FMR management fees of $4,993,000, $6,194,000 and
$3,933,000, respectively. The amount of these management fees include
both the basic fee and the amount of the performance adjustment, if
any. For the fiscal years ended November 30 , 1997 and 1995, the
downward performance adjustments amounted to $390,000 and $1,041,000,
respectively. For the fiscal year ended November 30 , 1996 the
upward performance adjustment amounted to $588,000.
FMR may, from time to time, voluntarily reimburse all or a portion
of the fund's operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
Expense reimbursements by FMR will increase the fund's total
returns and yield, and repayment of the reimbursement by the fund will
lower its total returns and yield.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND UNDER
THE HEADING "SHAREHOLDER AND TRUSTEE LIABILITY" IN THE "DESCRIPTION OF
THE TRUST" SECTION ON PAGE 25.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of
the type commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the trust shall not have
any claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees shall
include a provision limiting the obligations created thereby to the
trust or to one or more funds and its or their assets. The Declaration
of Trust provides for indemnification out of each fund's property of
any shareholder held personally liable for the obligations of the
fund. The Declaration of Trust also provides that each fund shall,
upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any
judgment thereon. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances
in which a fund itself would be unable to meet its obligations. FMR
believes that, in view of the above, the risk of personal liability to
shareholders is remote.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND
UNDER THE HEADING "VOTING RIGHTS" IN THE "DESCRIPTION OF THE TRUST"
SECTION ON PAGE 25.
VOTING RIGHTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar value of net asset value you own. The shares have no preemptive
or conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose
of voting on removal of one or more Trustees. The trust or any fund
may be terminated upon the sale of its assets to, or merger with,
another open-end management investment company or series thereof, or
upon liquidation and distribution of its assets. Generally, the merger
of the trust or a fund with another entity or the sale of
substantially all of the assets of the trust or a fund to another
entity requires the vote of a majority of the outstanding shares of
the trust or the fund, as determined by the current value of each
shareholder's investment in the fund or trust. The Trustees may,
however, reorganize or terminate the trust or any fund without prior
shareholder approval. If not so terminated or reorganized, the trust
and its funds will continue indefinitely. The fund may invest all of
its assets in another investment company.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACT" SECTION ON PAGE 20.
For providing investment advice and research services, fees paid to
the sub-advisers by FMR for the past three fiscal years are shown in
the table below.
FISCAL YEAR ENDED FMR U.K. FMR FAR EAST
NOVEMBER
1997 $ 21,267 $ 18,901
1996 $ 28,039 $ 29,790
1995 $ 16,602 $ 18,450
SUPPLEMENT TO THE FIDELITY
EQUITY-INCOME II FUND
JANUARY 28, 1998
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS THE FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT LIMITATIONS AND POLICIES" SECTION ON
PAGE 2.
(9) 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.
THE FOLLOWING INFORMATION SUPPLEMENTS THE NON-FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT LIMITATIONS AND POLICIES" SECTION
BEGINNING ON PAGE 2.
(vi) 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.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH IN THE
"MANAGEMENT CONTRACT" SECTION ON PAGE 20.
FMR is the fund's manager pursuant to a management contract dated
December 1, 1998, which was approved by shareholders on November 18,
1998.
Prior to December 1, 1998, FMR was the fund's manager pursuant to a
management contract dated December 1, 1993, which was approved by
shareholders on November 17, 1993.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER
THE HEADING "MANAGEMENT FEE" IN THE "MANAGEMENT CONTRACT" SECTION
BEGINNING ON PAGE 20.
MANAGEMENT FEE. For the services of FMR under the management contract,
the fund pays FMR a monthly management fee which has two components: a
group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
The following is the fee schedule for the fund.
GROUP FEE RATE EFFECTIVE ANNUAL
SCHEDULE 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 group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $543 billion of group net assets - the approximate level for
November 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.
The fund's individual fund fee rate is 0.20%. Based on the average
group net assets of the funds advised by FMR for November 1997, the
fund's annual basic fee rate would be calculated as follows:
GROUP FEE INDIVIDUAL FUND BASIC FEE
RATE FEE RATE RATE
0.2947% + 0.20% = 0.4947%
One-twelfth of this annual basic fee rate is applied to the fund's net
assets averaged for the most recent month, giving a dollar amount,
which is the fee for that month.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND UNDER THE
HEADING "SHAREHOLDER AND TRUSTEE LIABILITY" IN THE "DESCRIPTION OF THE
TRUST" SECTION ON PAGE 24.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the trust shall not have
any claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees shall
include a provision limiting the obligations created thereby to the
trust or to one or more funds and its or their assets. The Declaration
of Trust provides for indemnification out of each fund's property of
any shareholder held personally liable for the obligations of the
fund. The Declaration of Trust also provides that each fund shall,
upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any
judgment thereon. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances
in which a fund itself would be unable to meet its obligations. FMR
believes that, in view of the above, the risk of personal liability to
shareholders is remote.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER
THE HEADING "VOTING RIGHTS" IN THE "DESCRIPTION OF THE TRUST" SECTION
BEGINNING ON PAGE 24.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value
of net asset value you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose
of voting on removal of one or more Trustees. The trust or any fund
may be terminated upon the sale of its assets to, or merger with,
another open-end management investment company or series thereof, or
upon liquidation and distribution of its assets. Generally, the merger
of the trust or a fund with another entity or the sale of
substantially all of the assets of the trust or a fund to another
entity requires the vote of a majority of the outstanding shares of
the trust or the fund, as determined by the current value of each
shareholder's investment in the fund or trust. The Trustees may,
however, reorganize or terminate the trust or any fund without prior
shareholder approval. If not so terminated or reorganized, the trust
and its funds will continue indefinitely. The fund may invest all of
its assets in another investment company.
SUPPLEMENT TO THE FIDELITY
RETIREMENT GROWTH FUND
JANUARY 28, 1998
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS THE FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT LIMITATIONS AND POLICIES" SECTION ON
PAGE 2.
(9) 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.
THE FOLLOWING INFORMATION SUPPLEMENTS THE NON-FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT LIMITATIONS AND POLICIES" SECTION
BEGINNING ON PAGE 2.
(vi) 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.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH IN THE
"MANAGEMENT CONTRACT" SECTION ON PAGE 19.
FMR is the fund's manager pursuant to a management contract dated
December 1, 1998, which was approved by shareholders on November 18,
1998.
Prior to December 1, 1998, FMR was the fund's manager pursuant to a
management contract dated December 1, 1993, which was approved by
shareholders on November 17, 1993.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER
THE HEADING "MANAGEMENT FEE" IN THE "MANAGEMENT CONTRACT" SECTION
BEGINNING ON PAGE 19.
MANAGEMENT FEE. For the services of FMR under the management contract,
the 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
fund's performance to that of the S&P 500.
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.
The following is the fee schedule for the fund.
GROUP FEE RATE EFFECTIVE ANNUAL
SCHEDULE 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 group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $543 billion of group net assets - the approximate level for
November 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.
The fund's individual fund fee rate is 0.30%. Based on the average
group net assets of the funds advised by FMR for November 1997, the
fund's annual basic fee rate would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND BASIC FEE RATE
FEE RATE
0.2947% + 0.30% = 0.5947%
One-twelfth of this annual basic fee rate is applied to the fund's net
assets averaged for the most recent month, giving a dollar amount,
which is the fee for that month.
THE FOLLOWING INFORMATION REPLACES THE FIRST FOUR PARAGRAPHS FOUND
UNDER THE HEADING "COMPUTING THE PERFORMANCE ADJUSTMENT" IN THE
"MANAGEMENT CONTRACT" SECTION BEGINNING ON PAGE 19.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Retirement
Growth Fund is subject to upward or downward adjustment, depending
upon whether, and to what extent, the fund's investment performance
for the performance period exceeds, or is exceeded by, the record of
the S&P 500 (the Index) over the same period. The performance period
consists of the most recent month plus the previous 35 months.
Each percentage point of difference, calculated to the nearest 0.01%
(up to a maximum difference of (plus/minus)10.00) is multiplied by a
performance adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to the 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.
The maximum annualized adjustment rate is (plus/minus)0.20% of the
fund's average net assets over the performance period.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND UNDER THE
HEADING "SHAREHOLDER AND TRUSTEE LIABILITY" IN THE "DESCRIPTION OF THE
TRUST" SECTION BEGINNING ON PAGE 23.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the trust shall not have
any claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees shall
include a provision limiting the obligations created thereby to the
trust or to one or more funds and its or their assets. The Declaration
of Trust provides for indemnification out of each fund's property of
any shareholder held personally liable for the obligations of the
fund. The Declaration of Trust also provides that each fund shall,
upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any
judgment thereon. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances
in which a fund itself would be unable to meet its obligations. FMR
believes that, in view of the above, the risk of personal liability to
shareholders is remote.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER
THE HEADING "VOTING RIGHTS" IN THE "DESCRIPTION OF THE TRUST" SECTION
BEGINNING ON PAGE 23.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value
of net asset value you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose
of voting on removal of one or more Trustees. The trust or any fund
may be terminated upon the sale of its assets to, or merger with,
another open-end management investment company or series thereof, or
upon liquidation and distribution of its assets. Generally, the merger
of the trust or a fund with another entity or the sale of
substantially all of the assets of the trust or a fund to another
entity requires the vote of a majority of the outstanding shares of
the trust or the fund, as determined by the current value of each
shareholder's investment in the fund or trust. The Trustees may,
however, reorganize or terminate the trust or any fund without prior
shareholder approval. If not so terminated or reorganized, the trust
and its funds will continue indefinitely. The fund may invest all of
its assets in another investment company.
