IMPORTANT INFORMATION ON
ONE OF THE INVESTMENT OPTIONS
IN YOUR RETIREMENT PLAN.
On April 14, 1999 shareholders of the FIDELITY SHORT-INTERMEDIATE
GOVERNMENT FUND (the fund), an investment option in your plan, will
vote on a proposal to merge this fund into the Fidelity Intermediate
Government Income Fund. This letter describes the impact of the
potential merger and is important information if you are currently
invested in or are considering investing in the fund.
If the merger is approved by shareholders, the anticipated closing
date is April 29, 1999. As of the closing date, all participants with
balances in the Fidelity Short- Intermediate Government Fund will
receive the number of full and fractional shares in the Fidelity
Intermediate Government Fund that is equal in net asset value to that
of the old fund. However, as a participant, you have the opportunity
to direct the investment of your plan account and avoid the impact of
the merger, if you so desire.
If You Currently Own Shares in the Fund
If the merger is approved you have two options:
1. IF YOU WISH TO HAVE YOUR INVESTMENT IN THE FUND TRANSFERRED TO
FIDELITY INTERMEDIATE GOVERNMENT INCOME FUND, TAKE NO ACTION. If the
merger is approved and completed, your investment will be
automatically exchanged into the Fidelity Intermediate Government
Income Fund at the close of business on the closing date, currently
anticipated to be April 29, 1999.
2. IF YOU DO NOT WISH TO HAVE YOUR INVESTMENT IN THE FUND TRANSFERRED
TO FIDELITY INTERMEDIATE GOVERNMENT INCOME FUND, YOU MAY EXCHANGE OUT
OF FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND INTO ANOTHER OPTION IN
YOUR PLAN PRIOR TO THE ANTICIPATED MERGER CLOSING DATE OF APRIL 29TH.
If you elect this option, the merger will have no affect on your
holdings in the plan.
If you elect to remain in the fund and if the merger is completed, you
will receive a confirmation of the exchange of your shares from
Fidelity Short-Intermediate Government Fund into the Fidelity
Intermediate Government Income Fund within a few days of the
transaction. Of course if you elect to leave your balance in the fund
and allow the exchange into Fidelity Intermediate Government Income
Fund, you may exchange out of the new option into any other plan
option after the merger, just as you may now.
If you have the Fidelity Short-Intermediate Government Fund included
in your deferral elections under your plan, this deferral election
will be transferred to Fidelity Intermediate Government Income Fund.
If you wish to avoid this transfer of your deferral election, you
should change your deferral election under the procedures established
for your plan.
Please call Fidelity to inquire about the outcome of the merger vote,
or if you should have any other questions.
If You Have Been Thinking About Investing in the Fund
If you are considering the Fidelity Short-Intermediate Government Fund
as a future investment, you may want to look at the Fidelity
Intermediate Government Income Fund which may be available to you as
an investment option in your plan on April 30, 1999.
How to Learn More About the Funds
If you were a shareholder in the Fidelity Short-Intermediate
Government Fund on February 16, 1999, then you should have received a
prospectus and details on Fidelity Intermediate Government Income
Fund.
A brief comparison of the two funds can be found below. If you would
like more information, or the chance to review a prospectus of either
fund, please go to the "Funds" section of our Web site, www.401k.com,
or call your plan's 800 number and talk to a representative.
A COMPARISON OF THE TWO FUNDS
While Fidelity Intermediate Government Income Fund, shares a number of
characteristics with the Fidelity Short-Intermediate Government Fund,
there are some important differences.
The two funds share the same investment objective - to seek high
current income consistent with the preservation of capital and both
are managed by Andrew Dudley. Fidelity Intermediate Government Income
Fund invests primarily in U.S. government securities or in instruments
that are related to U.S. government securities.
Fidelity Intermediate Government Income Fund would offer participants
a lower expense ratio through June 30, 2001 and a potentially higher
yield with slightly more risk than Fidelity Short-Intermediate
Government Fund if the merger is approved. The increased risk for
investors comes by extending the duration and average maturity of
their investment as shown below. Duration is a way to measure the
change in market value of a bond or bond fund's reaction when interest
rates change.
The longer the duration of a bond or bond fund, the greater the rise
in market value when interest rates decline BUT the bigger the fall in
market value when interest rates rise as they have recently. Because
the Fidelity Intermediate Government Income Fund has a slightly longer
duration than Fidelity Short-Intermediate Government Fund, when
interest rates decline Fidelity Intermediate Government Income Fund
will tend to rise more in market price than Fidelity
Short-Intermediate Government Fund. Conversely, when interest rates
increase (generally resulting in lower bond market fund values) the
Fidelity Intermediate Government Income Fund's market price will fall
more than the market price of Fidelity Short-Intermediate Government
Fund would in similar circumstances.
FUND COMPARISON
(as of 2/28/99 unless otherwise indicated)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AVERAGE
FUND NAME FUND CODE MATURITY AVERAGE
RANGE MATURITY DURATION 30-DAY YIELD
Fidelity Short-Intermediate 464 2-5 years 3.5years 2.3 years (as of 1/31/99) 5.05%
Government Fund (as of 1/31/99)
Fidelity Intermediate 452 3-10 years 4.8 years 3.1 years (as of 1/31/99) 5.29%
Government Income Fund (as of 1/31/99)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LEHMAN BROTHERS BENCHMARK
FUND NAME EXPENSE RATIO
Fidelity Short-Intermediate 1-5 year U.S. Government Bond 0.78% (as of 9/30/98)
Government Fund Index
Fidelity Intermediate Intermediate Government Bond 0.63% if merger is approved
Government Income Fund Index (through 6/30/01)*
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS %
PERIODS ENDING DECEMBER 31, 1998
1 5 10 Life of Date of
FUND NO./NAME Year Year Year Fund Inception
452 Fidelity Intermediate 7.45 6.34 7.51 7.37 5/2/88
Gov't Income Fund
464 Fidelity 6.47 5.44 N/A 5.65 9/13/91
Short-Intermediate Gov't Fund
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. TOTAL RETURNS ARE
HISTORICAL AND INCLUDE CHANGE IN SHARE VALUE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS, IF ANY. LIFE OF FUND FIGURES ARE REPORTED
AS OF THE COMMENCEMENT DATE TO THE PERIOD INDICATED. EACH INVESTMENT
CHOICE'S SHARE PRICE, YIELD AND RETURN WILL VARY AND YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
THE LEHMAN BROTHERS 1-5 YEAR U.S. GOVERNMENT BOND INDEX IS A
MARKET-VALUE WEIGHTED INDEX OF GOVERNMENT AND FIXED-RATE DEBT ISSUES
WITH MATURITIES BETWEEN ONE AND FIVE YEARS.
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX IS A
MARKET-VALUE WEIGHTED INDEX OF U.S. GOVERNMENT FIXED-RATE DEBT ISSUES
WITH MATURITIES BETWEEN ONE AND TEN YEARS.
*THE EXPENSE RATIO IS 0.65% (AS OF 1/1/99) WITHOUT THE MERGER AND
REFLECTS A SPECIAL DIVIDEND PAID AS OF 1/1/99.
FIDELITY MUTUAL FUNDS RESERVE THE RIGHT TO MODIFY OR WITHDRAW THE
EXCHANGE PRIVILEGE.
FOR MORE COMPLETE INFORMATION ABOUT FIDELITY MUTUAL FUNDS, INCLUDING
FEE AND EXPENSES, CALL OR WRITE FIDELITY FOR FREE PROSPECTUSES. READ
THEM CAREFULLY BEFORE YOU MAKE YOUR INVESTMENT CHOICES.
Fidelity Investments Institutional Services Company, Inc., 82
Devonshire Street, Boston, MA 02109
74034 K.INTGOV-0399
IMPORTANT INFORMATION ON
ONE OF THE INVESTMENT OPTIONS
IN YOUR RETIREMENT PLAN.
On April 14, 1999 shareholders of the SPARTAN (Registered trademark)
SHORT-INTERMEDIATE GOVERNMENT FUND (the fund), an investment option in
your plan, will vote on a proposal to merge this fund into the
Fidelity Intermediate Government Income Fund. This letter describes
the impact of the potential merger and is important information if you
are currently invested in or are considering investing in the fund.
If the merger is approved by shareholders, the anticipated closing
date is April 22, 1999. As of the closing date, all participants with
balances in the Spartan Short-Intermediate Government Fund will
receive the number of full and fractional shares in the Fidelity
Intermediate Government Income Fund that is equal in net asset value
to that of the old fund. However, as a participant, you have the
opportunity to direct the investment of your plan account and avoid
the impact of the merger, if you so desire.
If You Currently Own Shares in the Fund
If the merger is approved you have two options:
1. IF YOU WISH TO HAVE YOUR INVESTMENT IN THE FUND TRANSFERRED TO
FIDELITY INTERMEDIATE GOVERNMENT INCOME FUND, TAKE NO ACTION. If the
merger is approved and completed, your investment will be
automatically exchanged into the Fidelity Intermediate Government
Income Fund at the close of business on the closing date, currently
anticipated to be April 22, 1999.
2. IF YOU DO NOT WISH TO HAVE YOUR INVESTMENT IN THE FUND TRANSFERRED
TO THE FIDELITY INTERMEDIATE GOVERNMENT INCOME FUND, YOU MAY EXCHANGE
OUT OF SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND INTO ANOTHER OPTION
IN YOUR PLAN PRIOR TO THE ANTICIPATED MERGER CLOSING DATE. If you
elect this option, the merger will have no affect on your holdings in
the plan.
If you elect to remain in the fund and if the merger is completed, you
will receive a confirmation of the exchange of your shares from
Spartan Short-Intermediate Government Fund into the Fidelity
Intermediate Government Income Fund within a few days of the
transaction. Of course if you elect to leave your balance in the fund
and allow the exchange into the Fidelity Intermediate Government
Income Fund, you may exchange out of the new option into any other
plan option after the merger, just as you may now.
If you have the Spartan Short-Intermediate Government Fund included in
your deferral elections under your plan, this deferral election will
be transferred to Fidelity Intermediate Government Income Fund. If
you wish to avoid this transfer of your deferral election, you should
change your deferral election under the procedures established for
your plan.
Please call Fidelity to inquire about the outcome of the merger vote
or if you should have any other questions.
If You Have Been Thinking About Investing in the Fund
If you are considering the Spartan Short-Intermediate Government Fund
as a future investment, you may want to look at the Fidelity
Intermediate Government Income Fund which may be available to you as
an investment option in your plan on April 30, 1999.
How to Learn More About the Funds
If you were a shareholder in the Spartan Short-Intermediate Government
Fund on February 16, 1999, you should have received a prospectus and
details on Fidelity Intermediate Government Income Fund.
A brief comparison of the two funds can be found below. If you would
like more information, or the chance to review a prospectus of either
fund, please go to the "Funds" section of our Web site, www.401k.com,
or call your plan's 800 number and talk to a representative.
A COMPARISON OF THE TWO FUNDS
While Fidelity Intermediate Government Income Fund shares a number of
characteristics with the Spartan Short-Intermediate Government Fund,
there are some important differences.
The two funds share the same investment objective - to seek high
current income consistent with the preservation of capital and both
are managed by Andrew Dudley. Fidelity Intermediate Government Income
Fund invests primarily in U.S. government securities or in instruments
that are related to U.S. government securities.
Fidelity Intermediate Government Income Fund would offer participants
a lower expense ratio through June 30, 2001 and a potentially higher
yield and a slight increase in risk than Spartan Short-Intermediate
Government Fund if the merger is approved. The increased risk for
investors comes by extending the duration and average maturity of
their investment as shown below. Duration is a way to measure the
change in market value of a bond or bond fund's reaction when interest
rates change.
The longer the duration of a bond or bond fund, the greater the rise
in market value when interest rates decline BUT the bigger the fall in
market value when interest rates rise as they have recently. Because
Fidelity Intermediate Government Income Fund has a slightly longer
duration than Spartan Short-Intermediate Government Fund, when
interest rates decline Fidelity Intermediate Government Income Fund
will tend to rise more in market price. Conversely, when interest
rates increase (generally resulting in lower bond market fund values)
the Fidelity Intermediate Government Income Fund's market price will
fall more than the market price of Spartan Short-Intermediate
Government Fund.
FUND COMPARISON
(as of 2/28/99 unless otherwise indicated)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AVERAGE
FUND NAME FUND CODE MATURITY AVERAGE
RANGE MATURITY DURATION 30-DAY YIELD
Spartan Short-Intermediate 474 2-5 years 3.5 (as of 1/31/99) 2.4 years (as of 1/31/99) 5.13%
Government Fund
Fidelity Intermediate 452 3-10 years 4.8 years 3.1 years (as of 1/31/99) 5.29%
Government Income Fund (as of 1/31/99)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LEHMAN BROTHERS BENCHMARK
FUND NAME EXPENSE RATIO
Spartan Short-Intermediate 1-5 Year U.S. Government Bond 0.65% (as of 10/31/98)
Government Fund Index
Fidelity Intermediate Intermediate Government Bond 0.63% if merger is approved
Government Income Fund Index (through 6/30/01)*
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS %
PERIODS ENDING DECEMBER 31, 1998
1 5 10 Life of Date of
FUND NO./NAME Year Year Year Fund Inception
452 Fidelity Intermediate 7.45 6.34 7.51 7.37 5/2/88
Gov't Income Fund
474 Spartan 6.60 5.77 N/A 5.79 12/18/92
Short-Intermediate Gov't Fund
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. TOTAL RETURNS ARE
HISTORICAL AND INCLUDE CHANGE IN SHARE VALUE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS, IF ANY. LIFE OF FUND FIGURES ARE REPORTED
AS OF THE COMMENCEMENT DATE TO THE PERIOD INDICATED. EACH INVESTMENT
CHOICE'S SHARE PRICE, YIELD AND RETURN WILL VARY AND YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
THE LEHMAN BROTHERS 1-5 YEAR U.S. GOVERNMENT BOND INDEX IS A
MARKET-VALUE WEIGHTED INDEX OF GOVERNMENT AND FIXED-RATE DEBT ISSUES
WITH MATURITIES BETWEEN ONE AND FIVE YEARS.
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX IS A
MARKET-VALUE WEIGHTED INDEX OF U.S. GOVERNMENT FIXED-RATE DEBT ISSUES
WITH MATURITIES BETWEEN ONE AND TEN YEARS.
*THE EXPENSE RATIO IS 0.65% (AS OF 1/1/99) WITHOUT THE MERGER AND
REFLECTS A SPECIAL DIVIDEND PAID AS OF 1/1/99.
FIDELITY MUTUAL FUNDS RESERVE THE RIGHT TO MODIFY OR WITHDRAW THE
EXCHANGE PRIVILEGE.
FOR MORE COMPLETE INFORMATION ABOUT FIDELITY MUTUAL FUNDS, INCLUDING
FEE AND EXPENSES, CALL OR WRITE FIDELITY FOR FREE PROSPECTUSES. READ
THEM CAREFULLY BEFORE YOU MAKE YOUR INVESTMENT CHOICES.
Fidelity Investments Institutional Services Company, Inc., 82
Devonshire Street, Boston, MA 02109
74764 K.SPSHINT-0399
