PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
GROWTH PORTFOLIO
HIGH INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
OVERSEAS PORTFOLIO
VALUE PORTFOLIO
TO BE HELD ON NOVEMBER 17, 2004
This Proxy Statement is furnished in connection with a solicitation of proxies
made by, and on behalf of, the Board of Trustees of Variable Insurance Products
Fund (the trust) to be used at the Special Meeting of Shareholders of
Equity-Income Portfolio, Growth Portfolio, High Income Portfolio, Money Market
Portfolio, Overseas Portfolio, and Value Portfolio (the funds) and at any
adjournments thereof (the Meeting), to be held on November 17, 2004 at 10:15
a.m. ET at 27 State Street, 10th Floor, Boston, Massachusetts 02109, an office
of the trust and Fidelity Management & Research Company (FMR), the funds'
investment adviser.
<R>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 or voting instruction form on or about September 20,
2004. Supplementary solicitations may be made by mail, telephone, telegraph,
facsimile, electronic means or by personal interview by representatives of the
trust. The expenses in connection with preparing this Proxy Statement and its
enclosures and all solicitations will be paid by each class of each fund
provided the expenses do not exceed each class's existing voluntary expense cap
as follows:</R>
<R>Fund Name Expense Cap</R>
<R>Equity-Income Portfolio: Initial Class 1.00%</R>
<R>Equity-Income Portfolio: Service Class 1.10%</R>
<R>Equity-Income Portfolio: Service Class 2 1.25%</R>
<R>Equity-Income Portfolio: Service Class 2 R 1.25%</R>
<R>Growth Portfolio: Initial Class 1.00%</R>
<R>Growth Portfolio: Service Class 1.10%</R>
<R>Growth Portfolio: Service Class 2 1.25%</R>
<R>Growth Portfolio: Service Class 2 R 1.25%</R>
<R>High Portfolio: Initial Class 1.00%</R>
<R>High Portfolio: Initial Class R 1.00%</R>
<R>High Portfolio: Service Class 1.10%</R>
<R>High Portfolio: Service Class 2 1.25%</R>
<R>Money Market Portfolio: Service Class 0.45%</R>
<R>Money Market Portfolio: Service Class 2 0.60%</R>
<R>Overseas Portfolio: Initial Class 1.50%</R>
<R>Overseas Portfolio: Initial Class R 1.50%</R>
<R>Overseas Portfolio: Service Class 1.60%</R>
<R>Overseas Portfolio: Service Class R 1.60%</R>
<R>Overseas Portfolio: Service Class 2 1.25%</R>
<R>Overseas Portfolio: Service Class 2 R 1.75%</R>
<R>Value Portfolio: Initial Class 1.00%</R>
<R>Value Portfolio: Service Class 1.10%</R>
<R>Value Portfolio: Service Class 2 1.25%</R>
<R>Expenses exceeding each class's voluntary expense cap will be paid by FMR.
The funds will reimburse insurance companies and others for their reasonable
expenses in forwarding solicitation material to the beneficial owners of shares.
The costs are allocated among the funds based upon the number of shareholder
accounts in each fund.</R>
The following table summarizes the proposals applicable to each fund:
Proposal # Proposal Description Applicable Fund(s) Page
1. To amend the Declaration All Funds <Click
of Trust to allow the Here>
Board of Trustees, if
permitted by applicable
law, to authorize fund
mergers without
shareholder approval.
2. To elect as Trustees the All Funds <Click
nominees presented in Here>
Proposal 2.
3. To approve a new Equity-Income Portfolio <Click
sub-advisory agreement and Growth Portfolio Here>
among FMR, FMR U.K., and
Variable Insurance
Products Fund to provide
investment advice and
research services or
investment management
services.
4. To approve a new Equity-Income Portfolio <Click
sub-advisory agreement and Growth Portfolio Here>
among FMR, FMR Far East,
and Variable Insurance
Products Fund to provide
investment advice and
research services or
investment management
services.
5. To approve a new amended Equity-Income Portfolio <Click
and restated sub-advisory and Growth Portfolio Here>
agreement between FMR Far
East and FIJ to provide
investment advice and
research services or
investment management
services.
6. To approve a new master Equity-Income Portfolio <Click
international research and Growth Portfolio Here>
agreement between FMR and
FIIA to provide investment
advice and research
services.
7. To approve a new Equity-Income Portfolio <Click
sub-research agreement and Growth Portfolio Here>
between FIIA and
FIIA(U.K.)L to provide
investment advice and
research services.
8. To approve a new Equity-Income Portfolio <Click
sub-research agreement and Growth Portfolio Here>
between FIIA and FIJ to
provide investment advice
and research services.
9. To amend the fundamental Equity-Income Portfolio, <Click
investment limitation Growth Portfolio, High Here>
concerning borrowing. Income Portfolio, and
Overseas Portfolio
10. To amend the fundamental Equity-Income Portfolio, <Click
investment limitation Growth Portfolio, High Here>
concerning lending to Income Portfolio, Money
clarify that acquisitions Market Portfolio, and
of loans, loan Overseas Portfolio
participations or other
debt instruments are not
considered lending.
<R>The principal business address of FMR, each fund's investment adviser and
administrator, and FMR Co., Inc. (FMRC), sub-adviser to Equity-Income Portfolio,
Growth Portfolio, High Income Portfolio, Overseas Portfolio, and Value Portfolio
is One Federal Street, Boston, Massachusetts 02110. The principal business
address of Fidelity Distributors Corporation (FDC), each fund's principal
underwriter and distribution agent, is 82 Devonshire Street, Boston,
Massachusetts, 02109. The principal business address of Fidelity Investments
Money Management, Inc. (FIMM), sub-adviser to Money Market Portfolio, is One
Spartan Way, Merrimack, New Hampshire 03054. Fidelity Management & Research
(U.K.) Inc. (FMR U.K.), located at 25 Lovat Lane, London, EC3R 8LL, England;
Fidelity Management & Research (Far East) Inc. (FMR Far East), located at
Shiroyama JT Mori Bldg. 4-3-1 Toranomon Minato-ku, Tokyo 105, Japan; and
Fidelity Investments Japan Limited (FIJ), located at Shiroyama JT Trust Tower,
3-1, Toranomon 4-chome, Minato-ku, Tokyo, Japan 105-6019 are also sub-advisers
to High Income Portfolio, Overseas Portfolio, and Value Portfolio. Fidelity
International Investment Advisors (FIIA), located at Pembroke Hall, 42 Crow
Lane, Pembroke HM19, Bermuda; and Fidelity International Investment Advisors
(U.K.) Limited (FIIA(U.K.)L), located at 25 Cannon Street, London EC4M 5TA,
England are also sub-advisers to High Income Portfolio, Money Market Portfolio,
Overseas Portfolio, and Value Portfolio.</R>
If the enclosed proxy or voting instruction form 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 or voting
instruction form or by attending the Meeting and voting in person.
<R>All proxies 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
or voting instruction form, it will be voted FOR the matters specified on the
proxy or voting instruction form. All shares that are voted and votes to ABSTAIN
will be counted towards establishing a quorum, but insurance company variable
accounts may vote all of their shares in the same proportion as the voting
instructions actually received from variable product owners. See page <Click
Here>.</R>
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.
<R>Shares of each class of each fund of the trust issued and outstanding as of
July 31, 2004 are indicated in the following table:</R>
Number of
<R> Shares</R>
<R>Equity-Income Portfolio: Initial Class 355,297,663</R>
<R>Equity-Income Portfolio: Service Class 47,392,287</R>
<R>Equity-Income Portfolio: Service Class 2 50,903,428</R>
<R>Equity-Income Portfolio: Service Class 2 R 170,904</R>
<R>Growth Portfolio: Initial Class 262,464,852</R>
<R>Growth Portfolio: Service Class 44,289,226</R>
<R>Growth Portfolio: Service Class 2 24,520,048</R>
<R>Growth Portfolio: Service Class 2 R 75,914</R>
<R>High Income Portfolio: Initial Class 196,194,671</R>
<R>High Income Portfolio: Initial Class R 11,587</R>
<R>High Income Portfolio: Service Class 49,950,062</R>
<R>High Income Portfolio: Service Class R 11,619</R>
<R>High Income Portfolio: Service Class 2 9,408,099</R>
<R>High Income Portfolio: Service Class 2 R 11,723</R>
<R>Money Market Portfolio: Initial Class 1,613,461,939</R>
<R>Money Market Portfolio: Service Class 39,875,306</R>
<R>Money Market Portfolio: Service Class 2 9,036,733</R>
<R>Overseas Portfolio: Initial Class 90,585,028</R>
<R>Overseas Portfolio: Initial Class R 5,422,405</R>
<R>Overseas Portfolio: Service Class 18,027,536</R>
<R>Overseas Portfolio: Service Class R 4,667,038</R>
<R>Overseas Portfolio: Service Class 2 14,741,735</R>
<R>Overseas Portfolio: Service Class 2 R 1,103,474</R>
<R>Value Portfolio: Initial Class 40,051</R>
<R>Value Portfolio: Service Class 99,407</R>
<R>Value Portfolio: Service Class 2 286,913</R>
<R>To the knowledge of the trust, substantial (5% or more) record ownership of
each fund and class on July 31, 2004 was as follows:</R>
<R>Equity-Income Nationwide Columbus, OH 16.05%</R>
Portfolio: Initial Class Insurance
Enterprises
<R>Equity-Income ING Hartford, CT 12.83%</R>
Portfolio: Initial Class
<R>Equity-Income Allmerica Financial Worcester, MA 7.82%</R>
Portfolio: Initial Class Corp.
<R>Equity-Income GE Financial Richmond, VA 5.27%</R>
Portfolio: Initial Class Assurance Holdings,
Inc.
<R>Equity-Income Citigroup, Inc. Hartford, CT 5.13%</R>
Portfolio: Initial Class
<R>Equity-Income ING West Chester, PA 17.26%</R>
Portfolio: Service Class
2
<R>Equity-Income Aegon USA Cedar Rapids, IA 13.55%</R>
Portfolio: Service Class Securities Inc.
2
<R>Equity-Income Nationwide Columbus, OH 10.95%</R>
Portfolio: Service Class Insurance
2 Enterprises
<R>Equity-Income GE Financial Richmond, VA 10.94%</R>
Portfolio: Service Class Assurance Holdings,
2 Inc.
<R>Equity-Income Minnesota Mutual Saint Paul, MN 8.87%</R>
Portfolio: Service Class Companies, Inc.
2
<R>Equity-Income LINCOLN Fort Wayne, IN 8.80%</R>
Portfolio: Service Class
2
<R>Equity-Income Nationwide Columbus, OH 90.77%</R>
Portfolio: Service Class Insurance
Enterprises
<R>Equity-Income Guardian Insurance Bethlehem, PA 5.83%</R>
Portfolio: Service Class & Annuity Company,
Inc.
<R>Equity-Income Nationwide Columbus, OH 97.22%</R>
Portfolio: Service Class Insurance
2 R Enterprises
<R>Growth Portfolio: Nationwide Columbus, OH 16.05%</R>
Initial Class Insurance
Enterprises
<R>Growth Portfolio: ING Hartford, CT 14.21%</R>
Initial Class
<R>Growth Portfolio: Citigroup, Inc. Hartford, CT 7.64%</R>
Initial Class
<R>Growth Portfolio: Allmerica Financial Worcester, MA 6.61%</R>
Initial Class Corp.
<R>Growth Portfolio: Nationwide Columbus, OH 61.65%</R>
Service Class Insurance
Enterprises
<R>Growth Portfolio: LINCOLN Fort Wayne, IN 10.04%</R>
Service Class
<R>Growth Portfolio: Massachusetts Springfield, MA 6.93%</R>
Service Class Mutual Group
<R>Growth Portfolio: John Hancock San Francisco, CA 6.50%</R>
Service Class Financial Services
Group
<R>Growth Portfolio: ING West Chester, PA 30.40%</R>
Service Class 2
<R>Growth Portfolio: Nationwide Columbus, OH 10.83%</R>
Service Class 2 Insurance
Enterprises
<R>Growth Portfolio: Aegon USA Cedar Rapids, IA 9.97%</R>
Service Class 2 Securities Inc.
<R>Growth Portfolio: Sun Life Financial Boston, MA 8.67%</R>
Service Class 2
<R>Growth Portfolio: GE Financial Richmond, VA 7.87%</R>
Service Class 2 Assurance Holdings,
Inc.
<R>Growth Portfolio: LINCOLN Fort Wayne, IN 6.68%</R>
Service Class 2
<R>Growth Portfolio: Nationwide Columbus, OH 95.75%</R>
Service Class 2 R Insurance
Enterprises
<R>High Income Nationwide Columbus, OH 22.79%</R>
Portfolio: Initial Class Insurance
Enterprises
<R>High Income Allmerica Financial Worcester, MA 15.49%</R>
Portfolio: Initial Class Corp.
<R>High Income American United Indianapolis, IN 6.41%</R>
Portfolio: Initial Class Life Insurance
Company
<R>High Income Fidelity Boston, MA 100.00%</R>
Portfolio: Initial Class Investments
R
<R>High Income Nationwide Columbus, OH 90.21%</R>
Portfolio: Service Class Insurance
Enterprises
<R>High Income Fidelity Boston, MA 100.00%</R>
Portfolio: Service Class Investments
R
<R>High Income Nationwide Columbus, OH 34.41%</R>
Portfolio: Service Class Insurance
2 Enterprises
<R>High Income Ameritas Financial Lincoln, NE 15.42%</R>
Portfolio: Service Class Services
2
<R>High Income Allmerica Financial Worcester, MA 13.66%</R>
Portfolio: Service Class Corp.
2
<R>High Income Western Southern Louisville, KY 11.71%</R>
Portfolio: Service Class Group
2
<R>High Income FBL Financial Group West Des Moines, IA 5.50%</R>
Portfolio: Service Class
2
<R>High Income Fidelity Boston, MA 99.97%</R>
Portfolio: Service Class Investments
2 R
<R>Money Market American New York, NY 12.69%</R>
Portfolio: Initial Class International Group
<R>Money Market Allstate Lincoln, NE 5.58%</R>
Portfolio: Initial Class Corporation
<R>Money Market Sun Life Financial Boston, MA 84.19%</R>
Portfolio: Service Class
<R>Money Market LINCOLN Fort Wayne, IN 15.08%</R>
Portfolio: Service Class
<R>Money Market Allstate Lincoln, NE 60.94%</R>
Portfolio: Service Class Corporation
2
<R>Money Market Great West Life Englewood, CO 14.40%</R>
Portfolio: Service Class
2
<R>Money Market Aegon USA Cedar Rapids, IA 12.10%</R>
Portfolio: Service Class Securities Inc.
2
<R>Money Market The Hartford Hartford, CT 9.70%</R>
Portfolio: Service Class Financial Group,
2 Inc.
<R>Overseas Portfolio: Nationwide Columbus, OH 16.82%</R>
Initial Class Insurance
Enterprises
<R>Overseas Portfolio: Metropolitan Life Boston, MA 10.87%</R>
Initial Class Insurance Company
<R>Overseas Portfolio: ING Hartford, CT 6.74%</R>
Initial Class
<R>Overseas Portfolio: Allmerica Financial Worcester, MA 6.15%</R>
Initial Class Corp.
<R>Overseas Portfolio: GE Financial Richmond, VA 5.83%</R>
Initial Class Assurance Holdings,
Inc.
<R>Overseas Portfolio: American United Indianapolis, IN 5.19%</R>
Initial Class Life Insurance
Company
<R>Overseas Portfolio: Nationwide Columbus, OH 61.02%</R>
Initial Class R Insurance
Enterprises
<R>Overseas Portfolio: Nationwide Newark, DE 8.54%</R>
Initial Class R Insurance
Enterprises
<R>Overseas Portfolio: Nationwide Columbus, OH 44.64%</R>
Service Class Insurance
Enterprises
<R>Overseas Portfolio: American Express Minneapolis, MN 36.04%</R>
Service Class Financial Services
<R>Overseas Portfolio: John Hancock San Francisco, CA 11.12%</R>
Service Class Financial Services
Group
<R>Overseas Portfolio: Nationwide Columbus, OH 99.85%</R>
Service Class R Insurance
Enterprises
<R>Overseas Portfolio: American Express Minneapolis, MN 56.50%</R>
Service Class 2 Financial Services
<R>Overseas Portfolio: LINCOLN Fort Wayne, IN 18.68%</R>
Service Class 2
<R>Overseas Portfolio: Nationwide Columbus, OH 8.47%</R>
Service Class 2 Insurance
Enterprises
<R>Overseas Portfolio: Nationwide Columbus, OH 99.51%</R>
Service Class 2 R Insurance
Enterprises
<R>Value Portfolio: Fidelity Boston, MA 75.38%</R>
Initial Class Investments
<R>Value Portfolio: Minnesota Mutual Saint Paul, MN 24.58%</R>
Initial Class Companies, Inc.
<R>Value Portfolio: Nationwide Columbus, OH 69.69%</R>
Service Class Insurance
Enterprises
<R>Value Portfolio: Fidelity Boston, MA 30.34%</R>
Service Class Investments
<R>Value Portfolio: Nationwide Columbus, OH 49.74%</R>
Service Class 2 Insurance
Enterprises
<R>Value Portfolio: AXA Group New York, NY 36.26%</R>
Service Class 2
<R>Value Portfolio: Fidelity Boston, MA 14.02%</R>
Service Class 2 Investments
<R>To the knowledge of the trust, no other shareholder owned of record or
beneficially more than 5% of the outstanding shares of each class of the funds
on that date.</R>
FMR has advised the trust that certain shares are registered to FMR or an FMR
affiliate. To the extent that FMR or an FMR affiliate has discretion to vote,
these shares will be voted at the Meeting FOR each proposal. Otherwise, these
shares will be voted in accordance with the plan or agreement governing the
shares. Although the terms of the plans and agreements vary, generally the
shares must be voted either (i) in accordance with instructions received from
shareholders or (ii) in accordance with instructions received from shareholders
and, for shareholders who do not vote, in the same proportion as certain other
shareholders have voted.
Shareholders of record at the close of business on September 20, 2004 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.
Shares of the trust are currently sold only to life insurance companies. Each
company holds its shares in a separate account (the Variable Account), which
serves as the funding vehicle for its variable insurance products. In accordance
with its view of present applicable law, each company will vote its shares held
in its respective Variable Account at the Special Meeting of Shareholders in
accordance with instructions received from persons having a voting interest in
the Variable Account. Those persons who have a voting interest at the close of
business on September 20, 2004, will be entitled to submit instructions to their
company.
Fund shares held in a Variable Account for which no timely instructions are
received will be voted by the companies in proportion to the voting instructions
that are received with respect to all contracts participating in a Variable
Account. Voting instructions to abstain on any item to be voted upon will reduce
the votes eligible to be cast.
Accordingly, if you wish to vote, you should complete the enclosed proxy card or
voting instruction form as a participant in a Variable Account. All forms which
are properly executed and received prior to the Meeting, and which are not
revoked, will be voted as described above. If the enclosed voting instruction
form is executed and returned, it may nevertheless be revoked at any time prior
to the Meeting by written notification received by your company, by execution of
a later-dated form received by your company, or by attending the Meeting and
voting in person.
Only one copy of this Proxy Statement may be mailed to households, even if more
than one person in a household is a shareholder of record. If you need
additional copies of this Proxy Statement, please contact your Insurance Company
Representative. If you do not want the mailing of this Proxy Statement to be
combined with those for other members of your household, please contact your
Insurance Company Representative.
<R>For a free copy of each fund's annual report for the fiscal year ended
December 31, 2003 and semiannual report for the fiscal period ended June 30,
2004 call 1-800-544-5429 or write to FDC at 82 Devonshire Street, Boston,
Massachusetts 02109.</R>
VOTE REQUIRED: Approval of Proposal 1 requires the affirmative vote of a
majority of the outstanding voting securities of the entire trust. Approval of
Proposal 2 requires the affirmative vote of a plurality of the shares of the
entire trust voted in person or by proxy at the Meeting. Approval of Proposals 3
through 10 requires the affirmative vote of a majority of the outstanding voting
securities of the appropriate fund. Under the Investment Company Act of 1940
(1940 Act), the vote of a majority of the outstanding voting securities means
the affirmative vote of the lesser of (a) 67% or more of the voting securities
present at the Meeting or represented by proxy if the holders of more than 50%
of the outstanding voting securities are present or represented by proxy or (b)
more than 50% of the outstanding voting securities.
1. TO AMEND THE DECLARATION OF TRUST TO ALLOW THE BOARD OF TRUSTEES, IF
PERMITTED BY APPLICABLE LAW, TO AUTHORIZE FUND MERGERS WITHOUT SHAREHOLDER
APPROVAL.
The Securities and Exchange Commission (SEC) has recently changed the rules for
mutual fund mergers to reduce the need for affiliated funds to incur the expense
of soliciting proxies when a merger does not raise significant issues for
shareholders - for example, merging two small Fidelity funds, with the same
portfolio manager, the same investment principles and the same fee structures in
order to achieve economies of scale and thereby reduce fund expenses borne by
shareholders. The rules still require the board of trustees (including a
majority of non-interested trustees) to determine that any merger is in the best
interest of the affiliated funds and will not dilute the interest of their
existing shareholders. The new SEC rules also require shareholder approval by
the acquired affiliated fund for mergers that could have a material impact on a
shareholder, like changing a fundamental investment policy or increasing fund
expenses (see below).
The fund's current Declaration of Trust was drafted to be consistent with the
old SEC rules which required approval of all mergers between affiliated funds by
the shareholders of the fund to be acquired. You are being asked now to approve
an amendment to the Declaration of Trust (Article XII, Section 4.3), consistent
with the new affiliated fund merger rules, to permit the Trustees in limited
circumstances to authorize a fund's or class's merger or consolidation with, or
sale of a fund's or class's assets to, another operating mutual fund without a
shareholder vote. You are not being asked to approve any fund mergers at this
time.
Shareholders have the right to vote on any Declaration of Trust amendment
affecting their right to vote or on any matter submitted to the shareholders by
the Trustees. On April 15, 2004, the Trustees approved the proposed amendment
and also authorized its submission to the trust's shareholders for their
approval at this Meeting.
The amendment will give the Trustees more flexibility and, subject to applicable
requirements of Federal law, namely the 1940 Act, and Massachusetts law, broader
authority to act. The amendment will not alter in any way the Trustees' existing
fiduciary obligations to act with due care and in the shareholders' interests.
Before using any new flexibility that the proposed amendment may afford, the
Trustees must first consider the shareholders' interests and then act in
accordance with such interests. Shareholders of an acquired affiliated fund will
still be required to approve a merger that would result in a change of a
fundamental investment policy, a material change to the terms of an investment
management contract, the institution of, or an increase in, a 12b-1 fee or where
the board of trustees of the surviving fund does not have a majority of
non-interested trustees who were elected by the acquired fund's shareholders.
Shareholder approval will also continue to be required for all mergers of
non-affiliated funds.
Article XII, Section 4.3 of the Declaration of Trust addresses mergers,
consolidations, and sales of fund assets. If approved, Article XII, Section 4.3
will be amended as follows (new language is underlined; language to be deleted
is [bracketed]):
ARTICLE XII
MISCELLANEOUS
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 or Class thereof may merge or consolidate with any other
corporation, association, trust, or other organization or may sell, lease, or
exchange all or a portion of the Trust property or Trust property allocated or
belonging to such Series or Class, including its good will, upon such terms and
conditions and for such consideration when and as authorized by the Trustees
without the vote or consent of Shareholders [at any meeting of Shareholders
called for such purpose by a Majority Shareholder Vote of the Trust or affected
Series or Class, as the case may be]. Such transactions may be effected through
share-for-share exchanges, transfers or sale of assets, shareholder in-kind
redemptions and purchases, exchange offers, or any other method approved by the
Trustees.
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 or a portion of the
Trust property or all or a portion of the Trust property allocated or belonging
to such Series or Class 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 or
Class 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 or
any Series or Class thereof 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 or
Class thereof sells, conveys, or transfers all or a portion of its assets to
another entity or merges or consolidates with another entity. Such transactions
may be effected through share-for-share exchanges, transfers or sale of assets,
shareholder in-kind redemptions and purchases, exchange offers, or any other
method approved by the Trustees.
Conclusion. The Board of Trustees has concluded that the proposal will benefit
the trust and its shareholders. The Trustees recommend voting FOR the proposal.
The amended Declaration of Trust will become effective upon shareholder
approval. If the proposal is not approved by shareholders of the trust, Article
XII, Section 4.3 of the Declaration of Trust will remain unchanged.
2. TO ELECT A BOARD OF TRUSTEES.
<R>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 the trust, the
Trustees have determined that the number of Trustees shall be fixed at 14. It is
intended that the enclosed proxy will be voted for the nominees listed below
unless such authority has been withheld in the proxy. A nominee shall be elected
immediately upon shareholder approval, unless he or she is proposed to begin
service at a later date. It is proposed that Dennis J. Dirks and Cornelia M.
Small begin serving as Trustee on or about January 1, 2005, replacing Ralph F.
Cox and Donald J. Kirk, who are scheduled to retire at the end of 2004.</R>
<R>Except for Mr. Dirks and Ms. Small, all nominees named below are currently
Trustees of the trust and have served in that capacity continuously since
originally elected or appointed. Laura B. Cronin, George H. Heilmeier, and
Robert L. Reynolds were selected by the trust's Governance and Nominating
Committee (see page <Click Here>) and were appointed to the Board on March
1, 2003, January 1, 2004, and March 1, 2003, respectively. Mr. Dirks and Ms.
Small are currently Members of the Advisory Board of the trust. Mr. Dirks and
Ms. Small were selected by the trust's Governance and Nominating Committee and
were appointed as Members of the Advisory Board on July 1, 2004 and January 1,
2004, respectively.</R>
<R>Except for William O. McCoy, Mr. Dirks, and Ms. Small, each of the nominees
oversees 293 funds advised by FMR or an affiliate. Mr. McCoy oversees 295 funds
advised by FMR or an affiliate. Mr. Dirks and Ms. Small do not currently serve
as Trustees of any fund advised by FMR or an affiliate; Mr. Dirks and Ms. Small
are currently Members of the Advisory Board of each Fidelity fund.</R>
In the election of Trustees, those nominees receiving the highest number of
votes cast at the Meeting, provided a quorum is present, shall be elected.
Interested Nominees*:
Correspondence intended for each nominee who is an interested person (as defined
in the 1940 Act) may be sent to Fidelity Investments, 82 Devonshire Street,
Boston, Massachusetts 02109.
Name, Age; Principal Occupation**
Edward C. Johnson 3d (74)***
Year of Election or Appointment: 1981
Trustee of Variable Insurance Products Fund. Mr. Johnson is Chairman of the
Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, 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 Management &
Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments
Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co.,
Inc.
Abigail P. Johnson (42)***
Year of Election or Appointment: 2001
Trustee of Variable Insurance Products Fund. Senior Vice President of
Equity-Income Portfolio (2001), Growth Portfolio (2001), High Income Portfolio
(2001), Money Market Portfolio (2001), Overseas Portfolio (2001), and Value
Portfolio (2001). Ms. Johnson also serves as Senior Vice President of other
Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity
Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director
of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (50)
Year of Election or Appointment: 2003
Trustee of Variable Insurance Products Fund. Ms. Cronin is an Executive Vice
President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member
of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as
Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR
(1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage
Company (2001-2002).
Robert L. Reynolds (52)
Year of Election or Appointment: 2003
Trustee of Variable Insurance Products Fund. Mr. Reynolds is a Director (2003)
and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity
Management Committee (2003). He also serves on the Board at Fidelity Investments
Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity
Investments Institutional Retirement Group (1996-2000).
* Nominees have been determined to be interested by virtue of, among other
things, their affiliation with the trust or various entities under common
control with FMR.
** Except as otherwise indicated, each individual has held the office shown or
other offices in the same company for the last five years.
*** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.
Non-Interested Nominees:
Correspondence intended for each non-interested nominee (that is, the nominees
other than the interested nominees) may be sent to Fidelity Investments, P. O.
Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation*
J. Michael Cook (61)**
<R> Year of Election or Appointment: 2001</R>
<R>Trustee of Variable Insurance Products Fund. Prior to Mr. Cook's
retirement in May 1999, he served as Chairman and Chief Executive
Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of
the Deloitte & Touche Foundation, and a member of the Board of Deloitte
Touche Tohmatsu. He currently serves as a Director of Comcast
(telecommunications, 2002), International Flavors & Fragrances, Inc.
(2000), The Dow Chemical Company (2000), and Northrop Grumman
Corporation (global defense technology, 2003). He is a Member of the
Diversity Advisory Council of Marakon (2003) and the Advisory Council
of the Public Company Accounting Oversight Board (PCAOB), Chairman
Emeritus of the Board of Catalyst (a leading organization for the
advancement of women in business), and is Chairman of the
Accountability Advisory Council to the Comptroller General of the
United States. He also serves as a Member of the Advisory Board of the
Graduate School of Business of the University of Florida, his alma
mater.</R>
Ralph F. Cox (72)***
Year of Election or Appointment: 1991
Trustee of Variable Insurance Products Fund. Mr. Cox is President of
RABAR Enterprises (management consulting for the petroleum industry).
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
CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum
exploration and production, 1999). In addition, he is a member of
advisory boards of Texas A&M University and the University of Texas at
Austin.
Dennis J. Dirks (56)+
Year of Election or Appointment to the Advisory Board: 2004
Member of the Advisory Board of Variable Insurance Products Fund. Prior
to his retirement in May 2003, Mr. Dirks was Chief Operating Officer
and a member of the Board of The Depository Trust & Clearing
Corporation (DTCC) (1999-2003). He also served as President, Chief
Operating Officer, and Board member of The Depository Trust Company
(DTC) (1999-2003) and President and Board member of the National
Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr.
Dirks served as Chief Executive Officer and Board member of the
Government Securities Clearing Corporation (2001-2003) and Chief
Executive Officer and Board member of the Mortgage-Backed Securities
Clearing Corporation (2001-2003).
Robert M. Gates (60)
Year of Election or Appointment: 1997
Trustee of Variable Insurance Products Fund. Dr. Gates is President of
Texas A&M University (2002). He was Director of the Central
Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr.
Gates served as Assistant to the President of the United States and
Deputy National Security Advisor. Dr. Gates is a Director of NACCO
Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc.
(drilling and rental tools for the energy industry, 2001), and Brinker
International (restaurant management, 2003). He also serves as a member
of the Advisory Board of VoteHere.net (secure internet voting, 2001).
Previously, Dr. Gates served as a Director of LucasVarity PLC
(automotive components and diesel engines), a Director of TRW Inc.
(automotive, space, defense, and information technology), and Dean of
the George Bush School of Government and Public Service at Texas A&M
University (1999-2001). Dr. Gates also is a Trustee of the Forum for
International Policy.
George H. Heilmeier (68)
Year of Election or Appointment: 2004
Trustee of Variable Insurance Products Fund. Dr. Heilmeier is Chairman
Emeritus of Telcordia Technologies (communication software and
systems), where prior to his retirement, he served as company Chairman
and Chief Executive Officer. He currently serves on the Boards of
Directors of The Mitre Corporation (systems engineering and information
technology support for the government), INET Technologies Inc.
(telecommunications network surveillance, 2001) and Teletech Holdings
(customer management services, 1998). He is Chairman of the General
Motors Technology Advisory Committee and a Life Fellow of the IEEE
(2000). Dr. Heilmeier is a member of the Defense Science Board and the
National Security Agency Advisory Board. He is also a member of the
National Academy of Engineering, the American Academy of Arts and
Sciences and The Board of Overseers of the School of Engineering and
Applied Science of the University of Pennsylvania. Previously, Dr.
Heilmeier served as a Director of TRW Inc. (automotive, space, defense,
and information technology, 1992-2002), Compaq (1994-2002), and
Automatic Data Processing, Inc. (ADP) (technology-based business
outsourcing, 1995-2002).
Donald J. Kirk (71)***
Year of Election or Appointment: 1987
Trustee of Variable Insurance Products Fund. Mr. Kirk is a Governor of
the American Stock Exchange (2001), a Trustee and former Chairman of
the Board of Trustees of the Greenwich Hospital Association, a Director
of the Yale-New Haven Health Services Corp. (1998), and a Director
Emeritus and former Chairman of the Board of Directors of National Arts
Strategies Inc. (leadership education for arts and culture). Mr. Kirk
was an Executive-in-Residence (1995-2000) and a Professor (1987-1995)
at Columbia University Graduate School of Business. Prior to 1987, he
was Chairman of the Financial Accounting Standards Board. Previously,
Mr. Kirk served as a Governor of the National Association of Securities
Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public
Oversight Board of the American Institute of Certified Public
Accountants' SEC Practice Section (1995-2002), a Director of General Re
Corporation (reinsurance, 1987-1998) and as a Director of Valuation
Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
Year of Election or Appointment: 2001
Trustee of Variable Insurance Products Fund. Prior to Ms. Knowles'
retirement in June 2000, she served as Executive Vice President and
Chief Financial Officer of Atlantic Richfield Company (ARCO)
(diversified energy, 1996-2000). From 1993 to 1996, she was a Senior
Vice President of ARCO and President of ARCO Transportation Company.
She served as a Director of ARCO from 1996 to 1998. She currently
serves as a Director of Phelps Dodge Corporation (copper mining and
manufacturing) and McKesson Corporation (healthcare service, 2002). Ms.
Knowles is a Trustee of the Brookings Institution and the Catalina
Island Conservancy and also serves as a member of the Advisory Board
for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (60)
<R> Year of Election or Appointment: 2000</R>
<R>Trustee of Variable Insurance Products Fund. Mr. Lautenbach has been
a partner of Clayton, Dubilier & Rice, Inc. (private equity investment
firm) since September 1998. Previously, Mr. Lautenbach was with the
International Business Machines Corporation (IBM) from 1968 until his
retirement in 1998. He was most recently Senior Vice President and
Group Executive of Worldwide Sales and Services. From 1993 to 1995, he
was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was
a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves
as Co-Chairman and a Director of Covansys, Inc. (global provider of
business and technology solutions, 2000). In addition, he is a Director
of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004) and
Eaton Corporation (diversified industrial) as well as the Philharmonic
Center for the Arts in Naples, Florida (1999). He also is a member of
the Council on Foreign Relations.</R>
Marvin L. Mann (71)
<R> Year of Election or Appointment: 1993</R>
<R>Trustee of Variable Insurance Products Fund. Mr. Mann is Chairman of
the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark
International, Inc. (computer peripherals) where he served as CEO until
April 1998, retired as Chairman May 1999, and remains a member of the
Board. 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. He is a
member of the Executive Committee of the Independent Director's Council
of the Investment Company Institute. In addition, Mr. Mann is a member
of the President's Cabinet at the University of Alabama and the Board
of Visitors of the Culverhouse College of Commerce and Business
Administration at the University of Alabama.</R>
William O. McCoy (70)
Year of Election or Appointment: 1997
Trustee of Variable Insurance Products Fund. Prior to his retirement in
December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth
Corporation (telecommunications) and President of BellSouth
Enterprises. He is currently a Director of Liberty Corporation (holding
company), Duke Realty Corporation (real estate), and Progress Energy,
Inc. (electric utility). He is also a partner of Franklin Street
Partners (private investment management firm) and a member of the
Research Triangle Foundation Board. In addition, Mr. McCoy served as
the Interim Chancellor (1999-2000) and a member of the Board of
Visitors (1994-1998) for the University of North Carolina at Chapel
Hill and currently serves on the Board of Directors of the University
of North Carolina Health Care System and the Board of Visitors of the
Kenan-Flagler Business School (University of North Carolina at Chapel
Hill). He also served as Vice President of Finance for the University
of North Carolina (16-school system, 1995-1998).
Cornelia M. Small (60)+
Year of Election or Appointment to the Advisory Board: 2004
Member of the Advisory Board of Variable Insurance Products Fund. Ms.
Small is a member (2000) and Chairperson (2002) of the Investment
Committee, and a member (2002) of the Board of Trustees of Smith
College. Previously, she served as Chief Investment Officer
(1999-2000), Director of Global Equity Investments (1996-1999), and a
member of the Board of Directors of Scudder, Stevens & Clark
(1990-1997) and Scudder Kemper Investments (1997-1998). In addition,
Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the
Fletcher School of Law and Diplomacy.
William S. Stavropoulos (65)
Year of Election or Appointment: 2001
Trustee of Variable Insurance Products Fund. Mr. Stavropoulos is
Chairman of the Board (2000), CEO (2002), a position he previously held
from 1995-2000, Chairman of the Executive Committee (2000), and a
Member of the Board of Directors of The Dow Chemical Company. Since
joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in
numerous senior management positions, including President (1993-2000;
2002-2003). Currently, he is a Director of NCR Corporation (data
warehousing and technology solutions), BellSouth Corporation
(telecommunications), Chemical Financial Corporation, and Maersk Inc.
(industrial conglomerate, 2002). He also serves as a member of the
Board of Trustees of the American Enterprise Institute for Public
Policy Research. In addition, Mr. Stavropoulos is a member of The
Business Council, J.P. Morgan International Council and the University
of Notre Dame Advisory Council for the College of Science.
* Except as otherwise indicated, each individual has held the office shown or
other offices in the same company for the last five years.
** Mr. Cook has advised the Board of Trustees that he intends to resign
effective on or about December 31, 2004 to pursue other opportunities.
*** Scheduled to retire at the end of 2004 in accordance with policy that each
non-interested Trustee retire no later than the last day of the calendar year in
which his or her 72nd birthday occurs.
+ Nominated to serve as Trustee effective on or about January 1, 2005 following
the retirement of Ralph F. Cox and Donald J. Kirk.
As of July 31, 2004 the nominees, Trustees and officers of the trust and each
fund owned, in the aggregate, less than 1% of each fund's outstanding shares.
If elected, the Trustees will hold office without limit in time except that (a)
any Trustee may resign; (b) any Trustee may be removed by written instrument,
signed by at least two-thirds of the number of Trustees prior to such removal;
(c) any Trustee who requests to be retired or who has become incapacitated by
illness or injury may be retired by written instrument signed by a majority of
the other Trustees; and (d) a Trustee may be removed at any Special Meeting of
shareholders by a two-thirds vote of the outstanding voting securities of the
trust. In any event, each non-interested Trustee shall retire not later than the
last day of the calendar year in which his or her 72nd birthday occurs. 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 Advisory Board Members hold office without
limit in time except that any Advisory Board Member may resign or may be removed
by a vote of a majority of the Trustees at any regular meeting or any special
meeting of the Trustees.
<R>The trust's Board, which is currently composed of four interested and 10
non-interested Trustees, met 11 times during the fiscal year ended December 31,
2003. It is expected that the Trustees will meet at least 11 times a year at
regularly scheduled meetings. For additional information on the committees of
the funds' Trustees, refer to the section entitled Standing Committees of the
Funds' Trustees beginning on page <Click Here>.</R>
The following table sets forth information describing the dollar range of equity
securities beneficially owned by each nominee in each fund and in all funds in
the aggregate within the same fund family overseen by the nominee as of June 30,
2004.
Interested Nominees
DOLLAR RANGE OF Edward C. Abigail P. Laura B. Robert L.
FUND SHARES Johnson 3d Johnson Cronin Reynolds
<R>Equity-Income
Portfolio none none none none</R>
<R>Growth Portfolio none none none none</R>
<R>High Income Portfolio none none none none</R>
<R>Money Market
Portfolio none none none none</R>
<R>Overseas Portfolio none none none none</R>
<R>Value Portfolio none none none none</R>
<R>AGGREGATE DOLLAR
RANGE OF FUND SHARES IN
ALL FUNDS OVERSEEN over over over over
WITHIN FUND FAMILY $100,000 $100,000 $100,000 $100,000</R>
Non-Interested Nominees
J.
<R>DOLLAR RANGE OF Michael Ralph F. Dennis J. Robert M. George H. Donald J.
FUND SHARES Cook Cox Dirks Gates Heilmeier Kirk</R>
<R>Equity-Income
Portfolio none none none none none none</R>
<R>Growth
Portfolio none none none none none none</R>
<R>High Income
Portfolio none none none none none none</R>
<R>Money Market
Portfolio none none none none none none</R>
<R>Overseas
Portfolio none none none none none none</R>
<R>Value Portfolio none none none none none none</R>
<R>AGGREGATE
DOLLAR RANGE OF
FUND SHARES IN ALL
FUNDS OVERSEEN over over over over over over
WITHIN FUND FAMILY $100,000 $100,000 $100,000 $100,000 $100,000 $100,000</R>
Marie Marvin William Cornelia William
DOLLAR RANGE OF L. Ned C. L. O. M. S.
FUND SHARES Knowles Lautenbach Mann McCoy Small Stavropoulos
<R>Equity-Income
Portfolio none none none none none none</R>
<R>Growth
Portfolio none none none none none none</R>
<R>High Income
Portfolio none none none none none none</R>
<R>Money Market
Portfolio none none none none none none</R>
<R>Overseas
Portfolio none none none none none none</R>
<R>Value Portfolio none none none none none none</R>
<R>AGGREGATE
DOLLAR RANGE OF
FUND SHARES IN ALL
FUNDS OVERSEEN over over over over $10,001 - over
WITHIN FUND FAMILY $100,000 $100,000 $100,000 $100,000 $50,000 $100,000</R>
The following table sets forth information describing the compensation of each
Trustee and Member of the Advisory Board for his or her services for the fiscal
year ended December 31, 2003.
Compensation Table*
AGGREGATE J. Ralph Phyllis Dennis Robert George H.
COMPENSATION Michael F. Burke J. M. Heilmeier Donald J.
FROM A FUND Cook Cox Davis** Dirks*** Gates **** Kirk
Equity-Income
PortfolioC $ 2,772 $ 2,852 $ 2,740 $ 0 $ 2,837 $ 2,311 $ 2,856
Growth
PortfolioD $ 2,917 $ 3,002 $ 2,882 $ 0 $ 2,986 $ 2,438 $ 3,006
High Income
Portfolio $ 566 $ 582 $ 559 $ 0 $ 579 $ 483 $ 582
Money Market
Portfolio $ 815 $ 840 $ 806 $ 0 $ 835 $ 659 $ 835
Overseas
PortfolioE $ 459 $ 472 $ 453 $ 0 $ 470 $ 385 $ 474
Value
Portfolio $ 1 $ 1 $ 1 $ 0 $ 1 $ 1 $ 1
<R>TOTAL
COMPENSATION
FROM THE FUND $ $ $
COMPLEXA 253,500 $ 261,000 250,500 $ 0 $ 259,500 $ 212,000 261,000</R>
AGGREGATE Marie Ned Marvin William William
COMPENSATION L. C. L. O. Cornelia S.
FROM A FUND Knowles Lautenbach Mann McCoy M.Small***** Stavropoulos
Equity-Income
PortfolioC $ 2,822 $ 2,807 $ 3,544 $ 2,854 $ 0 $ 2,773
Growth
PortfolioD $ 2,970 $ 2,954 $ 3,732 $ 3,003 $ 0 $ 2,918
High Income
Portfolio $ 575 $ 572 $ 724 $ 582 $ 0 $ 566
Money Market
Portfolio $ 828 $ 822 $ 1,036 $ 839 $ 0 $ 813
Overseas
PortfolioE $ 468 $ 465 $ 588 $ 473 $ 0 $ 459
Value
Portfolio $ 1 $ 1 $ 1 $ 1 $ 0 $ 1
TOTAL
COMPENSATION
FROM THE FUND $ $ $
COMPLEXA 258,000 $ 256,500 324,000 298,500B $ 0 $ 253,500
* Edward C. Johnson 3d, Abigail P. Johnson, Laura B. Cronin, Peter S. Lynch, and
Robert L. Reynolds are interested persons and are compensated by FMR.
** Ms. Davis served on the Board of Trustees through December 31, 2003.
*** Effective July 1, 2004, Mr. Dirks serves as a Member of the Advisory Board.
**** During the period from March 1, 2003 through December 31, 2003, Dr.
Heilmeier served as a Member of the Advisory Board. Effective January 1, 2004,
Dr. Heilmeier serves as a Member of the Board of Trustees.
***** Effective January 1, 2004, Ms. Small serves as a Member of the Advisory
Board.
A Information is for the calendar year ended December 31, 2003 for 293 funds of
57 trusts in the fund complex. 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, 2003, the Trustees accrued
required deferred compensation from the funds as follows: J. Michael Cook,
$111,000; Ralph F. Cox, $111,000; Phyllis Burke Davis, $111,000; Robert M.
Gates, $111,000; Donald J. Kirk, $111,000; Marie L. Knowles, $111,000; Ned C.
Lautenbach, $111,000; Marvin L. Mann, $141,000; William O. McCoy, $111,000; and
William S. Stavropoulos, $111,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as follows: J.
Michael Cook, $35,316.47; Ralph F. Cox, $35,316.47; Phyllis Burke Davis,
$44,989.93; Ned C. Lautenbach, $44,989.93; and William O. McCoy, $82,489.93.
B Compensation figures include cash and may include amounts deferred at Mr.
McCoy's election under a deferred compensation plan adopted by the other
open-end registered investment companies in the fund complex (Other Open-End
Funds). Pursuant to the deferred compensation plan, Mr. McCoy, as a
non-interested Trustee, may elect to defer receipt of all or a portion of his
annual fees. Amounts deferred under the deferred compensation plan are credited
to an account established for Mr. McCoy on the books of the Other Open-End
Funds. Interest is accrued on amounts deferred under the deferred compensation
plan. For the calendar year ended December 31, 2003, Mr. McCoy voluntarily
elected to defer $37,500.
C Compensation figures include cash, amounts required to be deferred, and may
include amounts deferred at the election of Trustees. The amounts required to be
deferred by each non-interested Trustee are as follows: J. Michael Cook, $1,727;
Ralph F. Cox, $1,727; Phyllis Burke Davis, $1,727; Robert M. Gates, $1,727;
Donald J. Kirk, $1,727; Marie L. Knowles, $1,727; Ned C. Lautenbach, $1,727;
Marvin L. Mann, $2,194; William O. McCoy, $1,727; and William S. Stavropoulos,
$1,727. Certain of the non-interested Trustees' aggregate compensation from the
fund includes accrued voluntary deferred compensation as follows: J. Michael
Cook, $700; Ralph F. Cox, $700; Phyllis Burke Davis, $700; Ned C. Lautenbach,
$700; and William O. McCoy, $700.
D Compensation figures include cash, amounts required to be deferred, and may
include amounts deferred at the election of Trustees. The amounts required to be
deferred by each non-interested Trustee are as follows: J. Michael Cook, $1,817;
Ralph F. Cox, $1,817; Phyllis Burke Davis, $1,817; Robert M. Gates, $1,817;
Donald J. Kirk, $1,817; Marie L. Knowles, $1,817; Ned C. Lautenbach, $1,817;
Marvin L. Mann, $2,308; William O. McCoy, $1,817; and William S. Stavropoulos,
$1,817. Certain of the non-interested Trustees' aggregate compensation from the
fund includes accrued voluntary deferred compensation as follows: J. Michael
Cook, $737; Ralph F. Cox, $737; Phyllis Burke Davis, $737; Ned C. Lautenbach,
$737; and William O. McCoy, $737.
E Compensation figures include cash, amounts required to be deferred, and may
include amounts deferred at the election of Trustees. The amounts required to be
deferred by each non-interested Trustee are as follows: J. Michael Cook, $286;
Ralph F. Cox, $286; Phyllis Burke Davis, $286; Robert M. Gates, $286; Donald J.
Kirk, $286; Marie L. Knowles, $286; Ned C. Lautenbach, $286; Marvin L. Mann,
$363; William O. McCoy, $286; and William S. Stavropoulos, $286. Certain of the
non-interested Trustees' aggregate compensation from the fund includes accrued
voluntary deferred compensation as follows: J. Michael Cook, $116; Ralph F. Cox,
$116; Phyllis Burke Davis, $116; Ned C. Lautenbach, $116; and William O. McCoy,
$116.
Under a deferred compensation plan adopted in September 1995 and amended in
November 1996 and January 2000 (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 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 non-interested 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 non-interested Trustee or to pay
any particular level of compensation to the non-interested Trustee. A fund may
invest in the Reference Funds under the Plan without shareholder approval.
OVERVIEW OF PROPOSALS 3 THROUGH 8
Proposals 3 through 8 present new foreign sub-advisory agreements (Proposed
Agreements) for Equity-Income Portfolio and Growth Portfolio. If the Proposed
Agreements are approved, these funds will have the same foreign sub-advisory
arrangements that have become standard for other Fidelity equity funds.
<R>FMR, the funds' investment advisor, has a number of affiliates that provide
sub-advisory services to mutual funds. These affiliates' offices are
geographically dispersed around the world. FMR's affiliated foreign sub-advisers
include FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L.</R>
FMR believes it is desirable to enter into agreements with these affiliated
foreign sub-advisers with respect to the Funds. Using affiliated foreign
sub-advisers provides FMR increased flexibility in the assignment of portfolio
managers and gives the Fidelity funds access to managers located abroad who may
have more specialized expertise with respect to local companies and markets. In
addition, FMR believes funds and shareholders may benefit from the ability of
FMR, through foreign sub-advisers, to execute portfolio transactions from points
abroad that are physically closer to foreign issuers and the primary markets in
which their securities are traded. FMR believes that through arrangements with
its affiliated foreign sub-advisers, funds may participate more readily in full
trading sessions on foreign exchanges, and may be positioned to react more
quickly to changing foreign market conditions.
Since 1997, standard foreign sub-advisory arrangements with FMR U.K. and FMR Far
East have been adopted by Fidelity equity funds. New Fidelity equity funds since
1997 have adopted these foreign sub-advisory arrangements prior to commencement,
and equity funds in existence before 1997 have asked shareholders to approve the
new arrangements. Since Equity-Income Portfolio and Growth Portfolio commenced
operations before 1997 (in 1986) the funds need shareholder approval in order to
adopt these standard agreements with FMR U.K. and FMR Far East.
In 2001, all Fidelity equity funds that had existing sub-advisory arrangements
with FMR Far East were made parties to a new sub-advisory agreement between FMR
Far East and FIJ. In 2003, all Fidelity equity funds that had existing foreign
sub-advisory arrangements with FMR Far East and FMR U.K. were made parties to
sub-advisory agreements between FMR and FIIA, FIIA and FIIA(U.K.)L, and FIIA and
FIJ.
Unlike the agreements with FMR U.K. and FMR Far East, the sub-advisory
arrangements entered into on behalf of Fidelity's equity funds in 2001 and 2003
did not require shareholder approval for funds that had previously existing
foreign sub-advisory arrangements. Instead, consistent with SEC staff positions
that shareholder approval is not required for certain sub-adviser restructurings
when there is no increase in fund fees or change in the identity of the
individuals providing sub-advisory services, these funds appointed FIJ, FIIA,
and FIIA(U.K.)L as sub-advisers without shareholder approval. Equity-Income
Portfolio and Growth Portfolio, the only two publicly offered Fidelity equity
funds without foreign sub-advisory arrangements in place at the time, were
unable to appoint FIJ, FIIA, and FIIA(U.K.)L.
As detailed in proposals 3 through 8, FMR proposes that Equity-Income Portfolio
and Growth Portfolio adopt the Proposed Agreements among FMR, the trust, FMR
U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L. If approved, each fund will have
the standard array of foreign sub-advisory arrangements available to Fidelity
equity funds. At a meeting on April 15, 2004, the Board of Trustees of the
funds, including all non-interested Trustees, approved the Proposed Agreements
and recommended that shareholders of each fund approve the Proposed Agreements.
It is important to note that while you are being asked to approve new
agreements, the Proposed Agreements will not result in increased fund fees.
As described below, Proposal 5 is contingent upon shareholder approval of
Proposal 4 and Proposals 7 and 8 are contingent upon shareholder approval of
Proposal 6.
3. TO APPROVE A NEW SUB-ADVISORY AGREEMENT AMONG FMR, FMR U.K., AND VARIABLE
INSURANCE PRODUCTS FUND ON BEHALF OF EQUITY-INCOME PORTFOLIO AND GROWTH
PORTFOLIO.
In conjunction with its portfolio management responsibilities on behalf of each
fund, FMR proposes that shareholders of each fund approve a sub-advisory
agreement (Proposed Agreement) among FMR, FMR U.K., and the trust on behalf of
the fund. Each fund's Proposed Agreement would allow FMR not only to receive
investment advice and research services from FMR U.K., but also would permit FMR
to grant FMR U.K. investment management authority if FMR believes it would be
beneficial to the fund and its shareholders. Because FMR would pay all of FMR
U.K.'s fees, the Proposed Agreement would not affect the fees paid by either
fund to FMR.
<R>On April 15, 2004, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of each fund pursuant to a unanimous vote of both the
full Board of Trustees and those Trustees who were not interested persons of the
trust or FMR. FMR provided substantial information to the Trustees to assist
them in their deliberations. For details regarding the Board's considerations,
please see the section entitled Matters Considered by the Board beginning on
page <Click Here>. A copy of the Proposed Agreement for each fund is
attached to this proxy statement as Exhibit 2.</R>
FMR U.K. is a wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This research
complements other research on foreign securities produced by FMR's U.S.-based
research analysts and portfolio managers or other sources.
<R>FMR U.K. may also provide investment advisory services to FMR with respect to
other investment companies for which FMR serves as investment adviser, and to
other clients. Currently, FMR U.K.'s only client other than FMR is Fidelity
International Limited (FIL), an affiliate of FMR organized under the laws of
Bermuda. FIL provides investment advisory services to non-U.S. investment
companies and private accounts that invest in securities of issuers throughout
the world. For more information on FMR U.K., see the section entitled Activities
and Management of FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L on page
<Click Here></R>.
Under each fund's Proposed Agreement, FMR U.K. could act as an investment
consultant to FMR and could supply FMR with such investment research information
and portfolio management advice as FMR reasonably requests on behalf of the
fund. FMR U.K. would provide investment advice and research services with
respect to issuers located outside of the United States focusing primarily on
companies based in Europe. Under each fund's Proposed Agreement with FMR U.K.,
FMR, not the fund, would pay FMR U.K.'s fee equal to 110% of its costs incurred
for providing investment advice and research services.
Under each fund's Proposed Agreement, FMR could also grant investment management
authority with respect to all or a portion of the fund's assets to FMR U.K. If
FMR U.K. were to exercise investment management authority on behalf of the fund,
it would be required, subject to the supervision of FMR, to direct the
investments of the fund in accordance with the fund's investment objective,
policies, and limitations as provided in the fund's prospectus or other
governing instruments and such other limitations as the fund may impose by
notice in writing to FMR or FMR U.K. If FMR grants investment management
authority to FMR U.K. with respect to all or a portion of the fund's assets, FMR
U.K. would be authorized to buy or sell stocks, bonds, and other securities for
the fund subject to the overall supervision of FMR and the Board of Trustees. In
addition, the Proposed Agreement would authorize FMR to delegate other
investment management services to FMR U.K., including, but not limited to,
currency management services (including buying and selling currency options and
entering into currency forward and futures contracts on behalf of each fund),
other transactions in futures contracts and options, and borrowing or lending
portfolio securities. If any investment management services were delegated, FMR
U.K. would continue to be subject to the control and direction of FMR and the
Board of Trustees and to be bound by the investment objective, policies, and
limitations of the fund.
Each fund's Proposed Agreement would not increase the fees paid to FMR by each
fund. To the extent that FMR granted investment management authority to FMR
U.K., FMR, not the fund, would pay FMR U.K. 50% of its monthly management fee
with respect to the average net assets managed on a discretionary basis by FMR
U.K. for investment management.
<R>If approved by shareholders, each fund's Proposed Agreement would take effect
on December 1, 2004 (or, if later, the first day of the first month following
approval) and would continue in force until July 31, 2005 and from year to year
thereafter, but only as long as its continuance was approved at least annually
by (i) the vote, cast in person at a meeting called for the purpose, of a
majority of those Trustees who are not interested persons of the trust or FMR
and (ii) the vote of either a majority of the Trustees or by the vote of a
majority of the outstanding shares of each fund.</R>
Each fund's Proposed Agreement could be transferred to a successor of FMR U.K.
without resulting in its termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable securities
laws and regulations. Each fund's Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and each fund's Proposed
Agreement would terminate automatically in the event of its assignment.
Conclusion. Based on their evaluation of all material factors and assisted by
the advice of independent counsel, the Trustees, including the non-Interested
Trustees, concluded that the proposal will benefit each fund and its
shareholders. The Board of Trustees, including the non-Interested Trustees,
voted to approve the submission of the Proposed Agreement to shareholders of
each fund and recommends that shareholders of each fund vote FOR the Proposed
Agreement. If the Proposed Agreement is approved by shareholders of each fund,
the Proposed Agreement will take effect on the first day of the first month
following approval. If the Proposed Agreement is not approved by shareholders of
each fund, FMR will consider alternative means of obtaining the investment
services to be provided under the Proposed Agreement.
4. TO APPROVE A NEW SUB-ADVISORY AGREEMENT AMONG FMR, FMR FAR EAST, AND VARIABLE
INSURANCE PRODUCTS FUND ON BEHALF OF EQUITY-INCOME PORTFOLIO AND GROWTH
PORTFOLIO.
In conjunction with its portfolio management responsibilities on behalf of each
fund, FMR proposes that shareholders of each fund approve a sub-advisory
agreement (Proposed Agreement) among FMR, FMR Far East, and the trust on behalf
of the fund. Each fund's Proposed Agreement would allow FMR not only to receive
investment advice and research services from FMR Far East, but also would permit
FMR to grant FMR Far East investment management authority if FMR believes it
would be beneficial to the fund and its shareholders. Because FMR would pay all
of FMR Far East's fees, each fund's Proposed Agreement would not affect the fees
paid by either fund to FMR.
<R>On April 15, 2004, the Board of Trustees agreed to submit each fund's
Proposed Agreement to shareholders of each fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not interested
persons of the trust or FMR. FMR provided substantial information to the
Trustees to assist them in their deliberations. For details regarding the
Board's considerations, please see the section entitled Matters Considered by
the Board beginning on page <Click Here>. A copy of the Proposed Agreement
for each fund is attached to this proxy statement as Exhibit 3.</R>
FMR Far East is a wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This research
complements other research on foreign securities produced by FMR's U.S.-based
research analysts and portfolio managers or other sources.
<R>FMR Far East may also provide investment advisory and management services to
FMR with respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FMR Far East's only client
is FMR. For more information on FMR Far East, see the section entitled
Activities and Management of FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L
on page <Click Here></R>.
Under each fund's Proposed Agreement, FMR Far East could act as an investment
consultant to FMR and could supply FMR with such investment research information
and portfolio management advice as FMR reasonably requests on behalf of the
fund. FMR Far East would provide investment advice and research services with
respect to issuers located outside of the United States focusing primarily on
companies based in the Far East. Under the Proposed Agreement with FMR Far East,
FMR, not the fund, would pay FMR Far East's fee equal to 105% of its costs
incurred for providing investment advice and research services. If this proposal
is approved, FMR Far East, will in turn, enter into an agreement with FIJ, a
wholly-owned subsidiary of FIL, to provide such investment research and
portfolio management advice as FMR Far East reasonably requests. FMR Far East,
not the fund, pays FIJ a sub-advisory fee equal to 100% of FIJ's costs incurred
in connection with providing investment advice and research services.
Under each fund's Proposed Agreement, FMR could also grant investment management
authority with respect to all or a portion of the fund's assets to FMR Far East.
If FMR Far East were to exercise investment management authority on behalf of
the fund, it would be required, subject to the supervision of FMR, to direct the
investments of the fund in accordance with the fund's investment objective,
policies, and limitations as provided in the fund's prospectus or other
governing instruments and such other limitations as the fund may impose by
notice in writing to FMR or FMR Far East. If FMR grants investment management
authority to FMR Far East with respect to all or a portion of the fund's assets,
FMR Far East would be authorized to buy or sell stocks, bonds, and other
securities for the fund subject to the overall supervision of FMR and the Board
of Trustees. In addition, each fund's Proposed Agreement would authorize FMR to
delegate other investment management services to FMR Far East, including, but
not limited to, currency management services (including buying and selling
currency options and entering into currency forward and futures contracts on
behalf of each fund), other transactions in futures contracts and options, and
borrowing or lending portfolio securities. If any investment management services
were delegated, FMR Far East would continue to be subject to the control and
direction of FMR and the Board of Trustees and to be bound by the investment
objective, policies, and limitations of the fund.
Each fund's Proposed Agreement would not increase the fees paid to FMR by each
fund. To the extent that FMR granted investment management authority to FMR Far
East, FMR, not the fund, would pay FMR Far East a fee equal to 50% of its
monthly management fee with respect to the fund's average net assets managed on
a discretionary basis by FMR Far East.
<R>If approved by shareholders, each fund's Proposed Agreement would take effect
on December 1, 2004 (or, if later, the first day of the first month following
approval) and would continue in force until July 31, 2005 and from year to year
thereafter, but only as long as its continuance was approved at least annually
by (i) the vote, cast in person at a meeting called for the purpose, of a
majority of those Trustees who are not interested persons of the trust or FMR
and (ii) the vote of either a majority of the Trustees or by the vote of a
majority of the outstanding shares of each fund.</R>
Each fund's Proposed Agreement could be transferred to a successor of FMR Far
East without resulting in its termination and without shareholder approval, as
long as the transfer did not constitute an assignment under applicable
securities laws and regulations. Each fund's Proposed Agreement would be
terminable on 60 days' written notice by either party to the agreement and each
fund's Proposed Agreement would terminate automatically in the event of its
assignment.
Conclusion. Based on their evaluation of all material factors and assisted by
the advice of independent counsel, the Trustees, including the non-Interested
Trustees, concluded that the proposal will benefit each fund and its
shareholders. The Board of Trustees, including the non-Interested Trustees,
voted to approve the submission of the Proposed Agreement to shareholders of
each fund and recommends that shareholders of each fund vote FOR the Proposed
Agreement. If the Proposed Agreement is approved by shareholders of each fund,
the Proposed Agreement will take effect on the first day of the first month
following approval. If the Proposed Agreement is not approved by shareholders of
each fund, FMR will consider alternative means of obtaining the investment
services to be provided under the Proposed Agreement.
5. TO APPROVE A NEW AMENDED AND RESTATED SUB-ADVISORY AGREEMENT BETWEEN FMR FAR
EAST AND FIJ FOR EQUITY-INCOME PORTFOLIO AND GROWTH PORTFOLIO.
In conjunction with its portfolio management responsibilities on behalf of each
fund, FMR proposes that shareholders of each fund approve an amended and
restated sub-advisory agreement (Proposed Agreement) between FMR Far East and
FIJ on behalf of the fund. Each fund's Proposed Agreement would allow FMR and
FMR Far East not only to receive investment advice and research services from
FIJ, but also would permit FMR Far East to delegate to FIJ investment management
authority with respect to either Fund if FMR or FMR Far East believes it would
be beneficial to either fund and its shareholders. Because FMR Far East would
pay all of FIJ's fees, the Proposed Agreement would not affect the fees paid by
either fund to FMR.
<R>On April 15, 2004, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of each fund pursuant to a unanimous vote of both the
full Board of Trustees and those Trustees who were not interested persons of the
trust or FMR. FMR provided substantial information to the Trustees to assist
them in their deliberations. For details regarding the Board's considerations,
please see the section entitled Matters Considered by the Board beginning on
page <Click Here>. A copy of the Proposed Agreement is attached to this
proxy statement as Exhibit 4.</R>
FIJ is a wholly-owned subsidiary of FIL established in 1986 to provide
investment research to FMR with respect to foreign securities. This research
complements other research on foreign securities produced by FMR's U.S.-based
research analysts and portfolio managers or other sources.
<R>FIJ may also provide investment advisory and management services to FMR and
FMR Far East with respect to other investment companies for which they serve as
investment adviser, and to other clients. For more information on FIJ, see the
section entitled Activities and Management of FMR U.K., FMR Far East, FIJ, FIIA,
and FIIA(U.K.)L on page <Click Here></R>.
Under each fund's Proposed Agreement, FIJ could act as an investment consultant
to FMR or FMR Far East and could supply FMR or FMR Far East with such investment
research information and portfolio management advice as FMR Far East reasonably
requests on behalf of each fund. FIJ would provide investment advice and
research services with respect to issuers located outside of the United States
focusing primarily on companies based in Japan (and other Asian companies as FMR
Far East may request from time to time). Under each fund's Proposed Agreement
with FIJ, FMR Far East, not the fund, would pay FIJ's fee equal to 100% of its
costs incurred for providing investment advice and research services.
Under each fund's Proposed Agreement, FMR Far East could also delegate
investment management authority with respect to a portion of the fund's assets
to FIJ. If FIJ were to exercise investment management authority on behalf of the
fund, it would be required, subject to the supervision of FMR or FMR Far East,
to direct the investments of the fund in accordance with the fund's investment
objective, policies, and limitations as provided in the fund's prospectus or
other governing instruments and such other limitations as the fund may impose by
notice in writing to FMR, FMR Far East or FIJ. If FMR Far East delegates
investment management authority to FIJ with respect to a portion of the fund's
assets, FIJ would be authorized to buy or sell stocks, bonds, and other
securities for the fund subject to the overall supervision of FMR, FMR Far East
and the Board of Trustees.
Each fund's Proposed Agreement would not increase the fees paid to FMR by each
fund. To the extent that FMR Far East delegated investment management authority
to FIJ, FMR Far East, not the fund, would pay FIJ a fee equal to 100% of its
costs incurred in connection with providing investment advice and research
services for each fund to FMR or FMR Far East.
<R>If approved by shareholders, each fund's Proposed Agreement would take effect
on December 1, 2004 (or, if later, the first day of the first month following
approval) and would continue in force until July 31, 2005 and from year to year
thereafter, but only as long as its continuance was approved at least annually
by (i) the vote, cast in person at a meeting called for the purpose, of a
majority of those Trustees who are not interested persons of the trust or FMR
and (ii) the vote of either a majority of the Trustees or by the vote of a
majority of the outstanding shares of each fund.</R>
Each fund's Proposed Agreement could be transferred to a successor of FIJ
without resulting in its termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable securities
laws and regulations. Each fund's Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and each fund's Proposed
Agreement would terminate automatically in the event of its assignment.
Conclusion. Based on their evaluation of all material factors and assisted by
the advice of independent counsel, the Trustees, including the non-Interested
Trustees, concluded that the proposal will benefit each fund and its
shareholders. The Board of Trustees, including the non-Interested Trustees,
voted to approve the submission of the Proposed Agreement to shareholders of
each fund and recommends that shareholders of each fund vote FOR the Proposed
Agreement.
Approval of this proposal is contingent upon shareholder approval of Proposal 4.
If this proposal and Proposal 4 are approved, each fund's Proposed Agreement
will take effect on the first day of the first month following shareholder
approval. If the proposal is not approved, FMR will consider alternative means
of obtaining the investment services to be provided under the Proposed
Agreement.
6. TO APPROVE A NEW MASTER INTERNATIONAL RESEARCH AGREEMENT BETWEEN FMR AND FIIA
ON BEHALF OF EQUITY-INCOME PORTFOLIO AND GROWTH PORTFOLIO.
In conjunction with its portfolio management responsibilities on behalf of each
fund, FMR proposes that shareholders of each fund approve a master international
research agreement (Proposed Agreement) between FMR and FIIA on behalf of the
fund. Each fund's Proposed Agreement would allow FMR to receive investment
advice and research services from FIIA. Because FMR would pay all of FIIA's
fees, the Proposed Agreement would not affect the fees paid by either fund to
FMR.
<R>On April 15, 2004, the Board of Trustees agreed to submit each fund's
Proposed Agreement to shareholders of each fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not interested
persons of the trust or FMR. FMR provided substantial information to the
Trustees to assist them in their deliberations. For details regarding the
Board's considerations, please see the section entitled Matters Considered by
the Board beginning on page <Click Here>. A copy of the Proposed Agreement
is attached to this proxy statement as Exhibit 5.</R>
FIIA is a wholly-owned subsidiary of Fidelity International Limited (FIL)
established in 1983 to provide investment research to FIL with respect to
foreign securities. This research complements other research on foreign
securities produced by FMR's U.S.-based research analysts and portfolio managers
or other sources.
<R>FIIA may also provide investment advisory services to FMR with respect to
other investment companies for which FMR serves as investment adviser, and to
other clients. FIL is an affiliate of FMR organized under the laws of Bermuda.
FIL provides investment advisory services to non-U.S. investment companies and
private accounts investing in securities of issuers throughout the world. For
more information on FIIA, see the section entitled Activities and Management of
FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L on page <Click Here>.</R>
Under each fund's Proposed Agreement, FIIA could act as an investment consultant
to FMR and could supply FMR with such investment research information and
portfolio management advice as FMR reasonably requests on behalf of the fund.
FIIA would provide investment advice and research services with respect to
issuers located outside of the United States and Canada. Under each fund's
Proposed Agreement with FIIA, FMR, not the fund, would pay FIIA's fee for
providing investment advice and research services.
Each fund's Proposed Agreement would not increase the fees paid to FMR by each
fund. To the extent that FMR received international investment advice and
research services from FIIA, FMR, not the fund, would pay FIIA an amount based
on each fund's international net assets relative to the international assets of
other registered investment companies with which FMR has management contracts.
<R>If approved by shareholders, each fund's Proposed Agreement would take effect
on December 1, 2004 (or, if later, the first day of the first month following
approval) and would continue in force until July 31, 2005 and from year to year
thereafter, but only as long as its continuance was approved at least annually
by (i) the vote, cast in person at a meeting called for the purpose, of a
majority of those Trustees who are not interested persons of the trust or FMR
and (ii) the vote of either a majority of the Trustees or by the vote of a
majority of the outstanding shares of each fund.</R>
Each fund's Proposed Agreement could be transferred to a successor of FIIA
without resulting in its termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable securities
laws and regulations. Each fund's Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and each fund's Proposed
Agreement would terminate automatically in the event of its assignment.
Conclusion. Based on their evaluation of all material factors and assisted by
the advice of independent counsel, the Trustees, including the non-Interested
Trustees, concluded that the proposal will benefit each fund and its
shareholders. The Board of Trustees, including the non-Interested Trustees,
voted to approve the submission of the Proposed Agreement to shareholders of
each fund and recommends that shareholders of each fund vote FOR the Proposed
Agreement. If the Proposed Agreement is approved by shareholders of each fund,
the Proposed Agreement will take effect on the first day of the first month
following approval. If the Proposed Agreement is not approved by shareholders of
each fund, FMR will consider alternative means of obtaining the investment
services to be provided under the Proposed Agreement.
7. TO APPROVE A NEW SUB-RESEARCH AGREEMENT BETWEEN FIIA AND FIIA(U.K.)L ON
BEHALF OF EQUITY-INCOME PORTFOLIO AND GROWTH PORTFOLIO.
In conjunction with its portfolio management responsibilities on behalf of each
fund, FMR proposes that shareholders of each fund approve a sub-research
agreement (Proposed Agreement) between FIIA and FIIA(U.K.)L on behalf of the
fund. Each fund's Proposed Agreement would allow FIIA to receive investment
advice and research services from FIIA(U.K.)L. Because FIIA would pay all of
FIIA(U.K.)L's fees, each fund's Proposed Agreement would not affect the fees
paid by either fund to FMR.
<R>On April 15, 2004, the Board of Trustees agreed to submit each fund's
Proposed Agreement to shareholders of each fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not interested
persons of the trust or FMR. FMR provided substantial information to the
Trustees to assist them in their deliberations. For details regarding the
Board's considerations, please see the section entitled Matters Considered by
the Board beginning on page <Click Here>. A copy of the Proposed Agreement
is attached to this proxy statement as Exhibit 6.</R>
<R>FIIA(U.K.)L is a wholly-owned subsidiary of Fidelity Investments Management
Limited, an indirect wholly-owned subsidiary of FIL. FIIA(U.K.)L, established in
1984, provides investment research to FIIA with respect to foreign securities.
This research complements other research on foreign securities produced by FMR's
U.S.-based research analysts and portfolio managers or other sources.</R>
<R>FIIA(U.K.)L may also provide investment advisory services to FIIA with
respect to other investment companies for which FIIA serves as investment
adviser, and to other clients. For more information on FIIA(U.K.)L, see the
section entitled Activities and Management of FMR U.K., FMR Far East, FIJ, FIIA,
and FIIA(U.K.)L on page <Click Here>.</R>
Under each fund's Proposed Agreement, FIIA(U.K.)L could act as an investment
consultant to FIIA and could supply FIIA with such investment research
information as FIIA reasonably requests on behalf of each fund. FIIA(U.K.)L
would provide investment advice and research services with respect to issuers
located outside of the United States and Canada. Under each fund's Proposed
Agreement with FIIA(U.K.)L, FIIA, not the fund, would pay FIIA(U.K.)L's fee for
providing investment advice and research services.
Each fund's Proposed Agreement would not increase the fees paid to FMR by each
fund. To the extent that FIIA received international investment advice and
research services from FIIA(U.K.)L, FIIA, not the fund, would pay FIIA(U.K.)L an
amount equal to the administrative costs incurred in providing investment advice
and research services for a fund.
<R>If approved by shareholders, each fund's Proposed Agreement would take effect
on December 1, 2004 (or, if later, the first day of the first month following
approval) and would continue in force until July 31, 2005 and from year to year
thereafter, but only as long as its continuance was approved at least annually
by (i) the vote, cast in person at a meeting called for the purpose, of a
majority of those Trustees who are not interested persons of the trust or FMR
and (ii) the vote of either a majority of the Trustees or by the vote of a
majority of the outstanding shares of each fund.</R>
Each fund's Proposed Agreement could be transferred to a successor of
FIIA(U.K.)L without resulting in its termination and without shareholder
approval, as long as the transfer did not constitute an assignment under
applicable securities laws and regulations. Each fund's Proposed Agreement would
be terminable on 60 days' written notice by either party to the agreement and
each fund's Proposed Agreement would terminate automatically in the event of its
assignment.
Conclusion. Based on their evaluation of all material factors and assisted by
the advice of independent counsel, the Trustees, including the non-Interested
Trustees, concluded that the proposal will benefit each fund and its
shareholders. The Board of Trustees, including the non-Interested Trustees,
voted to approve the submission of the Proposed Agreement to shareholders of
each fund and recommends that shareholders of each fund vote FOR the Proposed
Agreement.
Approval of this proposal is contingent upon shareholder approval of Proposal 6.
If this proposal and Proposal 6 are approved, each fund's Proposed Agreement
will take effect on the first day of the first month following shareholder
approval. If the proposal is not approved, FMR will consider alternative means
of obtaining the investment services to be provided under the Proposed
Agreement.
8. TO APPROVE A NEW SUB-RESEARCH AGREEMENT BETWEEN FIIA AND FIJ ON BEHALF OF
EQUITY-INCOME PORTFOLIO AND GROWTH PORTFOLIO.
In conjunction with its portfolio management responsibilities on behalf of each
fund, FMR proposes that shareholders of each fund approve a sub-research
agreement (Proposed Agreement) between FIIA and FIJ on behalf of the fund. Each
fund's Proposed Agreement would allow FIIA to receive investment advice and
research services from FIJ. Because FIIA would pay all of FIJ's fees, each
fund's Proposed Agreement would not affect the fees paid by either fund to FMR.
<R>On April 15, 2004, the Board of Trustees agreed to submit each fund's
Proposed Agreement to shareholders of each fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not interested
persons of the trust or FMR. FMR provided substantial information to the
Trustees to assist them in their deliberations. For details regarding the
Board's considerations, please see the section entitled Matters Considered by
the Board beginning on page 31. A copy of the Proposed Agreement is attached to
this proxy statement as Exhibit 7.</R>
FIJ is a wholly-owned subsidiary of FIL established in 1986 to provide
investment research to FMR with respect to foreign securities. This research
complements other research on foreign securities produced by FMR's U.S.-based
research analysts and portfolio managers, or obtained from broker-dealers or
other sources.
<R>FIJ may also provide investment advisory services to FMR and FIIA with
respect to other investment companies for which they serve as investment
adviser, and to other clients. For more information on FIJ, see the section
entitled Activities and Management of FMR U.K., FMR Far East, FIJ, FIIA, and
FIIA(U.K.)L on page <Click Here>.</R>
Under each fund's Proposed Agreement, FIJ could act as an investment consultant
to FIIA and could supply FIIA with such investment research information as FIIA
reasonably requests on behalf of each fund. FIJ would provide investment advice
and research services with respect to issuers located outside of the United
States and Canada. Under the Proposed Agreement with FIJ, FIIA, not the fund,
would pay FIJ's fee for providing investment advice and research services.
Each fund's Proposed Agreement would not increase the fees paid to FMR by each
fund. To the extent that FIIA received international investment advice and
research services from FIJ, FIIA, not the fund, would pay FIJ an amount equal to
the administrative costs incurred in providing investment advice and research
services for a fund.
<R>If approved by shareholders, each fund's Proposed Agreement would take effect
on December 1, 2004 (or, if later, the first day of the first month following
approval) and would continue in force until July 31, 2005 and from year to year
thereafter, but only as long as its continuance was approved at least annually
by (i) the vote, cast in person at a meeting called for the purpose, of a
majority of those Trustees who are not interested persons of the trust or FMR
and (ii) the vote of either a majority of the Trustees or by the vote of a
majority of the outstanding shares of each fund.</R>
Each fund's Proposed Agreement could be transferred to a successor of FIJ
without resulting in its termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable securities
laws and regulations. Each fund's Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and each fund's Proposed
Agreement would terminate automatically in the event of its assignment.
Conclusion. Based on their evaluation of all material factors and assisted by
the advice of independent counsel, the Trustees, including the non-Interested
Trustees, concluded that the proposal will benefit each fund and its
shareholders. The Board of Trustees, including the non-Interested Trustees,
voted to approve the submission of the Proposed Agreement to shareholders of
each fund and recommends that shareholders of each fund vote FOR the Proposed
Agreement.
Approval of this proposal is contingent upon shareholder approval of Proposal 6.
If this proposal and Proposal 6 are approved, each fund's Proposed Agreement
will take effect on the first day of the first month following shareholder
approval. If the proposal is not approved, FMR will consider alternative means
of obtaining the investment services to be provided under the Proposed
Agreement.
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 11 times a year. The Board of Trustees, including the non-Interested
Trustees, believes that matters bearing on each fund's advisory contracts are
considered at most, if not all, of its meetings. While the full Board of
Trustees or the non-Interested 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) is conducted through committees.
The non-Interested Trustees meet frequently in executive session and are advised
by independent legal counsel selected by the non-Interested Trustees.
The proposals to present the sub-advisory agreements among FMR, the trust, FMR
U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L with respect to Equity-Income
Portfolio and Growth Portfolio (Proposed Agreements) to shareholders were
approved by the Board of Trustees of the funds, including all non-Interested
Trustees, at a meeting on April 15, 2004.
In connection with their meetings, the Board of Trustees, including the
non-Interested Trustees, received materials specifically relating to the
Proposed Agreements. These materials included (i) information on the investment
performance of each fund, a peer group of funds and an appropriate index or
combination of indices, (ii) sales and redemption data in respect of each fund,
and (iii) the economic outlook and the general investment outlook in the markets
in which each fund invests. The Board of Trustees, including the non-Interested
Trustees, also considers periodically other material facts such as (1) the
results and financial condition of FMR U.K., FMR Far East, FIJ, FIIA, and
FIIA(U.K.)L (the Investment Advisers), (2) arrangements in respect of the
distribution of each fund's shares, (3) the procedures employed to determine the
value of each fund's assets, (4) the allocation of each fund's brokerage, if
any, including allocations to brokers affiliated with the Investment Advisers,
the use of soft commission dollars to pay for research and brokerage services,
and the use of brokerage commissions to pay fund expenses, (5) the Investment
Advisers' management of the relationships with each fund's custodians and
subcustodians, (6) the resources devoted to and the record of compliance with
each fund's investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost and character of
non-investment management services provided by the Investment Advisers and their
affiliates.
Additional information was furnished by the Investment Advisers including, among
other items, information on and analysis of (a) the overall organization of the
Investment Advisers, (b) investment performance, (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 the Investment
Advisers, (f) investment management staffing, (g) the potential for achieving
further economies of scale, (h) operating expenses paid to third parties, and
(i) the information furnished to investors, including each fund's shareholders.
In considering the Proposed Agreements, the Board of Trustees, including the
non-Interested 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, including the
non-Interested Trustees, in connection with its approval of the Proposed
Agreements include the following:
Benefits to Shareholders. The Board of Trustees, including the non-Interested
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.
Investment Compliance and Performance. The Board of Trustees, including the
non-Interested Trustees, considered whether each fund has operated within its
investment objective and its record of compliance with its investment
restrictions. It also reviewed each fund's investment performance as well as the
performance of a peer group of mutual funds, and the performance of an
appropriate index or combination of indices.
The Investment Advisers' Personnel and Methods. The Board of Trustees, including
the non-Interested Trustees, reviews at least annually the background of each
fund's portfolio manager and each fund's investment objective and discipline.
The non-Interested Trustees have also had discussions with senior management of
the Investment Advisers responsible for investment operations and the senior
management of Fidelity's equity group. Among other things they considered the
size, education and experience of the Investment Advisers' investment staff,
their use of technology, and the Investment Advisers' 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, including the
non-Interested Trustees, considered the nature, quality, cost and extent of
administrative and shareholder services performed by the Investment Advisers and
affiliated companies, both under the Proposed Agreements and under separate
agreements covering transfer agency functions and pricing, bookkeeping and
securities lending services, if any. The Board of Trustees, including the
non-Interested Trustees, has also considered the nature and extent of the
Investment Advisers' supervision of third party service providers, principally
custodians and subcustodians.
Expenses. The Board of Trustees, including the non-Interested Trustees,
considered each fund's expense ratio, and expense ratios of a peer group of
funds. It also considered the amount and nature of fees paid by shareholders.
Profitability. The Board of Trustees, including the non-Interested Trustees,
considered the level of the Investment Advisers' profits in respect of the
management of the Fidelity funds. This consideration included an extensive
review of the Investment Advisers' methodology in allocating their costs to the
management of a fund. The Board of Trustees, including the non-Interested
Trustees, has concluded that the cost allocation methodology employed by the
Investment Advisers has a reasonable basis and is appropriate in light of all of
the circumstances. It considered the profits realized by the Investment Advisers
in connection with the operation of a fund and whether the amount of profit is a
fair entrepreneurial profit for the management of a fund. It also considered the
profits realized from non-fund businesses which may benefit from or be related
to a fund's business. The Board of Trustees, including the non-Interested
Trustees, also considered the Investment Advisers' profit margins in comparison
with available industry data.
Economies of Scale. The Board of Trustees, including the non-Interested
Trustees, considered whether there have been economies of scale in respect of
the management of the Fidelity funds, whether the Fidelity funds (including each
fund) have appropriately benefitted from any economies of scale, and whether
there is potential for realization of any further economies of scale. The Board
of Trustees, including the non-Interested Trustees, has concluded that any
potential economies of scale are being shared between fund shareholders and the
Investment Advisers in an appropriate manner.
Other Benefits to the Investment Advisers. The Board of Trustees, including the
non-Interested Trustees, also considered the character and amount of fees paid
by each fund and each fund's shareholders for services provided by the
Investment Advisers and their affiliates, including fees for services like
transfer agency, fund accounting, and direct shareholder services. It also
considered the allocation of fund brokerage to brokers affiliated with the
Investment Advisers, the receipt of sales loads and payments under Rule 12b-1
plans in respect of certain of the Fidelity funds, and benefits to the
Investment Advisers from the use of soft commission dollars to pay for research
and brokerage services. The Board of Trustees, including the non-Interested
Trustees, considered the intangible benefits that accrue to the Investment
Advisers and their affiliates by virtue of their relationship with each fund.
Conclusion. The Trustees determined that allowing FMR to receive investment
advice and research services from the Investment Advisers as well as in certain
cases to grant investment management authority to certain Investment Advisers
would provide FMR increased flexibility in the assignment of portfolio managers
and give each fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets. Additionally,
the Trustees believe that each fund and its shareholders may benefit from giving
FMR, through the Investment Advisers, the ability to execute portfolio
transactions from points abroad that are physically closer to foreign issuers
and the primary markets in which their securities are traded. Increasing FMR's
proximity to foreign markets should enable each fund to participate more readily
in full trading sessions on foreign exchanges, and to react more quickly to
changing market conditions. Finally, the Trustees noted that FMR or an
affiliated sub-adviser, but not the funds, would pay for any services provided
under the Proposed Agreements.
Based on their evaluation of all material factors and assisted by the advice of
independent counsel, the Board of Trustees, including the non-Interested
Trustees, concluded that the addition of the Proposed Agreements is in the best
interest of each fund's shareholders. The Board of Trustees, including the
non-Interested Trustees, voted to approve the submission of the Proposed
Agreements to shareholders of the fund and recommends that shareholders of each
fund vote FOR the Proposed Agreements. If approved, the Proposed Agreements will
take effect on the first day of the first month following shareholder approval.
9. TO AMEND EQUITY-INCOME PORTFOLIO'S, GROWTH PORTFOLIO'S, HIGH INCOME
PORTFOLIO'S, AND OVERSEAS PORTFOLIO'S FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING BORROWING.
<R>Each fund's current fundamental investment limitation concerning borrowing
states:</R>
The fund may not borrow money, except that the fund (i) may borrow money for
temporary or emergency purposes (not for leveraging or investment) or (ii)
engage in reverse repurchase agreements, provided that (i) and (ii) in
combination (borrowings) do not exceed 33 1/3% 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.
<R>The Trustees recommend that shareholders of each fund vote to replace each
fund's current fundamental limitation with the following amended fundamental
investment limitation governing borrowing (additional language is underlined,
deleted language is [bracketed]):</R>
The fund may not borrow money, except that the fund [(i) ]may borrow money for
temporary or emergency purposes (not for leveraging or investment) [or (ii)
engage in reverse repurchase agreements, provided that (i) and (ii) in
combination (borrowings) do]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 [33 1/3% of the value of the fund's total
assets by reason of a decline in net assets]this amount will be reduced within
three days ([exclusive of ]not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation.
<R>Discussion of Proposed Modification. The primary purpose of the proposal is
to revise each fund's fundamental borrowing limitation to conform to a
limitation that has become standard for all funds managed by FMR. If the
proposal is approved, the amended fundamental borrowing limitation cannot be
changed without the approval of shareholders.</R>
<R>Adoption of the proposed fundamental limitation concerning borrowing is not
expected to affect the way in which each fund is managed, the investment
performance of each fund, or the securities or instruments in which each fund
invests. However, the proposed changes would clarify the fundamental limitation.
The wording of the current fundamental limitation suggests that reverse
repurchase agreements are a separate category of permitted borrowing. The
wording suggests that the funds might use reverse repurchase agreements for any
purpose, including investment or leveraging. Instead, the funds only use reverse
repurchase agreements for temporary or emergency borrowing.</R>
<R>In a reverse repurchase agreement, a fund sells a security to another party
in return for cash and agrees to repurchase that security at a particular price
and time. Adoption of the proposed fundamental limitation is not expected to
affect the management or performance of each fund, since none of the funds would
engage in reverse repurchase agreements for purposes other than temporary or
emergency borrowing anyway. Non-fundamental limits can be changed by the Board
of Trustees without the approval of shareholders.</R>
<R>If the amended limitation is approved, each fund will continue to follow
their existing non-fundamental limitation, as follows, which also reflects that
the funds treat reverse repurchase agreements as borrowings rather than a
permitted type of investment or leverage:</R>
The fund may borrow money only (a) from a bank or from a registered investment
company or portfolio for which FMR or an affiliate serves as investment adviser
or (b) by engaging in reverse repurchase agreements with any party (reverse
repurchase agreements are treated as borrowings for purposes of the fundamental
investment limitation).
Conclusion. The Board of Trustees has concluded that the proposal will benefit
each of Equity-Income Portfolio, Growth Portfolio, High Income Portfolio, and
Overseas Portfolio and its shareholders. The Trustees recommend voting FOR the
proposal. Upon shareholder approval, the amended fundamental limitation will
become effective when the prospectus and/or statement of additional information
are revised to reflect it. If the proposal is not approved by the shareholders
of a fund, that fund's current limitation will remain unchanged.
10. TO AMEND EQUITY-INCOME PORTFOLIO'S, GROWTH PORTFOLIO'S, HIGH INCOME
PORTFOLIO'S, MONEY MARKET PORTFOLIO'S, AND OVERSEAS PORTFOLIO'S FUNDAMENTAL
INVESTMENT LIMITATION CONCERNING LENDING.
<R>Each fund's current fundamental investment limitation concerning lending is
as follows:</R>
The fund may not lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
<R>The Trustees recommend that the shareholders of each fund vote to replace
each fund's limitation with the following more modern fundamental investment
limitation governing lending (additional language is underlined):</R>
The fund may not lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other |