SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO 2-67004)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 23 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT [x]
COMPANY ACT OF 1940
Amendment No.____ [ ]
Fidelity Advisor Series VII
(Exact Name of Registrant as Specified in Declaration of Trust)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices)
Registrant's Telephone Number (617) 570-7000
Arthur S. Loring, Esq.
Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485.
[x] On January 29, 1994 pursuant to paragraph (b) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485.
[ ] On ____________ pursuant to paragraph (a) of Rule 485.
Registrant filed a declaration pursuant to Rule 24f-2 under the Investment
Company Act of 1940 and intends to file the notice required by such Rule
by January 29, 1994.
FIDELITY ADVISOR FUNDS
CROSS-REFERENCE SHEET
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Form N-1A Item Number
Part A Prospectus Caption
1 Cover Page
2 Prospectus Summary
3 a,b Condensed Financial Information
c Performance
4 a(i) The Funds and the Fidelity Organization
a(ii),b,c Investment Objectives; Investment Policies; Investment
Limitations; Appendix
5 a The Trusts and the Fidelity Organization
b,c,d,e Fees
f Portfolio Transactions
6 a The Funds and the Fidelity Organization; How to Buy Shares;
How to Exchange; How to Sell Shares; Shareholder Services
b *
c Investment Objectives; The Funds and the Fidelity Organization
d The Funds and the Fidelity Organization
e How to Buy; How to Sell; How to Exchange
f,g Distribution Options; Distributions and Taxes
7 a Fees
b Valuation; How to Buy
c Investor Services
d How to Buy
e,f Fees
8 How to Sell Shares
9 *
</TABLE>
- --------------------------------------
* Not Applicable
FIDELITY ADVISOR SERIES VII
FIDELITY ADVISOR OVERSEAS FUND
CROSS-REFERENCE SHEET
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Form N-1A Item Number
Part B Statement of Additional Information
10 Cover Page
11 Table of Contents
12 FMR; Description of the Trust
13 a,b,c Investment Policies and Limitations
d Portfolio Transactions
14 a,b Trustees and Officers
c *
15 a *
b Description of the Trust
c *
16 a(i, ii) FMR, Management Contract; Trustees and Officers;
Distribution and Service Plans
a(iii),b,c,d Management and Other Services
e Portfolio Transactions
f Distribution and Service Plan
g *
h Description of the Trust
i Management and Other Services
17 a,b,c,d Portfolio Transactions
e *
18 a Description of the Trust
b *
19 a Additional Purchase, Exchange and Redemption Information
b Valuation of Portfolio Securities
20 Taxes
21 Distribution and Service Plans
22 a *
b Performance
23 Financial Statements
</TABLE>
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* Not Applicable
FIDELITY ADVISOR FUNDS
PROSPECTUS
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
JANUARY 29, 1994
The Fidelity Advisor Funds (Funds) offer investors a broad selection of
diversified portfolios.
EQUITY FUNDS:
FIDELITY ADVISOR OVERSEAS FUND
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
FIDELITY ADVISOR GLOBAL RESOURCES FUND
(formerly Fidelity Advisor Global Natural Resources Portfolio)
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
(formerly Fidelity Special Situations Fund : Advisor Class)
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME
FIDELITY ADVISOR INCOME & GROWTH FUND
FIXED - INCOME FUNDS:
FIDELITY ADVISOR HIGH YIELD FUND
FIDELITY ADVISOR LIMITED TERM BOND FUND
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND
FIDELITY ADVISOR SHORT FIXED-INCOME FUND
MUNICIPAL/TAX-EXEMPT FUNDS:
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
Fidelity Advisor Equity Portfolio Growth is a portfolio of Fidelity Advisor
Series I. Fidelity Advisor Growth Opportunities Fund, Fidelity Advisor
Income & Growth Fund, Fidelity Advisor High Yield Fund, Fidelity
Advisor Government Investment Fund and Fidelity Advisor Short Fixed-Income
Fund are portfolios of Fidelity Advisor Series II. Fidelity Advisor Equity
Portfolio Income is a portfolio of Fidelity Advisor Series III. Fidelity
Advisor Limited Term Bond Fund is a portfolio of Fidelity Advisor Series
IV. Fidelity Advisor Global Resources Fund and Fidelity Advisor High Income
Municipal Fund are portfolios of Fidelity Advisor Series V. Fidelity
Advisor Limited Term Tax-Exempt Fund is a portfolio of Fidelity Advisor
Series VI. Fidelity Advisor Overseas Fund is a portfolio of Fidelity
Advisor Series VII. Fidelity Advisor Strategic Opportunities Fund is a
portfolio of Fidelity Advisor Series VIII.
FIDELITY ADVISOR HIGH YIELD FUND INVESTS IN LOWER-RATED DEBT SECURITIES,
WHICH PRESENT HIGHER RISKS OF UNTIMELY INTEREST AND PRINCIPAL PAYMENTS,
DEFAULT, AND PRICE VOLATILITY THAN HIGHER-RATED SECURITIES, AND MAY PRESENT
PROBLEMS OF LIQUIDITY AND VALUATION.
Please read this Prospectus before investing. It is designed to provide you
with information and help you decide if a Fund's goals match your own.
RETAIN THIS DOCUMENT FOR FUTURE REFERENCE.
A Statement of Additional Information (SAI) dated January 29, 1994 for each
Fund has been filed with the Securities and Exchange Commission (SEC) and
each is incorporated herein by reference. SAIs and each Fund's
A nnual R eport are available free upon request from Fidelity
Distributors Corporation (Distributors), 82 Devonshire Street, Boston, MA
02109, or from your investment professional.
MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR ENDORSED OR GUARANTEED
BY ANY BANK OR SAVINGS ASSOCIATION , NOR ARE THEY FEDERALLY INSURED
OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC),
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY . INVESTMENT IN THE FUNDS
INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE VALUE
OF THE INVESTMENT AND ITS RETURN WILL FLUCTUATE AND ARE NOT GUARANTEED.
WHEN SOLD, THE VALUE OF SHARES OF THE INVESTMENT MAY BE HIGHER OR LOWER
THAN THE AMOUNT ORIGINALLY INVESTED.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(Registered trademark)
TABLE OF CONTENTS Page
FINANCIAL HISTORY
Shareholder Transaction Expenses
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES
HOW TO BUY SHARES
Sales Charges and Investment Professional Concessions
Minimum Account Balance
Sales Charge Waivers
INVESTOR SERVICES
Quantity Discounts
Combined Purchases
Rights of Accumulation
Letter of Intent
Fidelity Advisor Systematic Investment Program
SHAREHOLDER COMMUNICATIONS
HOW TO EXCHANGE
Fidelity Advisor Systematic Exchange Program
HOW TO SELL SHARES
Redemption Requests by Telephone
Redemption Requests in Writing
Reinstatement Privilege
Fidelity Advisor Systematic Withdrawal Program
Checkwriting Service
DISTRIBUTION OPTIONS
DISTRIBUTIONS AND TAXES
Distributions
Capital Gains
"Buying a Dividend"
Federal Taxes
State and Local Taxes
Other Tax Information
INVESTMENT POLICIES
INVESTMENT LIMITATIONS
FEES
Management and Other Services
Distribution and Service Plan s
VALUATION
PERFORMANCE
PORTFOLIO TRANSACTIONS
THE TRUSTS AND THE FIDELITY ORGANIZATION
APPENDIX
FINANCIAL HISTORY
The purpose of the table below is to assist you in understanding the
various costs and expenses that an investor in each Fund would bear
directly or indirectly. This standard format was developed for use by all
mutual funds to help investors make their investment decisions. This
expense information should be considered along with other important
information such as each Fund's investment objective and past performance.
1.SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge (as a percentage of the offering price)
- -Short Fixed-Income Fund 1.50%
-Other Fidelity Advisor Funds 4.75%
Sales Charge on Reinvested Dividends None
Deferred Sales Charge on Redemptions None
Redemption Fees None
Exchange Fees None
SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you
purchase, sell or exchange shares of a Fund. If you exchange shares
or direct dividends of Short Fixed-Income Fund into other Fidelity Advisor
Funds, a differential sales charge may apply. Lower sales charges may be
available with purchases over $50,000 or in conjunction with various
programs. See "How To Buy Shares," page 11.
ANNUAL OPERATING EXPENSES are based on historical expenses for the most
recent fiscal year ended. Management fees are paid by each Fund to Fidelity
Management & Research Company (FMR) for managing its investments and
business affairs. Management fees for Overseas, Growth Opportunities and
Strategic Opportunities will vary based on performance. 12b-1 fees are paid
by the Funds to Distributors for services and expenses in connection with
the distribution of Fund shares. Long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers (NASD) due to 12b-1
payments. The Funds incur other expenses for maintaining shareholder
records, furnishing shareholder statements and reports, and for other
services. A portion of the brokerage commissions that Equity Portfolio
Growth, Growth Opportunities, Global Resources and Income & Growth paid
were used to reduce Fund expenses. Without this reduction, their operating
expenses would have been 1.85%, 1.65%, 2.63% and 1.52%, respectively. FMR
has voluntarily agreed to reimburse Government Investment and Limited Term
Tax-Exempt to the extent that total operating expenses (exclusive of taxes,
interest, brokerage commissions, and extraordinary expenses) are in excess
of an annual rate of 0.60% and 0.90%, respectively, of average net assets.
If reimbursements were not in effect, the management fees, other expenses
(including 12b-1 fees) and total fund operating expenses would have been:
.46%, .86%, and 1.32%, (Government Investment); and .42%, .94%, and 1.36%,
(Limited Term Tax-Exempt). Please refer to the section "Fees," page .
The HYPOTHETICAL EXAMPLE illustrates the expenses, including the maximum
sales charge, associated with a $1,000 investment in each Fund over periods
of one, three, five and ten years, based on the expenses (after
reimbursements, if any) in the table and an assumed annual return of 5%.
THE RETURN OF 5% AND EXPENSES SHOULD NOT BE CONSIDERED INDICATIONS OF
ACTUAL OR EXPECTED FUND PERFORMANCE OR EXPENSES, BOTH OF WHICH MAY
VARY.
2.ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
EXPENSE TABLE EXAMPLE:
You would pay the following expenses, including
the maximum sales charge, on a $1,000 investment
in a Fund assuming (1) a 5% annual return
and (2) full redemption at the end of each time period:
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MANAGEMENT 12B-1OTHER TOTAL
FEE FEE EXPENSES OPERATING 1 Y EAR 3 Y EARS 5 Y EARS 10 Y EARS
EXPENSES
EQUITY FUNDS:
Overseas
. 77 % .65% .96 % 2.38 % $ 70 $ 118 $ 169 $ 306
Equity Portfolio Growth
.6 6 % .65% .53 % * 1.84 % 65 103 142 265
Growth Opportunities
.6 8 % .65% .31 % * 1.64 % 63 97 132 233
Global Resources
. 77 % .65% 1.20 %* 2.62 % 73 125 180 329
Strategic Opportunities
.5 4 % .65% .38 % 1.57 % 63 95 129 225
Equity Portfolio Income
.50% .65% .62 % 1.77 % 65 101 139 246
Income & Growth
.53% .65% .33 % * 1.51 % 62 93 126 219
FIXED - INCOME FUNDS:
High Yield
. 51 % .25% .35 % 1.11 % 58 81 106 176
Limited Term Bond
.42% .25% .56 % 1.23 % 59 85 112 189
Government Investment
. 00 %* .25% .35 %* .60 % 53 66 79 119
Short Fixed-Income
.47% .15% .33 % .95 % 25 45 67 130
MUNICIPAL/TAX-EXEMPT
FUNDS:
High Income Municipal
.42% .25% .25 % .92 % 56 75 96 155
Limited Term
. 12 %* .25% .53 %* .90 % 56 75 95 153
Tax-Exempt
</TABLE>
* AFTER EXPENSE REDUCTIONS
FINANCIAL HIGHLIGHTS
The following tables give information about each Fund's financial history
and use its fiscal year. They have been audited by each Fund's independent
accountant whose unqualified report is included in each Fund's Annual
Report. The Annual Report for each Fund is incorporated by reference into
its SAI.
FIDELITY ADVISOR OVERSEAS FUND
April 23, 1990
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 October 31, 1990
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SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.07 $ 9.78 $ 9.55 $ 10.00
Income from Investment Operations
Net investment income .03 .05 .14 .05
Net realized and unrealized gain (loss) on
investments 3.93 (.62) .17 (.50)
Total from investment operations 3.96 (.57) .31 (.45)
Less Distributions
From net investment income (.07) (.14) (.07) -
From net realized gain on investments (.03)(DAGGER) - (.01)(DAGGER) -
Total distributions (.10) (.14) (.08) -
Net asset value, end of period $ 12.93 $ 9.07 $ 9.78 $ 9.55
TOTAL RETURN (dagger)(double dagger) 44.13% (5.88)% 3.25% (4.50)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 221,370 $ 18,652 $ 19,091 $ 18,161
Ratio of expenses to average net assets 2.38% 2.64% 2.85% 3.07%*+
Ratio of net investment income to average net
assets (.18)% .48% 1.48% 1.45%*
Portfolio turnover rate 42% 168% 226% 137%*
</TABLE>
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH
Effective September 10, 1992, the Fund commenced sale of two classes of
shares entitled "Fidelity Advisor Institutional Equity Portfolio Growth"
(representing the Fund's original shares) and "Fidelity Advisor Equity
Portfolio Growth" (representing the new shares). With the exception of the
Equity Portfolio Growth columns, the information below does not reflect
Equity Portfolio Growth's 12b-1 fee and revised transfer agent fee
arrangement.
Equity Portfolio Growth Institutional Equity Portfolio Growth
Year Period
Ended Ended
Nov. 30, Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985 1984
Net asset value, beginning of period $ 26.33 $ 23.78 $ 26.37 $ 24.28
$ 15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03 $ 10.05
Income from Investment Operations
Net investment income (.07)(dagger)(dagger) .01(dagger)(dagger)
.19(dagger)(dagger) .17(dagger)(dagger) .04 .01 .06 .28#
.00(dagger)(dagger) .03 .01 .02
Net realized and unrealized gain
(loss) on investments 3.82 2.54 3.78 4.55 8.69 .34 5.50 2.59
(2.03) 2.41 3.05 (2.04)
Total from investment operations 3.75 2.55 3.97 4.72 8.73 .35
5.56 2.87 (2.03) 2.44 3.06 (2.02)
Less Distributions
From net investment income (.08) - (.10) (.03) - (.08) (.26)
(.01) (.01) (.02) - -
From net realized gain on investments (.50) - (.50) (2.60) -
(2.04) - (.76) (1.22) (.33) - -
Total distributions (.58) - (.60) (2.63) - (2.12) (.26) (.77)
(1.23) (.35) - -
Net asset value, end of period $ 29.50 $ 26.33 $ 29.74 $ 26.37 $ 24.28 $
15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03
TOTAL RETURN (dagger)(double dagger) 14.52% 10.72% 15.36% 21.14%
56.14% 2.75% 47.18% 29.77% (17.12)% 22.55% 38.11% (20.10)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 377,984 $ 22,655 $ 296,466
$ 179,325 $ 68,766 $ 27,473 $ 24,523 $ 20,182 $ 43,537 $ 63,607 $ 23,447 $
4,117
Ratio of expenses to average net assets 1.84%## 1.47%* .94%## .98%
1.13% 1.74% 1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of expenses to average net assets
before expense reductions 1.85%## 1.47%* .95% ## .98% 1.13% 1.74%
1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of net investment income to
average net assets (.24)% .25%* .66% .73% .25% .07% .38% 1.20%
.00% .29% .43% .33%
Portfolio turnover rate 160% 240% 160% 240% 254% 262% 269% 331%
226% 115% 108% 453%
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF EQUITY
PORTFOLIO GROWTH) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN
ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(DAGGER) INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
# DURING THE PERIOD A SHAREHOLDER REDEEMED A SIGNIFICANT PORTION OF THE
ASSETS OF THE FUND. DUE TO THE TIMING OF THIS TRANSACTION, THE FUND
EXPERIENCED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
## FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A
PORTION OF THE FUND'S EXPENSES.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
November 18, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 October 31, 1988
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SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27 $ 10.00
Income from Investment Operations
Net investment income
.08 .14 .06 .18# .02 .05
Net realized and unrealized gain (loss) on investments
5.56 2.04 7.70 (2.50) 3.03 4.22
Total from investment operations
5.64 2.18 7.76 (2.32) 3.05 4.27
Less Distributions
From net investment income
(.13) (.09) (.17) (.05) (.03) -
From net realized gain on investments
(1.26) (1.53) - (1.17) (.76) -
Total distributions
(1.39) (1.62) (.17) (1.22) (.79) -
Net asset value, end of period
$ 25.39 $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27
TOTAL RETURN (dagger) (double dagger)
28.11% 12.09% 60.25% (15.05)% 22.69% 42.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 2,054,988 $ 580,595 $ 213,095 $ 51,122 $ 34,351 $ 8,097
Ratio of expenses to average net assets
1.64%* 1.60% 1.73% 2.00% 2.45% 2.52%*(dagger)
* (dagger)
Ratio of expenses to average net assets before expense reductions
1.65%* 1.60% 1.73% 2.00% 2.45% 2.52%*
*
Ratio of net investment income to average net assets
.43% .80% .47% 1.49% .31% .82%*
Portfolio turnover rate
69% 94% 142% 136% 163% 143%*
</TABLE>
FIDELITY ADVISOR GLOBAL RESOURCES FUND
December 29, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 October 31, 1988
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SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 13.88 $ 14.11 $ 12.30 $ 12.60 $ 11.47 $ 10.00
Income from Investment Operations
Net investment income
.22 (.10) (.15) (.10) .10(DAGGER) (.05)
Net realized and unrealized gain (loss) on investments
4.91 .79 2.45 .93 1.96 1.52
Total from investment operations
5.13 .69 2.30 .83 2.06 1.47
Less Distributions
From net investment income
- - - (.08) - -
From net realized gain on investments
(1.42) (.92) (.49) (1.05) (.93) -
Total distributions
(1.42) (.92) (.49) (1.13) (.93) -
Net asset value, end of period
$ 17.59 $ 13.88 $ 14.11 $ 12.30 $ 12.60 $ 11.47
TOTAL RETURN (dagger)(double dagger)
41.05% 5.97% 19.50% 6.37% 19.63% 14.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 40,309 $ 7,087 $ 5,940 $ 4,615 $ 2,049 $ 916
Ratio of expenses to average net assets 2.62%** 3.27%(dagger)(dagger)
3.35%(dagger)(dagger) 3.34%(dagger)(dagger) 3.23%(dagger)(dagger) 2.85%*(dagger)
(dagger)
Ratio of expenses to average net assets before expense
2.63% 3.94% 3.35% 3.34% 3.23% 2.85%*
reductions
Ratio of net investment income to average net assets
(1.18)% (1.22)% (1.28)% (1.13)% .83% (.64)%*
Portfolio turnover rate
208% 248% 256% 229% 249% 220%*
* ANNUALIZED.
** FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE WITH A STATE EXPENSE LIMITATION
REGULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REIMBURSED CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
# NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.09 PER SHARE.
(DAGGER) NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.17 PER SHARE.
</TABLE>
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
August 20,1986
(Commencement
of Operations) to
Years Ended September 30, September 30,
1993 1992(dagger)(dagger) 1991 1990 1989 1988 1987 1986
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.53 $ 21.38 $ 17.21 $ 19.55 $
15.53 $ 19.06 $ 16.71 $ 17.81
Income from Investment Operations
Net investment income .33 .61 .66 .70 .50 .42 .46 .08(SOLID
DIAMOND)
Net realized and unrealized gain (loss) on investments 4.44 .58 4.26
(2.49) 4.08 (1.80) 2.95 (1.18)
Total from investment operations 4.77 1.19 4.92 (1.79) 4.58 (1.38)
3.41 (1.10)
Less Distributions
From net investment income (.57) (.62) (.75) (.55) (.56) (.24)
(.09) --
From net realized gain on investments (1.21) (2.42) - -- --
(1.91) (.97) --
Total distributions (1.78) (3.04) (.75) (.55) (.56) (2.15) (1.06)
- -
Net asset value, end of period $ 22.52 $ 19.53 $ 21.38 $ 17.21 $ 19.55
$ 15.53 $ 19.06 $ 16.71
TOTAL RETURN (dagger)(double dagger) 26.33% 7.26% 29.51% (9.49)%
30.45% (4.98)% 21.28% (6.23)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 269,833 $ 194,694 $ 199,604 $
172,083 $ 198,198 $ 191,454 $ 283,117 $ 22,141
Ratio of expenses to average net assets 1.57%++ 1.46% 1.56% 1.59%
1.51% 1.71% 1.67%+ 1.50%*+
Ratio of net investment income to average net assets 2.06% 3.22% 3.61%
3.70% 3.23% 3.10% 2.36% 2.77%*
Portfolio turnover rate 183% 211% 223% 114% 89% 160% 225% --
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME
Effective September 10, 1992, the Fund commenced sale of two classes of
shares, entitled "Fidelity Advisor Institutional Equity Portfolio Income"
(representing the Fund's original shares) and "Fidelity Advisor Equity
Portfolio Income" (representing the new shares). With the exception of the
Equity Portfolio Income columns, the information below does not reflect
Equity Portfolio Income's 12b-1 fee and revised transfer agent fee
arrangement.
Equity Portfolio Income Institutional Equity Portfolio Income
Year Period
Ended Ended
Nov. 30 Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985 1984
Net asset value, beginning of period $ 12.86 $ 12.37 $ 12.88 $ 11.08
$ 9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24 $ 10.49
Income from Investment Operations
Net investment income .33 .13 .39 .49 .63 # .69 .75 .75 .76
.78 .79 .72
Net realized and unrealized gain
(loss) on investments 1.97 .47 2.02 1.79 1.52 (2.42) 1.17
1.81 (1.53) 1.92 1.69 (.14)
Total from investment operations 2.30 .60 2.41 2.28 2.15 (1.73)
1.92 2.56 (.77) 2.70 2.48 .58
Less Distributions
From net investment income (.30) (.11) (.36) (.48) (.59) (.72)
(.75) (.74) (.70) (.77) (.77) (.74)
From net realized gain on investments - - - - - (.30) -
(1.65) (1.14) (.34) - (.09)
Total distributions (.30) (.11) (.36) (.48) (.59) (1.02) (.75)
(2.39) (1.84) (1.11) (.77) (.83)
Net asset value, end of period $ 14.86 $ 12.86 $ 14.93 $ 12.88 $ 11.08 $
9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24
TOTAL RETURN (dagger)(double dagger) 18.03% 4.88% 18.90% 20.91%
22.97% (14.90)% 17.58% 26.99% (7.28)% 23.48% 24.86% 6.20%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 42,326 $ 1,462 $ 191,138 $
139,391 $ 168,590 $ 253,049 $ 463,696 $ 436,753 $ 443,603 $ 544,269 $
349,262 $ 89,364
Ratio of expenses to average net assets 1.77% 1.55%* .79%##
.71%(CLEAR DIAMOND) .67%(CLEAR DAIMOND) .61%(CLEAR DIAMOND) .55%(CLEAR
DIAMOND) .55%(CLEAR DIAMOND) .54%(CLEAR DIAMOND) .61% .63% .77%
Ratio of expenses to average net assets
before expense reductions 1.77% 1.55%* .80%## .79%(CLEAR DIAMOND)
.77%(CLEAR DIAMOND) .71%(CLEAR DIAMOND) .65%(CLEAR DIAMOND) .65%(CLEAR
DIAMOND) .61%(CLEAR DIAMOND) .61% .63% .77%
Ratio of net investment income
to average net assets 2.02% 3.39%* 3.00% 3.77% 5.66% 6.11% 6.09%
6.86% 5.58% 6.06% 7.36% 7.86%
Portfolio turnover rate 120% 51% 120% 51% 91% 103% 93% 78% 137%
107% 110%(dagger)(dagger)(dagger) 121%
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF EQUITY
PORTFOLIO INCOME) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(dagger)(dagger) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN
ACCORDANCE WITH A STATE EXPENSE LIMITATION. IN ADDITION, DURING THE PERIOD
JULY 1, 1986 THROUGH OCTOBER 31, 1987 THE INVESTMENT ADVISER WAIVED .05% OF
THE ANNUAL INDIVIDUAL FUND FEE OF .35%.
++ INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FIDELITY MANAGEMENT
& RESEARCH COMPANY FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THIS
REIMBURSEMENT HAD NOT EXISTED THE RATIO OF EXPENSES TO AVERAGE NET ASSETS
WOULD HAVE BEEN 1.73%.
(CLEAR DIAMOND) EFFECTIVE APRIL 1, 1987 TO SEPTEMBER 10, 1992 THE
ADVISER REDUCED .10% OF THE ANNUAL MANAGEMENT FEE OF .50%.
(SOLID DIAMOND) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED
BASED ON UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE AT THE END OF THE
PERIOD LESS THE AMOUNT OF UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE OF
THE FUND AT AUGUST 20, 1986.
# INCLUDES $.04 PER-SHARE FROM FOREIGN TAXES RECOVERED.
## FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A
PORTION OF THE FUND'S EXPENSES.
FIDELITY ADVISOR INCOME & GROWTH FUND
January 6, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44 $ 10.00
Income from Investment Operations
Net investment income
.48 .50 .51 .56 1.01# .62 .27
Net realized and unrealized gain (loss) on
2.18 .85 3.74 (1.34) 1.27 1.56 (.63)
investments
Total from investment operations
2.66 1.35 4.25 (.78) 2.28 2.18 (.36)
Less Distributions
From net investment income
(.56) (.46) (.53) (1.06) (.58) (.55) (.20)
From net realized gain on investments
(.60) (.61) - (.52) - - -
Total distributions
(1.16) (1.07) (.53) (1.58) (.58) (.55) (.20)
Net asset value, end of period
$ 15.91 $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44
TOTAL RETURN (dagger)(double dagger)
19.66% 10.27% 41.73% (7.15)% 21.15% 23.66% (3.90)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 1,654,124 $ 397,672 $ 135,533 $ 60,934 $ 46,139 $ 36,224 $ 34,376
Ratio of expenses to average net assets
1.51%** 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%*
Ratio of expenses to average net assets before
1.52%** 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%*
expense reductions
Ratio of net investment income to average net
3.24% 3.97% 4.19% 5.29% 8.80% 5.83% 3.95%*
assets
Portfolio turnover rate
200% 389% 220% 297% 151% 204% 206%*
</TABLE>
FIDELITY ADVISOR HIGH YIELD FUND
January 5, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090 $ 10.000
Income from Investment Operations
Net investment income
.980 1.146 1.115 1.144 1.237 1.165 .878
Net realized and unrealized gain (loss) on
1.153 .975 1.948 (.820) (.890) .770 (.910)
investments
Total from investment operations
2.133 2.121 3.063 .324 .347 1.935 (.032)
Less Distributions
From net investment income
(.963) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)
From net realized gain on investments
(.230) - - - - - -
Total distributions
(1.193) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)
Net asset value, end of period
$ 12.010 $ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090
TOTAL RETURN (dagger)(double dagger)
20.47% 21.96% 39.67% 3.58% 3.34% 22.14% (.81)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 485,559 $ 136,316 $ 38,681 $ 15,134 $ 13,315 $ 11,900 $ 9,077
Ratio of expenses to average net assets
1.11% 1.10% 1.10% 1.10% 1.10% 1.10% 1.24%*
Ratio of expenses to average net assets before
1.11% 1.16% 1.76% 2.04% 2.17% 2.22% 2.25%*
voluntary
(CLEAR DIAMOND)
expense limitation
Ratio of net investment income to average net
8.09% 9.95% 12.20% 12.72% 12.98% 11.86% 10.74%*
assets
Portfolio turnover rate
79% 100% 103% 90% 131% 135% 166%*
* ANNUALIZED.
** FMR HAS DIRECTED CERTAIN TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
# NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.26 PER SHARE.
(CLEAR DIAMOND) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
</TABLE>
FIDELITY ADVISOR LIMITED TERM BOND FUND
Effective September 10, 1992, the Fund commenced sale of two classes of
shares entitled "Fidelity Advisor Institutional Limited Term Bond Fund"
(representing the Fund's original shares) and "Fidelity Advisor Limited
Term Bond Fund" (representing the new shares). With the exception of the
Limited Term Bond Fund columns, the information below does not reflect
Limited Term Bond Fund's 12b-1 fee and revised transfer agent fee
arrangement.
Limited Term
Bond Fund Institutional Limited Term Bond Fund
Year Period February 2, 1984
Ended Ended (Commencement
Nov. 30, Nov. 30 Years Ended November 30, of Operations) to
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985 November 30, 1984
Net asset value, beginning
of period $ 10.640 $ 10.960 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180
$ 10.250 $ 11.240 $ 10.550 $ 9.960 $ 10.000
Income from Investment Operations
Net investment income .785 .170 .832 .840 .884 .901 .937 .944
.953 1.026 1.053 .897
Net realized and unrealized gain (loss)
on investments .511 (.320)# .531 .102 .411 (.270) .230 (.070)
(.770) .710 .590 (.040)
Total from investment operations 1.296 (.150) 1.363 .942 1.295 .631
1.167 .874 .183 1.736 1.643 .857
Less Distributions
From net investment income (.796) (.170) (.843) (.852) (.885)
(.901) (.937) (.944) (.953) (1.026) (1.053) (.897)
From net realized gain on investments - -- -- -- -- -- -- --
(.220) (.020) -- --
Total distributions (.796) (.170) (.843) (.852) (.885) (.901)
(.937) (.944) (1.173) (1.046) (1.053) (.897)
Net asset value, end of period $ 11.140 $ 10.640 $ 11.160 $ 10.640 $
10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250 $ 11.240 $ 10.550 $ 9.960
TOTAL RETURN (dagger)(double dagger) 12.50% (1.37)% 13.17% 9.21%
13.35% 6.46% 12.03% 8.81% 1.78% 17.04% 17.40% 9.33%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 59,184 $ 2,583 $ 183,790 $
160,156 $ 327,756 $ 356,564 $ 426,832 $ 418,929 $ 407,228 $ 418,632 $
253,913 $ 15,192
Ratio of expenses to average net assets 1.23% .82%* .64% .57% .57%
.58% .54% .54% .53% .53% .65% 1.50%*(dagger)(dagger)
Ratio of net investment income to
average net assets 6.81% 7.67%* 7.41% 7.96% 8.59% 8.90% 9.16%
9.16% 9.03% 9.22% 10.29% 11.01%*
Portfolio turnover rate 59% 7% 59% 7% 60% 59% 87% 48% 92% 59%
88%(dagger)(dagger)(dagger) 12%*
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND
January 7, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200 $ 10.000
Income from Investment Operations
Net investment income
.567 .666 .700 .735 .773 .769 .614
Net realized and unrealized gain (loss) on
.601 .125 .419 (.160) .050 .060 (.800)
investments
Total from investment operations
1.168 .791 1.119 .575 .823 .829 (.186)
Less Distributions
From net investment income
(.558) (.651) (.679) (.735) (.773) (.769) (.614)
From net realized gain on investments
(.200) - - - - - -
Total distributions
(.758) (.651) (.679) (.735) (.773) (.769) (.614)
Net asset value, end of period
$ 10.140 $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200
TOTAL RETURN (dagger)(double dagger)
12.53% 8.49% 12.65% 6.48% 9.37% 9.34% (1.84)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 69,876 $ 23,281 $ 13,058 $ 9,822 $ 8,203 $ 6,590 $ 4,584
Ratio of expenses to average net assets
.68% 1.10% 1.10% 1.10% 1.10% 1.10% 1.29%*
Ratio of expenses to average net assets before
1.32% 1.79% 2.46% 2.74% 2.75% 2.25% 2.36%*
voluntary
expense limitation
Ratio of net investment income to average net
6.11% 6.98% 7.47% 8.04% 8.45% 8.30% 8.12%*
assets
Portfolio turnover rate
333% 315% 54% 31% 42% 44% 32%*
</TABLE>
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF LIMITED
TERM BOND FUND) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
# THE AMOUNT SHOWN IN THIS CAPTION, WHILE DETERMINABLE BY THE SUMMATION
OF AMOUNTS COMPUTED DAILY AS SHARES WERE SOLD OR REPURCHASED, IS ALSO THE
BALANCING FIGURE DERIVED FROM THE OTHER FIGURES IN THE STATEMENT AND HAS
BEEN SO COMPUTED. THE AMOUNT SHOWN FROM THE PERIOD ENDED NOVEMBER 30, 1992
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE NET
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FOR THE PERIOD BECAUSE OF THE
TIMING OF SALES AND REPURCHASES OF THE LIMITED TERM BOND FUND SHARES IN
RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND
September 16, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060 $ 10.000
Income from Investment Operations
Net investment income
.732 .830 .848 .868 .832 .852 .101
Net realized and unrealized gain (loss) on
.146 .071 .270 (.330) .010 (.120) .060
investments
Total from investment operations
.878 .901 1.118 .538 .842 .732 .161
Less Distributions
From net investment income
(.738) (.821) (.868) (.868) (.832) (.852) (.101)
Net asset value, end of period
$ 10.090 $ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060
TOTAL RETURN (dagger)(double dagger)
9.13% 9.44% 12.19% 5.59% 8.89% 7.56% 1.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 654,202 $ 170,558 $ 25,244 $ 13,062 $ 12,394 $ 13,433 $ 3,252
Ratio of expenses to average net assets
.95% .90% .90% .90% .90% .90% .90%*
Ratio of expenses to average net assets before
.95% 1.03% 1.74% 1.90% 2.22% 1.84% 2.15%*
voluntary
(CLEAR DIAMOND
expense limitation
Ratio of net investment income to average net
6.77% 7.59% 8.50% 8.86% 8.45% 8.39% 7.65%*
assets
Portfolio turnover rate
58% 57% 127% 144% 157% 178% 119%*
</TABLE>
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND
September 16, 1987
(Commencement of
Years Ended October 31, Operations) to
SELECTED PER-SHARE DATA 1993 1992 1991 1990 1989 1988
October 31, 1987
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period
$ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850 $ 10.000
Income from Investment Operations
Net interest income
.710 .774 .803 .811 .800 .750 .092
Net realized and unrealized gain (loss) on
1.100 .250 .660 .150 .410 .610 (.150)
investments
Total from investment operations
1.810 1.024 1.463 .961 1.210 1.360 (.058)
Less Distributions
From net interest income
(.710) (.774) (.803) (.811) (.800) (.750) (.092)
From net realized gain on investments
(.030) (.010) (.120) (.100) (.050) - -
Total distributions
(.740) (.784) (.923) (.911) (.850) (.750) (.092)
Net asset value, end of period
$ 12.720 $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850
TOTAL RETURN (dagger)(double dagger)
15.95% 9.21% 14.02% 9.28% 12.05% 14.22% (.58)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 497,575 $ 156,659 $ 67,135 $ 22,702 $ 6,669 $ 3,290 $ 1,275
Ratio of expenses to average net assets
.92% .90% .90% .90% .90% .89% .80%*
Ratio of expenses to average net assets before
.92% .96% 1.24% 2.09% 2.75% 2.25% 2.25%*
voluntary
(CLEAR DIAMOND) (CLEAR DIAMOND)
(CLEAR DIAMOND)
expense limitation
Ratio of net interest income to average net assets
5.59% 6.59% 7.08% 7.37% 7.60% 7.33% 7.24%*
Portfolio turnover rate
27% 13% 10% 11% 27% 19% -%
</TABLE>
* ANNUALIZED.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(CLEAR DIAMOND) LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
Effective September 10, 1992, the Fund commenced sale to two classes of
shares entitled "Fidelity Advisor Institutional Limited Term Tax-Exempt
Fund" (representing the Fund's original shares) and "Fidelity Advisor
Limited Term Tax-Exempt Fund" (representing the new shares). With the
exception of the Limited Term Tax-Exempt Fund columns, the information
below does not reflect Limited Term Tax-Exempt Fund's 12b-1 fee and revised
transfer agent fee arrangement.
Limited Term
Tax-Exempt Fund Institutional Limited Term Tax-Exempt Fund
September 19, 1985
Year Period (Commencement
Ended Ended of Operations) to
Nov. 30 Nov. 30 Years Ended November 30, November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985
Net asset value, beginning of period $ 11.080 $ 11.010 $ 11.080 $
10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280 $ 10.000
Income from Investment Operations
Net interest income .508 .131 .536 .666 .682 .689 .674 .650 .641
.671 .130
Net realized and unrealized gain (loss) on investments .260 .070 .260
.280 .160 .030 .090 .140 (.540) .760 .280
Total from investment operations .768 .201 .796 .946 .842 .719
.764 .790 .101 1.431 .410
Less Distributions
From net interest income (.508) (.131) (.536) (.666) (.682) (.689)
(.674) (.650) (.641) (.671) (.130)
From net realized gain on investments (.880) -- (.880) -- -- --
- -- -- (.070) (.050) --
Total distributions (1.388) (.131) (1.416) (.666) (.682) (.689)
(.674) (.650) (.711) (.721) (.130)
Net asset value, end of period $ 10.460 $ 11.080 $ 10.460 $ 11.080 $
10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280
TOTAL RETURN (dagger)(double dagger) 7.72% 1.37% 8.01% 9.01% 8.15%
7.04% 7.50% 7.77% .97% 14.39% 4.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 39,800 $ 1,752 $ 15,076 $
28,428 $ 100,294 $ 111,506 $ 121,418 $ 132,443 $ 162,857 $ 161,045 $ 94,391
Ratio of expenses to average net assets .90% 1.04%* .65% .66% .61%
.62% .65% .63% .59% .58% .69%*
Ratio of expenses to average net assets before voluntary
expense limitation 1.36% 1.06%* .83% .67% .61% .62% .65% .63%
.59% .58% .69%*
Ratio of net investment income to average net assets 4.76% 5.65%* 5.01%
6.05% 6.40% 6.53% 6.45% 6.20% 6.01% 6.29% 6.33%*
Portfolio turnover rate 46% 36% 46% 36% 20% 32% 31% 24% 43% 34%
103%*
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 15, 1992 (COMMENCEMENT OF OPERATIONS OF
LIMITED TERM TAX-EXEMPT FUND) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
INVESTMENT OBJECTIVES
EQUITY FUNDS:
FIDELITY ADVISOR OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities.
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH seeks to achieve capital
appreciation by investing primarily in the common and preferred stock
and securities convertible into the common stock, of companies with above
average growth characteristics.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND seeks to provide capital growth
by investing primarily in common stocks and securities convertible into
common stocks.
FIDELITY ADVISOR GLOBAL RESOURCES FUND seeks long-term growth of capital
and protection of the purchasing power of shareholders' capital by
investing primarily in securities of foreign and domestic companies that
own or develop natural resources, or that supply goods and services to such
companies, or in physical commodities.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by
investing primarily in securities of companies believed by FMR to involve a
"special situation."
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks a yield from dividend and
interest income which exceeds the composite dividend yield on securities
comprising the Standard & Poor's 500 Composite Stock Price
Index (S&P 500).
FIDELITY ADVISOR INCOME & GROWTH FUND seeks both income and growth of
capital by investing in a diversified portfolio of equity and fixed-income
securities with income, growth of income and capital appreciation
potential.
FIXED-INCOME FUNDS:
FIDELITY ADVISOR HIGH YIELD FUND seeks a combination of a high level of
income and the potential for capital gains by investing in a diversified
portfolio consisting primarily of high-yielding, fixed-income and zero
coupon securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate of
income through investment in high and upper-medium grade fixed-income
obligations.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND seeks a high level of current
income by investing primarily in obligations issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND seeks to obtain a high level of
current income, consistent with preservation of capital, by investing
primarily in a broad range of investment grade fixed-income securities.
MUNICIPAL/TAX-EXEMPT FUNDS:
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND seeks to provide a high current
yield by investing in a diversified portfolio of municipal obligations
whose interest is not included in gross income for purposes of calculating
federal income tax. The Fund reserves the right to invest up to 100% of
its assets in municipal obligations subject to the federal alternative
minimum tax.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND seeks the highest level of
income exempt from federal income taxes that can be obtained consistent
with the preservation of capital, from a diversified portfolio of high
quality or upper-medium quality municipal obligations.
The investment objective of each Fund is fundamental and can only be
changed by vote of a majority of the outstanding shares of the Fund. Except
as otherwise noted, the investment limitations and policies of Equity
Portfolio Growth, Strategic Opportunities, Income & Growth, Limited
Term Bond, Government Investment, High Income Municipal, and Limited Term
Tax-Exempt are fundamental and may not be changed without shareholder
approval. Except for the investment limitations and policies identified as
fundamental, the limitations and policies of Overseas, Growth
Opportunities, Global Resources , Equity Portfolio Income, High
Yield, and Short Fixed-Income are not fundamental. Non-fundamental
investment limitations and policies may be changed without shareholder
approval.
The yield , return and potential price changes of each Fund depend on
the quality and maturity of the obligations in its portfolio, as well as on
market conditions. Risks vary based on the type of fund in which you are
investing. As is the case with any investment in securities, investment in
the Funds involve certain risks and therefore a Fund may not
always achieve its investment objective . See "Investment Policies"
beginning on page 15.
HOW T O BUY SHARES
Shares of each Fund are offered continuously to investors who engage an
investment professional for investment advice and may be purchased at the
public offering price (the offering price) next determined after the
transfer agent receives your order to purchase. State Street Bank and
Trust Company (the Transfer Agent), P.O. Box 8302 , Boston,
Massachusetts 02266-8302 , provides transfer and dividend paying
services for each Fund.
The offering price is equal to the net asset value per share (NAV) plus
a sales charge, which is a variable percentage of the offering price
depending upon the amount of the purchase. The table below shows total
sales charges and concessions to securities dealers and banks (investment
professionals) having Agreements with Distributors.
You can open an account with a minimum initial investment of $2,500 or more
by completing and returning an account application. You can make additional
investments of $250 or more. For tax-deferred retirement plans, including
IRA accounts, there is a $500 minimum initial investment and a $100
subsequent investment minimum. For accounts established under the
Fidelity Advisor S ystematic I nvestment Program or
the Fidelity Advisor Systematic Exchange Program, there is a $1,000 initial
and $100 monthly subsequent investment minimum requirement. FOR
FURTHER INFORMATION ON OPENING AN ACCOUNT, PLEASE CONSULT YOUR INVESTMENT
PROFESSIONAL OR REFER TO THE ACCOUNT APPLICATION.
It is the responsibility of your investment professional to transmit
your order to purchase shares to the Transfer Agent before 4:00 p.m.
Eastern time in order for you to receive that day's share price. The
Transfer Agent must receive payment within five business days after an
order is placed, otherwise, the purchase order may be canceled and you
could be held liable for resulting fees and/or losses.
All of your purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks. Each Fund reserves the right to limit the number of your
checks processed at one time. If your check does not clear, the Fund may
cancel your purchase and you could be held liable for any fees and/or
losses incurred. When you purchase directly by check, the Fund can hold the
proceeds of redemptions until the Transfer Agent is reasonably satisfied
that the purchase payment has been collected (which can take up to seven
calendar days). You may avoid a delay in receiving redemption proceeds by
purchasing shares with a certified check. Shares of the fixed - income
funds purchased through investment professionals utilizing an automated
order placement and settlement system that guarantees payment for orders on
a specified dat e , begin to earn income dividends on that date.
Direct purchases and all other orders begin to earn dividends on the
business day after the F und receives payment.
2.SALES CHARGES AND INVESTMENT PROFESSIONAL CONCESSIONS
SALES CHARGES AS % OF INVESTMENT PROFESSIONAL
AMOUNT OF PURCHASE OFFERING NET AMOUNT CONCESSION AS %
IN SINGLE TRANSACTIONS PRICE INVESTED OF OFFERING PRICE
FIDELITY ADVISOR FUNDS:
Less than $50,000 4.75% 4.99% 4.00%
$50,000 to less than $100,000 4.50% 4.71% 4.00%
$100,000 to less than $250,000 3.50% 3.63% 3.00%
$250,000 to less than $500,000 2.50% 2.56% 2.00%
$500,000 to less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None See Below*
SHORT FIXED-INCOME FUND:
Less than $1,000,000 1.50% 1.52% 1.20%
$1,000,000 or more None None See Below*
* INVESTMENT PROFESSIONALS WILL BE COMPENSATED WITH A FEE OF .25% FOR
PURCHASES OF $1 MILLION OR MORE, IF THE ASSETS ON WHICH THE .25% IS PAID
REMAIN WITHIN THE FIDELITY ADVISOR FUNDS FOR ONE YEAR, EXCEPT FOR
PURCHASES THROUGH A BANK OR BANK-AFFILIATED BROKER-DEALER THAT QUALIFY FOR
A SALES CHARGE WAIVER DESCRIBED ON PAGE 12. ALL ASSETS ON WHICH THE .25%
FEE IS PAID MUST REMAIN WITHIN THE FIDELITY ADVISOR FUNDS (INCLUDING SHARES
EXCHANGED INTO DAILY MONEY FUND AND DAILY TAX-EXEMPT MONEY FUND) FOR A
PERIOD OF ONE UNINTERRUPTED YEAR OR THE INVESTMENT PROFESSIONAL WILL BE
REQUIRED TO REFUND THIS FEE TO DISTRIBUTORS.
Each Fund and Distributor s reserve the right to suspend the
offering of shares for a period of time and to reject any order for the
purchase of shares, including certain purchases by exchange (see "How to
Exchange,'' page ).
3.MINIMUM ACCOUNT BALANCE. You must maintain an account balance of $1,000.
If your account falls below $1,000 due to redemption, the Transfer Agent
may close it at the NAV next determined on the day your account is closed
and mail you the proceeds at the address shown on the Transfer Agent's
records. The Transfer Agent will give you 30 days' notice that your account
will be closed unless you make an investment to increase your account
balance to the $1,000 minimum. The minimum account balance does not
apply to IRA accounts.
4.SALES CHARGE WAIVERS. Sales charges do not apply to shares of a Fund
purchased:
(1) by registered representatives, bank trust officers and other employees
(and their immediate families) of investment professionals having
A greements with Distributors;
(2) by a current or former Trustee or officer of a Fidelity fund or a
current or retired officer, director or full-time employee of FMR Corp. or
its direct or indirect subsidiaries (a "Fidelity Trustee or employee"), the
spouse of a Fidelity Trustee or employee, a Fidelity Trustee or employee
acting as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity Trustee or
employee;
(3) by a charitable organization (as defined in Section 501(c)(3) of the
Internal Revenue Code) investing $100,000 or more;
(4) by a charitable remainder trust or life income pool established for the
benefit of a charitable organization (as defined in Section 501(c)(3) of
the Internal Revenue Code);
(5) by trust institutions (including bank trust departments)
investing on their own behalf or on behalf of their clients;
(6) in accounts as to which a bank or broker-dealer charges an account
management fee, provided the bank or broker-dealer has an Agreement with
Distributors;
(7) as part of an employee benefit plan having more than 200 eligible
employees or a minimum of $1,000,000 invested in Fidelity Advisor Funds;
(8) in a Fidelity or Fidelity Advisor IRA account purchased with the
proceeds of a distribution from (i) an employee benefit plan having more
than 200 eligible employees or a minimum of $3,000,000 in plan assets
invested in Fidelity mutual funds or $1,000,000 invested in Fidelity
Advisor mutual funds, or (ii) an insurance company separate account
qualifying under (9) below, or funding annuity contracts purchased by
employee benefit plans which in the aggregate have at least $3,000,000 in
plan assets invested in Fidelity mutual funds;
(9) by an insurance company separate account used to fund annuity contracts
purchased by employee benefit plans which in the aggregate have more than
200 eligible employees or $1,000,000 invested in Fidelity Advisor mutual
funds;
(10) by any state, county, c ity, or any governmental
instrumentality, department, authority or agency; or
(11) with redemption proceeds from other mutual fund complexes on which the
investor has paid a front-end sales charge only. (A Sales Charge Waiver
Form must accompany these transactions.)
Sales charge waivers must be qualified through Distributors in advance, and
employee benefit plan investors must meet additional requirements specified
in the SAIs. Your investment professional should call Fidelity for more
information.
INVESTOR SERVICES
You may initiate many transactions by telephone. Note that the Transfer
Agent will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the
identity of the caller. The Transfer Agent will request personalized
security codes or other information, and may also record calls. You should
verify the accuracy of your confirmation statements immediately after you
receive them. If you do not want the ability to redeem and exchange by
telephone, call the Transfer Agent for instructions.
5.QUANTITY DISCOUNTS. Reduced sales charges are applicable to purchases of
$50,000 or more ($1,000,000 or more for Short Fixed-Income) alone or in
combination with purchases of shares of other Fidelity Advisor Funds made
at any one time (including Daily Money Fund and Daily Tax-Exempt Money Fund
shares acquired by exchange from certain other Fidelity Advisor
Fund s ). To obtain the reduction of the sales charge, you or your
investment professional must notify the Transfer Agent at the time of
purchase whenever a quantity discount is applicable to your purchase. Upon
such notification, you will receive the lowest applicable sales charge.
For purposes of qualifying for a reduction in sales charges under the
C ombined P urchase, R ights of A ccumulation or
L etter of I ntent provisions, the following may qualify as an
individual, or a "company" as defined in Section 2(a)(8) of the Investment
Company Act of 1940 (1940 Act): an individual, spouse, and their children
under age 21 purchasing for his, her, or their own account; a trustee,
administrator or other fiduciary purchasing for a single trust estate or
single fiduciary account or for a single or a parent-subsidiary group of
"employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974); and tax-exempt organizations as
defined under Section 501(c)(3) of the Internal Revenue Code.
6.COMBINED PURCHASES. When you invest in a Fund for several accounts at the
same time, you may combine these investments into a single transaction to
qualify for the quantity discount if purchased through one investment
professional, and if the total is at least $50,000 (at least $1,000,000 for
Short Fixed-Income).
7.RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on any future purchases after you have reached a new
breakpoint in a Fund's sales charge schedule. You can add the value of
existing Fidelity Advisor Fund shares (including Daily Money Fund and Daily
Tax-Exempt Money Fund shares ACQUIRED BY EXCHANGE FROM ANY FIDELITY ADVISOR
FUND), determined at the current day's NAV at the close of business,
to the amount of your new purchase valued at the current offering price to
determine your reduced sales charge.
8.LETTER OF INTENT. If you anticipate purchasing $50,000 or more
($1,000,000 for Short Fixed-Income) of a Fund's shares alone or in
combination with shares of other Fidelity Advisor Funds (excluding Daily
Money Fund and Daily Tax-Exempt Money Fund) within a 13-month period, you
may obtain shares at the same reduced sales charge as though the total
quantity were invested in one lump sum, by filing a non-binding Letter of
Intent (the Letter) within 90 days of the start of the purchases. Each
investment you make after signing the Letter will be entitled to the sales
charge applicable to the total investment indicated in the Letter. For
example, a $2,500 purchase toward a $50,000 Letter would receive the same
reduced sales charge as if the $50,000 ($1,000,000 for Short Fixed-Income)
had been invested at one time. To ensure that the reduced price will be
received on future purchases, you or your investment professional must
inform the Transfer Agent that the Letter is in effect each time shares are
purchased. Neither income dividends nor capital gain distributions taken in
additional shares will apply toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you plan to
invest. Out of the initial purchase, 5% of the dollar amount specified in
the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is
satisfied or the additional sales charges have been paid. You will earn
income dividends and capital gain distributions on escrowed shares. The
escrow will be released when your purchase of the total amount has been
completed. You are not obligated to complete the Letter.
If you purchase more than the amount specified in the Letter and qualify
for a further sales charge reduction, the sales charge will be adjusted to
reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering
price applicable to the total purchase.
If you do not complete your purchase under the Letter within the 13-month
period, 30 days' written notice will be provided for you to pay the
increased sales charges due. Otherwise, sufficient escrowed shares will be
redeemed to pay such charges.
9. FIDELITY ADVISOR SYSTEMATIC INVESTMENT P ROGRAM . You can
make regular investments in a Fidelity Advisor Fund with the Systematic
Investment Program by completing the appropriate section of the
account application and attaching a voided personal check. Investments may
be made monthly by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time. There is a $1,000 minimum initial investment requirement for the
Systematic Investment Program . Shares will be purchased at the
offering price next determined following receipt of the investment by the
Transfer Agent. You may cancel the Systematic Investment Program at
any time without payment of a cancellation fee. You will receive a
confirmation from the Transfer Agent for every transaction, and a debit
entry will appear on your bank statement.
SHAREHOLDER COMMUNICATIONS
The Transfer Agent will send you a confirmation after every transaction
that affects the share balance or the account registration. In addition,
a consolidated statement will be provided quarterly. At least twice a
year each shareholder will receive the Fund's financial statements, with a
summary of its portfolio composition and performance. To reduce expenses,
only one copy of most shareholder reports (such as a Fund's Annual Report)
will be mailed to each shareholder address. Please write to the
Transfer Agent or contact your investment professional if you need to have
additional reports sent each time.
A Fund pays for these shareholder communications, but not for special
services that are required by a few shareholders, such as a request for a
historical transcript of an account. You may be required to pay a fee for
such special services. If you are purchasing shares of a Fund through a
program of administrative services offered by an investment professional,
you should read the additional materials pertaining to that program in
conjunction with this Prospectus. Certain features of a Fund, such as the
minimum initial or subsequent investment, may be modified in these
programs, and administrative charges may be imposed for the services
rendered.
HOW TO EXCHANGE
An exchange is the redemption of shares of one Fund and the purchase of
shares of another Fund, each at the next determined NAV. The exchange
privilege is a convenient way to sell and buy shares of other Fidelity
Advisor Funds and certain Fidelity money market funds registered in your
state.
To protect each Fund's performance and shareholders, FMR discourages
frequent trading in response to short-term market fluctuations. The Funds
reserve the right to refuse exchange purchases by any person or group if,
in FMR's opinion, a Fund would be unable to invest effectively in
accordance with its investment objective and policies, or would otherwise
be affected adversely. Your exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant
portions of a Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to a Fund.
Exchange restrictions may be imposed at any time. The Funds may modify or
terminate the exchange privilege. The exchange limit may be modified for
certain institutional retirement plans.
Exchange instructions may be given by you in writing or by telephone
directly to the Transfer Agent or through your investment professional. FOR
MORE INFORMATION ON ENTERING AN EXCHANGE TRANSACTION, PLEASE CONSULT YOUR
INVESTMENT PROFESSIONAL .
Before you make an exchange:
1. Read the prospectus of the Fund into which you want to exchange.
2. Shares may be exchanged into other Fidelity Advisor Funds seven calendar
days after purchase at NAV . If you have held shares of Short
Fixed-Income Fund for less than six months, you will pay a sales charge
equal to the difference between the sales charge on the Fund you are
exchanging into and the sales charge applicable to shares of Short
Fixed - Income being exchanged. For example, if you paid
the full 1.5% sales charge when you purchased your Short
Fixed-Income shares, you will have to pay a sales charge of up to 3.25%
when you exchange these shares into another Fidelity Advisor Fund having a
maximum sales charge of 4.75%. After six months, shares may be exchanged at
NAV. Exchanges into a Fidelity Advisor Fund from eligible Fidelity money
market funds will be processed at the next determined offering price
(unless the shares were acquired by exchange from another Fidelity Advisor
Fund).
3. You may only exchange between accounts that are registered in the same
name, address, and taxpayer identification number.
4. You may make four exchanges out of a Fund per calendar year .
I f you exceed this limit, your future purchases of (including
exchanges into) Fidelity Advisor Funds may be permanently refused. For
purposes of the four exchange limit, accounts under common ownership or
control, including accounts having the same taxpayer identification number,
will be aggregated. Systematic exchanges are not subject to this four
exchange limit (see following section).
5. TAXES: The shares exchanged represent a sale and are taxable. The
Transfer Agent will send you a confirmation of each exchange transaction.
10.FIDELITY ADVISOR SYSTEMATIC EXCHANGE P ROGRAM . You can exchange a
specific dollar amount of shares from a Fund into another Fidelity Advisor
Fund on a monthly, quarterly or semiannual basis under the following
conditions:
1. The account from which the exchanges are to be processed must have a
minimum balance of $10,000.
2. The account into which the exchanges are to be processed must be an
existing account with a minimum balance of $1,000.
3. Both accounts must have identical registrations and taxpayer
identification numbers. The minimum amount that can be exchanged
systematically into a Fund is $100.
4. Systematic Exchanges will be processed at the NAV determined on the
transaction date, except that Systematic Exchanges into a Fidelity Advisor
Fund from eligible money market funds will be processed at the offering
price next determined on the transaction date (unless the shares were
acquired by exchange from another Fidelity Advisor Fund).
HOW T O SELL SHARES
You may sell (redeem) all or a portion of your shares on any day the New
York Stock Exchange (NYSE) is open, at the NAV next determined after the
Transfer Agent receives your request to sell. Orders to sell may be placed
by you in writing or by telephone or through your investment professional.
Orders to sell received by the Transfer Agent before 4:00 p.m. Eastern time
will receive that day's share price. For orders to sell placed through your
investment professional, it is the investment professional's responsibility
to transmit such orders to the Transfer Agent by 4:00 p.m. Eastern time for
you to receive that day's share price.
Once your shares are redeemed, a Fund normally will send the proceeds on
the next business day to the address of record. If making immediate payment
could adversely affect the Fund, the Fund may take up to seven days to pay
you. A Fund may withhold redemption proceeds until it is reasonably
satisfied that it has collected investments that were made by check (which
can take up to seven calendar days).
When the NYSE is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the SEC to merit such action, a
Fund may suspend redemption or postpone payment dates for more than
seven days . The Transfer Agent requires additional documentation to
sell shares registered in the name of a corporation, agent or fiduciary
or a surviving joint owner. Call 1-800-221-5207 for specific requirements.
11.REDEMPTION REQUESTS BY TELEPHONE:
TO RECEIVE A CHECK. You may sell shares of a Fund having a value of
$100,000 or less from your account by calling the Transfer Agent.
Redemption proceeds must be sent to the address of record listed on the
account, and a change of address must not have occurred within the
preceding 60 days.
T O RECEIVE A WIRE. You may sell shares of a Fund and have the
proceeds wired to a pre-designated bank account. Wires will generally be
sent the next business day following the redemption of shares from your
account.
Telephone redemptions cannot be processed for Fidelity Advisor Fund
prototype retirement accounts where State Street Bank and Trust Company is
the custodian.
12.REDEMPTION REQUESTS IN WRITING. For your protection, if you sell
shares of a Fund having a value of more than $100,000, or if you are
sending the proceeds of a redemption of any amount to an address other than
the address of record listed on the account, or if you have requested a
change of address within the preceding 60 days, or if you wish to have the
proceeds wired to a non predesignated bank account, you must send a letter
of instruction signed by all registered owners with signature(s) guaranteed
to the Transfer Agent. A signature guarantee is a widely recognized way to
protect you by guaranteeing the signature on your request; it may not be
provided by a notary public. Signature guarantee(s) will be accepted from
banks, brokers, dealers, municipal securities dealers, municipal securities
brokers, government securities dealers, government securities brokers,
credit unions (if authorized under state law), national securities
exchanges, registered securities associations, clearing agencies and
savings associations.
13.REINSTATEMENT PRIVILEGE. If you have sold all or part of your Fund
shares you may reinvest an amount equal to all or a portion of the
redemption proceeds in the Fund , or in any of the other Fidelity
Advisor Funds, at the NAV next determined after receipt of your investment
order , provided that such reinvestment is made within 30 days of
redemption. You must reinstate your shares into an account with the same
registration. Th is privilege may be exercised only once by a
shareholder with respect to a Fund and certain restrictions may
apply .
14. FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM. If you own shares
of a Fund worth $10,000 or more, you may periodically have proceeds sent
automatically from your account to you, to a person named by you, or to
your bank checking account. Your Systematic Withdrawal Program payments are
drawn from share redemptions. If Systematic Withdrawal Program redemptions
exceed distributions earned on your shares, your account eventually
may be exhausted. Since a sales charge is applied on new shares you buy, it
is to your disadvantage to buy shares while also making systematic
redemptions. You may obtain information about the Systematic Withdrawal
Program by contacting your investment professional.
15.CHECKWRITING SERVICE. Short Fixed-Income Fund offers a check-writing
service ($500 minimum) to allow the redemption of shares from your
account . Refer to the account a pplication or the SAI and
complete the attached signature card. Upon receipt of the properly
completed account application and signature card, the Fund will provide
checks. If you redeem by check from the Fund and the amount of the check is
greater than the value of your account, your check will be returned to you
and you may be subject to additional charges.
DISTRIBUTION OPTIONS
When you fill out your account application, you can choose from four
Distribution Options:
1. REINVESTMENT OPTION. Dividends and capital gain distributions will be
automatically reinvested in additional shares of a Fund. If you do not
indicate a choice on your account application, you will be assigned
this option.
2. INCOME-EARNED OPTION. Capital gain distributions will be automatically
reinvested, but a check will be sent for each dividend distribution.
3. CASH OPTION. A check will be sent for each dividend and capital gain
distribution.
4. DIRECTED DIVIDENDS PROGRAM . Dividends and capital gain
distributions will be automatically invested in another identically
registered Fidelity Advisor Fund.
You may change your Distribution Option at any time by notifying the
Transfer Agent in writing. Distribution checks for fixed-income funds will
be mailed no later than seven days after the last day of the month. On the
day a Fund goes ex-dividend, the amount of the distribution is deducted
from its share price. Reinvestment of distributions will be made at that
day's NAV. If you select option 2 or 3 and the U.S. Postal Service
cannot deliver your checks, or if your checks remain uncashed for six
months, distribution checks will be reinvested in your account at the
current NAV and your election may be converted to the Reinvestment
Option.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. The Funds distribute substantially all of their net
investment income and capital gains, if any, to shareholders each year
pursuant to the following schedule. Each Fund may pay capital gains
in December. In addition, Equity Portfolio Growth , Equity Portfolio
Income , Limited Term Bond and Limited Term Tax-Exempt may pay
capital gains in January as well.
Equity Portfolio Growth pays net investment income in January and December;
Overseas, Growth Opportunities, Global Resources, and Strategic
Opportunities pay in December; High Yield, Limited Term Bond,
Government Investment, Short Fixed-Income, High Income Municipal, and
Limited Term Tax-Exempt declare dividends daily and pay monthly; and
Equity Portfolio Income and Income & Growth declare dividends in
March, June, September, and December and pay the following month.
16.CAPITAL GAINS. You may realize a gain or loss when you sell (redeem)
or exchange shares. For most types of accounts, a Fund will report the
proceeds of your redemptions to you and the IRS annually. However, because
the tax treatment also depends on your purchase price and your personal tax
position, YOU SHOULD KEEP YOUR REGULAR ACCOUNT STATEMENTS to use in
determining your tax.
17."BUYING A DIVIDEND." On the record date for a distribution from a
Fund, the Fund's share price is reduced by the amount of the distribution.
If you buy shares just before the record date (buying a dividend), you will
pay the full offering price for the shares, and then receive a portion of
the price back as a taxable distribution.
18.FEDERAL TAXES. Distributions from each Fund's income and short-term
capital gains are taxed as dividends, and long-term capital gain
distributions are taxed as long-term capital gains. Gains on the sale of
tax-free bonds results in a taxable distribution. Short-term capital gains
and a portion of the gain on bonds purchased at a discount are taxed as
dividends. Distributions are taxable when they are paid , whether
you take them in cash or reinvest them in additional shares, except that
distributions declared in December and paid in January are taxable as if
paid on December 31. Each Fund will send you a tax statement by January 31
showing the tax status of the distributions you received in the past year.
A copy will be filed with the Internal Revenue Service (IRS) .
High Income Municipal and Limited Term Tax-Exempt may invest in municipal
obligations whose interest is subject to the federal alternative minimum
tax for individuals (AMT bonds). To the extent that the Funds invest
in AMT bonds, individuals who are subject to the AMT will be required to
report a portion of the Fund's dividends as a "tax-preference item" in
determining their federal tax. Federally tax-free interest earned by the
Funds is federally tax-free when distributed as income dividends. During
the most recent fiscal year ended, 100% of the income dividends for High
Income Municipal and Limited Term Tax-Exempt were free from federal tax. If
the Funds earn taxable income from any of their investments, it w ill
be distributed as a taxable dividend. Some of the Funds may be eligible
for the dividends-received deduction for corporations.
If a Fund has paid withholding or other taxes to foreign governments during
the year, the taxes will reduce the Fund's dividends but will be included
in the taxable income reported on your tax statement. You may be able to
claim an offsetting tax credit or itemized deduction for foreign taxes paid
by a Fund. Your tax statement will show the amount of foreign tax for which
a credit or deduction may be available.
STATE AND LOCAL TAXES . Mutual fund dividends from most U.S.
government securities generally are free from state and local income taxes.
However , certain types of securities, such as repurchase agreements
and certain agency backed securities, may not qualify for the government
interest exemption on a state-by-state basis. GNMA and other mortgage
backed securities are other notable exceptions in many states. Some states
may impose intangible property taxes. You should consult your own tax
advisor for details and up-to-date information on the tax laws in your
state.
19.OTHER TAX INFORMATION. In addition to federal taxes, you may be subject
to state or local taxes on your investment, depending on the laws in your
area. Because some states exempt their own municipal obligations from tax,
you will receive tax information each year showing how High Income
Municipal and Limited Term Tax-Exempt allocated its investments by state.
When you sign your account application, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a Fund to
withhold 31% of your taxable distributions and redemptions.
INVESTMENT POLICIES
Further information relating to the types of securities in which each Fund
may invest and the investment policies of each Fund in general are set
forth in the Appendix to this Prospectus and in each Fund's SAI.
FMR will use its extensive research facilities in addition to considering
the ratings of Nationally Recognized Statistical Rating Organizations
(NRSROs) in selecting investments for the Funds. Unrated securities are not
necessarily of lower quality than rated securities, but they may not be
attractive to as many buyers. This credit analysis includes
consideration of the economic feasibility, the financial condition of the
issuer with respect to liquidity, cash flow and political developments that
may affect credit quality. Since the risk of default is higher for
lower-quality obligations, FMR's research and analysis are an integral part
of choosing a Fund's securities. Through portfolio diversification and
careful credit analysis, FMR can reduce risk, although there can be no
assurance that losses will not occur. FMR also considers trends in the
economy, in geographic areas, in various industries, and in the financial
markets.
EQUITY FUNDS . Equity Funds invest mainly in common stock and
other equity securities in search of growth or a combination of growth and
income. Their performance depends heavily on stock market conditions in the
U.S. and abroad, and can also be affected by changes in interest rates or
other economic conditions. Investments in Equity Funds are more suitable
for investors who take a long-term approach to investing.
FIDELITY ADVISOR OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities. The Fund defines foreign securities as
securities of issuers whose principal activities are outside of the United
States. Normally, at least 65% of the Fund's total assets will be invested
in securities of issuers from at least three different countries outside of
North America (the U.S. , Canada, Mexico, and Central America). The
Fund expects to invest most of its assets in securities of issuers located
in developed countries in these general geographic areas: The Americas
(other than the U.S. ), the Far East and the Pacific Basin, and
Western Europe. In determining whether a company's or organization's
principal activities are in a particular region, FMR will look at such
factors as the location of assets, personnel, sales, and earnings.
FMR expects that opportunities for capital growth will come most often from
common stock and other equity securities, and therefore, expects that
equity securities will account for the majority of the Fund's investments.
However, the Fund also may find opportunities for capital growth from debt
securities of any quality or maturity by reason of anticipated changes in
such factors as interest rates, currency relationships, or the credit
standing of individual issuers. The Fund will not consider dividend income
as a primary factor in choosing securities, unless FMR believes the income
will contribute to the securities' growth potential.
When allocating the investments of the Fund among geographic regions and
individual countries, and among assets denominated in U.S. and foreign
currencies, FMR considers various factors, such as prospects for relative
economic growth among countries, regions or geographic areas; expected
levels of inflation; government policies influencing business conditions;
and the outlook for currency relationships. Although the Fund has the
a bil ity under normal conditions to invest up to 35% of its total
assets in the U.S., FMR currently intends to manage the Fund to be as fully
invested outside the U.S. as is practicable in light of the Fund's cash
flow and cash needs.
The equity securities in which the Fund may invest include common stocks of
companies or closed-end investment companies, securities such as warrants
or rights that are convertible into common stock, preferred stocks, and
depositary receipts for those securities.
The Fund may invest in debt securities of any type of issuer, including
governments and governmental entities (including supra national
organizations such as the World Bank) as well as corporations and other
business organizations. The Fund has no limitation on the quality of debt
securities in which it may invest. The Fund may invest in lower-quality,
high-yielding debt securities (commonly referred to as "junk bonds"),
although it intends to limit its investments in these securities to 5% of
its assets. FMR may invest a portion of the Fund's assets in high-quality,
short-term debt securities, bank deposits and money market instruments
(including repurchase agreements) denominated in U.S. dollars or foreign
currencies. When market conditions warrant, FMR can make substantial
temporary defensive investments in U.S. government securities or
investment-grade obligations of companies incorporated in, and having
principal business activities in, the U.S .
The Fund may purchase or engage in indexed securities, illiquid
investments, loans and other direct debt instruments, options and futures
contracts, repurchase agreements and securities loans, restricted
securities, and swap agreements.
CONSIDERATIONS IN INVESTING IN SHARES OF OVERSEAS FUND:
Investing outside the U.S. involves different opportunities and different
risks from U.S. investments. FMR believes that it may be possible to obtain
significant returns from a portfolio of foreign investments, or a
combination of foreign investments and U.S. investments, and to achieve
increased diversification in comparison to a portfolio invested solely in
U.S. securities. By including international investments in your investment
portfolio, you may gain increased diversification by combining securities
from various countries and geographic areas that offer different investment
opportunities and are affected by different economic trends. At the same
time, these opportunities and trends involve risks that may not be
encountered with U.S. investments.
International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
foreign issuers, and there may be less government regulation and
supervision of foreign stock exchanges, brokers, and listed companies.
There may be difficulty in enforcing legal rights outside the U.S .
Foreign companies generally are not subject to uniform accounting,
auditing, and financial reporting standards, practices, and requirements
comparable to those that apply to U.S. companies. Security trading
practices abroad may offer less protection to investors such as the Fund.
Settlement of transactions in some foreign markets may be delayed or may be
less frequent than in the U.S., which could affect the liquidity of the
Fund. Additionally, in some foreign countries, there is the possibility of
expropriation or confiscatory taxation; limitations on the removal of
securities, property, or other assets of the Fund; political or social
instability; or diplomatic developments which could affect U.S. investments
in foreign countries. FMR will take these factors into consideration in
managing the Fund's investments.
The Fund may invest a portion of its assets in developing countries, or in
countries with a new or developing capital market. The
considerations noted above are generally intensified for these investments.
These countries may have relatively unstable governments, economies based
on only a few industries, and securities markets that trade a small number
of securities. Securities of issuers located in these countries tend to
have volatile prices and may offer significant potential for loss as well
as gain.
FOREIGN CURRENCIES. The value of the Fund's investments, and the value of
dividends and interest earned by the Fund, may be significantly affected by
changes in currency exchange rates. Some foreign currency values may be
volatile, and there is the possibility of governmental controls on currency
exchange or governmental intervention in currency markets, which could
adversely affect the Fund. Although FMR may attempt to manage currency
exchange rate risks, there is no assurance that FMR will do so at an
appropriate time or that FMR will be able to predict exchange rates
accurately. For example, if FMR increases the Fund's exposure to a foreign
currency, and that currency's value subsequently falls, FMR's currency
management may result in increased losses to the Fund. Similarly, if FMR
hedges the Fund's exposure to a foreign currency, and that currency's value
rises, the Fund will lose the opportunity to participate in the currency's
appreciation.
CURRENCY MANAGEMENT. The relative performance of foreign currencies is an
important factor in the Fund's performance. FMR may manage the Fund's
exposure to various currencies to take advantage of different yield, risk,
and return characteristics that different currencies can provide for U.S.
investors.
To manage exposure to currency fluctuations, the Fund may enter into
currency exchange contracts (agreements to exchange one currency for
another at a future date) or currency swap agreements, buy and sell options
and futures contracts relating to foreign currencies, and purchase
securities indexed to foreign currencies. The Fund will use currency
exchange contracts in the normal course of business to lock in an
exchange rate in connection with purchases and sales of securities
denominated in foreign currencies. Other currency management strategies
allow FMR to hedge portfolio securities, to shift investment exposure from
one currency to another, or to attempt to profit from anticipated declines
in the value of a foreign currency relative to the U.S. dollar. There is no
limitation on the amount of the Fund's assets that may be committed to
currency management strategies.
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH seeks to achieve capital
appreciation by investing primarily in the common and preferred stock, and
securities convertible into the common stock, of companies with above
average growth characteristics.
As a general rule, the Fund will invest in the securities of companies
whose growth in the areas of earnings or gross sales measured either in
dollars or in unit volume (either on an absolute or percentage basis) may
exceed that of the average of the companies whose securities are included
in the S&P 500. These securities generally command high multiples
(price/earnings ratios) in the stock markets over time. Above average
growth characteristics are most often associated with companies in new and
emerging areas of the economy but occasionally can be found in the stronger
companies of more mature and even declining industries. The Fund will,
therefore, be invested in the securities of smaller, less well-known
companies except when FMR believes that opportunities for above-average
growth are presented by larger, more mature companies which have undergone
reformation and revitalization or possess a strong position in relation to
the market as a whole.
The market price of securities with above average growth characteristics
often can experience a more sudden and more dramatic downward reaction to
negative news than is the case with securities carrying a lower market
multiple. This can be particularly true for companies with a narrow product
line or whose securities are relatively thinly-traded, characteristics
which are common to smaller, less well-known companies.
As a non-fundamental policy, at least 65% of the total assets of the Fund
normally will be invested in common and preferred stock. As a
non-fundamental policy, the Fund may invest up to 35% of its total assets
in debt obligations of all types and quality, a high percentage of which
are expected to be convertible into common stocks. The Fund may invest in
lower-quality, high yielding debt securities (commonly referred to as "junk
bonds" although as a non-fundamental policy it intends to limit its
investments in these securities to 35% of its assets. ). The Fund also
may purchase or engage in foreign investments, indexed securities,
illiquid investments, loans and other direct debt instruments, options and
futures contracts, repurchase agreements and securities loans
restricted securities, swap agreements, and warrants.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND seeks to provide capital growth
by investing primarily in common stocks and securities convertible into
common stocks. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in securities of companies that FMR believes have
long-term growth potential. Growth can be considered either appreciation of
the security itself or growth of the company's earnings or gross sales.
Accordingly, these securities will often pay little, if any, income,
which will be entirely incidental to the objective of capital growth.
The Fund also has the ability to purchase other securities, such as
preferred stock and bonds that may produce capital growth. Securities may
be of all types or quality. The Fund may invest in lower-quality,
high-yielding debt securities (commonly referred to as "junk
bonds") , a lthough the Fund currently intends to limit its
investments in these securities to 10% of its assets.
The Fund may purchase foreign investments of all types without limitation
and may enter into foreign forward currency exchange contracts for
the purpose of managing exchange rate risks. The Fund may purchase or
engage in indexed securities, illiquid investments, loans and other direct
debt instruments, options and futures contracts, repurchase agreements and
securities loans, restricted securities, reverse repurchase agreements,
swap agreements, and warrants.
The Fund may make substantial temporary investments in high-quality debt
securities and money market instruments, including commercial paper,
obligations of banks or the U.S. government and repurchase agreements for
defensive purposes when, in FMR's judgment, economic or market conditions
warrant.
FIDELITY ADVISOR GLOBAL RESOURCES FUND seeks long-term growth of capital
and protection of the purchasing power of shareholders' capital by
investing primarily in securities of foreign and domestic companies that
own or develop natural resources, or supply goods and services to such
companies, or in physical commodities. Natural resources include precious
metals, ferrous and nonferrous metals, strategic metals, hydrocarbons,
chemicals, forest products, real estate, food products, and other basic
commodities which, historically, have been produced and marketed profitably
during periods of significant inflation.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in securities of foreign and domestic companies that own or develop
natural resources, or supply goods and services to such companies, or in
physical commodities. The remain der of the Fund may be invested in
other investments including debt securities of any kind including
asset-backed securities, obligations of foreign governments or their
political subdivisions, foreign companies and supranational organizations,
and common and preferred stocks of corporations not necessarily engaged in
natural resources. FMR will seek securities that are priced relative to the
intrinsic value of the relevant natural resource or that are issued
by companies which are positioned to benefit during particular portions
of the economic cycle. Accordingly, the Fund may shift its emphasis from
one natural resource industry to another depending upon prevailing trends
or developments. For example, when FMR anticipates significant economic,
political or financial pressures or major dislocations in the foreign
currency exchange markets, the Fund may, in seeking to protect the
purchasing power of shareholders' capital, invest a substantial portion of
its assets in companies that explore for, extract, process , or deal
in precious metals, and/or invest in precious metals themselves. The
Fund expects to invest a majority of its assets to be invested in
securities of companies that have their principal business activities in at
least three different countries (including the U.S. ).
A company will be deemed to have substantial ownership of, or activities
in, natural resources if, at the time of the Fund's acquisition of its
securities, at least 50% of the company's assets are involved in, either
directly or through subsidiaries, exploring, mining, refining, processing,
transporting, fabricating, dealing in , or owning natural resources.
Natural resources include precious metals (such as gold, palladium,
platinum and silver), ferrous and nonferrous metals (such as iron, aluminum
and copper), strategic metals (such as uranium and titanium), hydrocarbons
(such as coal, oil and natural gases), chemicals, forest products, real
estate, food products and other basic commodities which, historically, have
been produced and marketed profitably during periods of rising inflation.
The Fund may purchase foreign securities of all types without limitation
and may enter into forward foreign currency exchange contracts for the
purpose of managing exchange rate risks. The Fund may invest in
lower-quality, high-yielding debt securities (commonly referred to as "junk
bonds''), rated as low as CCC by Standard & Poor's Corporation
(S&P) or Caa by Moody's Investors Service, Inc. (Moody's). The Fund
does not currently intend to invest more than 5% of its net assets in
debt securities rated below BBB or Bbb . Debt securities
ordinarily will make up a relatively small portion of the Fund's
assets.
The Fund may purchase ADRs and EDRs. The Fund may purchase indexed
securities, illiquid investments, loans and other direct debt instruments,
repurchase agreements and securities loans, restricted securities, and
warrants. The Fund may also purchase securities on a delayed-delivery
basis.
As a fundamental policy, the Fund is authorized to invest up to 50% of its
assets in physical commodities. In order to permit the sale of the Fund's
shares in certain states, the Fund has adopted a non-fundamental
policy of limiting investments in physical commodities to precious metals
(i.e., gold, palladium, platinum and silver) and to not more than 25% of
the Fund's total assets. Investments in other types of physical commodities
could present concerns, including practical problems of delivery, storage
and maintenance, possible illiquidity, the unavailability of accurate
market valuations and increased expenses. When a precious metal is
purchased, FMR currently intends that it will be only in a form that is
readily marketable and that it will be delivered to and stored with a
qualified U.S. bank. Investments in bullion earn no investment income and
may involve higher custody and transaction costs than investments in
securities. The Fund may receive no more than 10% of its yearly income from
gains resulting from selling metals or any other physical commodity. The
Fund may be required, therefore, either to hold its metals or sell them at
a loss, or to sell its portfolio securities at a gain, when it would not
otherwise do so for investment reasons. Precious metals, at times, have
been subject to substantial price fluctuations over short periods of time
and may be affected by unpredictable international monetary and political
policies such as currency devaluations or revaluations, economic and social
conditions within a country, trade imbalances, or trade or currency
restrictions between countries.
Since the Fund may invest in physical commodities and utilize investment
techniques which are subject to market fluctuations and/or foreign
market risk, an investment in the Fund may be considered more speculative
than an investment in other funds that seek capital growth. The value of
equity securities of natural resource companies will fluctuate pursuant to
market conditions generally, as well as the market for the particular
natural resource in which the issuer is involved. In addition, the values
of natural resources are subject to numerous factors, including nature and
international politics.
During periods when, in FMR's opinion, a temporary defensive posture in the
market is appropriate, the Fund may invest without limitation in cash or
high-quality money market instruments including, but not limited to,
certificates of deposit, commercial paper and obligations issued by the
U.S. government or any of its agencies or instrumentalities.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by
investing primarily in securities of companies believed by FMR to involve a
"special situation." The term "special situation" refers to FMR's
identification of an unusual, and possibly non-repetitive, development
taking place in a company or a group of companies in an industry.
As a non-fundamental policy, the Fund normally will invest at least 65% of
its assets in companies involving a special situation. A special situation
may involve one or more of the following characteristics:
(bullet) A technological advance or discovery, the offering of a new or
unique product or service, or changes in consumer demand or consumption
forecasts.
(bullet) Changes in the competitive outlook or growth potential of an
industry or a company within an industry, including changes in the scope or
nature of foreign competition or the development of an emerging industry.
(bullet) New or changed management, or material changes in management
policies or corporate structure.
(bullet) Significant economic or political occurrences abroad, including
changes in foreign or domestic import and tax laws or other regulations.
(bullet) Other events, including natural disasters, favorable litigation
settlements, or a major change in demographic patterns.
In seeking capital appreciation, the Fund also may invest in securities of
companies not involving a special situation, but which are companies with
valuable fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential.
FMR intends to invest primarily in common stocks and securities that are
convertible into common stocks; however, it also may invest in debt
securities of all types and quality if FMR believes that investing in these
securities will result in capital appreciation. As a non-fundamental
investment policy, the Fund may invest in lower-quality, high-yielding debt
securities (commonly referred to as "junk bonds"). The Fund currently
intends to limit its investments in these securities to 35% of its assets.
The Fund also may invest in unrated securities. The Fund may invest
up to 30% of its assets in foreign investments of all types and may enter
into forward foreign currency exchange contracts for the purpose of
managing exchange rate risks. The Fund may purchase or engage in
indexed securities, illiquid instruments, loans and other direct debt
instruments, options and futures contracts, repurchase agreements and
securities loans, restricted securities, swap agreements, warrants, and
zero coupon bonds.
The Fund expects to be fully invested under most market conditions. The
Fund may make substantial temporary investments in high - quality debt
securities for defensive purposes when, in FMR's judgment, a more
conservative approach to investment is desirable.
An investment in the Fund may be considered more speculative than an
investment in other funds that seek capital appreciation. There are greater
risks involved in investing in securities of smaller companies rather than
companies operating according to established patterns and having longer
operating histories. The Fund may invest in securities in which other
investors have not shown significant interest or confidence, and
which are subject to stock market fluctuations. Larger well-established
companies experiencing a special situation may involve, to a certain
extent, breaks with past experience, which may pose greater risks. There
are also greater risks involved in investing in securities of companies
that are not currently favored by the public but show potential for capital
appreciation.
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks to obtain reasonable income
from a portfolio consisting primarily of income-producing equity
securities. The Fund seeks a yield from dividend and interest income which
exceeds the composite dividend yield on securities comprising the S&P
500. In addition, consistent with the primary objective of obtaining
reasonable income, in managing its portfolio, the Fund will consider the
potential for achieving capital appreciation.
It is the policy of the Fund that at least 65% of its total assets normally
will be invested in income-producing equity securities. For purposes of
this policy, equity securities are defined as common stocks and preferred
stocks.
The balance of the Fund will tend to be invested in debt obligations, a
high percentage of which are expected to be convertible into common stocks.
As a non-fundamental policy, the Fund may invest in lower-quality
high-yielding debt securities (commonly referred to as "junk bonds"),
although it currently intends to limit its investments in these securities
to 35% of its assets. However, the Fund does not intend to invest in
securities of companies without proven earnings and/or credit histories.
The Fund may purchase and sell stock index futures and options to manage
cash flow and to attempt to remain fully invested instead of, or in
addition to, buying and selling stocks. Additionally, the Fund may
purchase or engage in foreign investments, indexed securities,
illiquid investments, loans and other direct debt instruments, repurchase
agreements and securities loans, restricted securities, short sales, swap
agreements, and warrants.
Because of the income considerations, investors should not expect capital
appreciation comparable to the appreciation which could be achieved by
funds whose primary objective is capital appreciation. While the investment
portfolio will not mirror the stocks in the S&P 500 (such a fund is
commonly referred to as an index fund), the yield on the overall investment
portfolio generally will increase or decrease from year to year in
accordance with market conditions and in relation to the changes in yields
of the stocks included in the S&P 500.
The Fund may make temporary investments in securities such as
investment-grade bonds or short-term notes for defensive purposes .
FIDELITY ADVISOR INCOME & GROWTH FUND seeks both income and growth
of capital by investing in a diversified portfolio of equity and
fixed-income securities with income, growth of income and capital
appreciation potential.
The Fund will invest in equity securities, convertible securities,
preferred and common stocks paying any combination of dividends and capital
gains and in fixed-income securities. The Fund also may buy securities that
are not providing dividends but offer prospects for growth of
capital or future income. The proportion of the Fund's assets invested in
each type of security will vary from time to time in accordance with FMR's
assessment of economic conditions.
In selecting securities for the Fund, FMR will consider such factors as the
company's financial strength, its outlook for increased dividend or
interest payments (defined herein as "growth of income") and capital gains.
In addition, industry factors and overall economic conditions may be
considered. The Fund may invest in equity securities of some smaller, more
rapidly growing companies. Investing in smaller, less well-known companies,
especially those that have a narrow product line or are thinly traded,
often involves greater risk than investing in established companies with
proven track records. In selecting fixed-income securities for the Fund
( such as bonds, notes, mortgage securities, convertible securities,
and short-term obligations such as bankers' acceptances, certificates of
deposit, and commercial paper), FMR will consider several factors,
including maturity, quality and expected yield.
The Fund may invest in lower-quality high-yielding debt securities
(commonly referred to as "junk bonds"). The Fund currently intends to limit
its investments in these securities to 35% of its assets. The Fund also may
invest in foreign investments, currency exchange
contracts , indexed securities, illiquid instruments, loans and other
direct debt instruments, options and futures contracts, repurchase
agreements and securities loans, restricted securities, swap agreements,
warrants, and zero coupon bonds. The Fund may, for temporary defensive
purposes, invest without limit in short-term securities.
FIXED-INCOME FUNDS . Fixed -I ncome Funds invest primarily in
debt securities (e.g., bonds, debentures, notes and similar obligations).
The share value of fixed-income funds ten d to move inversely
with changes in prevailing interest rates. Shorter-term bonds are less
sensitive to interest rate changes, but longer-term bonds generally offer
higher yields. It also is important to note that high-yielding,
lower - quality bonds involve greater risks, because there is a
greater possibility of a financial reversal affecting the issuer's ability
to pay interest and principal on time. Share value and yield are not
guaranteed and will fluctuate based on credit quality and changes in
interest rates.
FIDELITY ADVISOR HIGH YIELD FUND seeks a combination of a high level of
income and the potential for capital gains by investing in a diversified
portfolio consisting primarily of high-yielding, fixed-income and zero
coupon securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
As a non-fundamental policy, t he Fund normally will invest at least
65% of its assets in high-yielding, income producing debt securities and
preferred stocks, including convertible and zero coupon securities. The
Fund may invest all or a substantial portion of its assets in lower-quality
debt securities (commonly referred to as "junk bonds"). Please refer to
"The Risks of Lower-Quality Debt Securities". In addition, the Fund also
may invest in government securities, securities of any state or any
of their subdivisions, agencies or instrumentalities , and
securities of foreign issuers, including securities of foreign governments.
The Fund may invest up to 35% of its assets in equity securities, including
common stocks, warrants and rights.
Debt instruments include securities such as bonds, notes, convertible
bonds, and mortgage-backed or asset-backed securities; commercial paper and
other money market instruments, including repurchase agreements; and loans,
trade claims, and similar instruments representing indebtedness of a
corporate borrower. These instruments may provide for interest payments in
cash or in kind, may pay no interest, or may be in default, and may have
warrants attached or otherwise include rights to purchase common stocks.
The Fund may purchase debt instruments in public offerings or through
private placements. The Fund has no specific limitations on the maturity or
credit ratings of the debt instruments in which it invests.
The Fund may enter into forward foreign currency contracts and may purchase
or engage in foreign investments, indexed securities, illiquid
investments, loans and other direct debt instruments, options and futures
contracts, repurchase agreements and securities loans, restricted
securities, reverse repurchase agreements, and swap agreements.
RISKS OF LOWER-QUALITY TAXABLE DEBT SECURITIES
Lower-quality debt securities usually are defined as securities rated Ba or
lower by Moody's or BB or lower by S&P. Lower-rated debt securities are
considered speculative and involve greater risk of loss than higher-rated
debt securities , and are more sensitive to changes in the issuer's
capacity to pay. This is an aggressive approach to income investing.
The 1980s saw a dramatic increase in the use of lower-rated debt securities
to finance highly leveraged corporate acquisitions and restructurings. Past
experience may not provide an accurate indication of the future performance
of lower-rated debt securities, especially during periods of economic
recession. In fact, from 1989 to 1991, the percentage of lower-rated debt
securities that defaulted rose significantly above prior levels, although
the default rate decreased in 1992.
Lower-rated debt securities may be thinly traded, which can adversely
affect the prices at which these securities can be sold and can
result in high transaction costs. If market quotations are not
available, lower-rated debt securities will be valued in accordance
with standards set by the Board of Trustees, including the use of outside
pricing services. Judgment plays a greater role in valuing lower-rated debt
securities than securities for which more extensive quotations and last
sale information are available. Adverse publicity and changing investor
perceptions may affect the ability of outside pricing services to value
lower-rated debt securities, and the Fund's ability to dispose of
these securities.
The market prices of lower-rated debt securities may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates. During an economic downturn or a prolonged period of
rising interest rates, the ability of issuers of lower-rated debt to
service their payment obligations, meet projected goals, or obtain
additional financing may be impaired.
The Fund may choose, at its own expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the interest of Fund shareholders.
The considerations discussed above for lower-rated debt securities also
apply to lower - quality, unrated debt instruments of all
types, including loans and other direct indebtedness of businesses with
poor credit standing. Unrated debt instruments are not necessarily of
lower - quality than rated securities, but they may not be attractive
to as many buyers. The Fund relies more on FMR's credit analysis when
investing in debt instruments that are unrated. Please refer to
page s 31 and 32 for a discussion of Moody's and S&P
ratings.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate
of income through investment in high- and upper-medium grade fixed-income
obligations, as follows:
(I) Corporate obligations which are rated AAA, AA, or A by S&P, or Aaa,
Aa, or A by Moody's;
(II) Obligations issued or guaranteed as to interest and principal by the
government of the U.S. , or any agency or instrumentality thereof;
(III) Obligations (including certificates of deposit and bankers'
acceptances) of U.S. banks which at the date of investment have capital
gains, surplus, and undivided profits (as of the date of their most
recently published annual financial statements) in excess of $100,000,000;
(IV) Commercial paper which at the date of investment is rated A-1 or A-2
by S&P or Prime-1 or Prime-2 by Moody's or, if not rated, is issued by
companies which at the date of investment have an outstanding debt issue
rated AAA, AA, or A by S&P or Aaa, Aa, or A by Moody's; and
(V) Such other fixed-income instruments as the Board of Trustees, in its
judgment, deems to be of comparable quality to those enumerated above.
Instruments in which the Fund may invest include asset-backed
securities , collateralized mortgage obligations, convertible
securities , loans and other direct debt instruments,
mortgage - backed securities , and zero coupon securities.
FMR's standards for determining high- and upper-medium grades are
essentially the same as those described by S&P and Moody's as
characteristic of their ratings of A and above. Such instruments have
strong protection of principal and interest payments. In addition to
reliance on S&P's or Moody's ratings, FMR also performs its own credit
analysis. The Fund also may invest in unrated instruments, and may at times
purchase instruments rated below A if FMR judges them to be of comparable
quality to those rated A or better. Currently, the Fund does not intend to
invest in debt obligations rated below BBB. Investment-grade bonds are
generally of medium to high quality. Those rated in the lower end of the
category (Baa/BBB), however, may possess speculative characteristics and
may be more sensitive to economic changes and changes in the financial
condition of issues.
In addition, the Fund may seek capital appreciation when consistent with
its primary objective. In seeking capital appreciation, FMR will select
securities for the Fund based on its judgment as to economic and market
conditions and the prospects for interest rate changes.
The Fund may purchase or engage in foreign investments, indexed
securities, illiquid investments, loans and other direct debt instruments,
options and futures contracts, repurchase agreements and securities loans,
restricted securities, and swap agreements. The Fund also may engage in
reverse repurchase agreements for temporary or emergency purposes and not
for investment purposes.
The Fund will maintain a dollar-weighted average maturity of 10 years or
less . As of November 30, 1993 , its average maturity was
8.12 years. Based on FMR's assessment of interest rate trends,
generally, the average maturity will be shortened when interest rates are
expected to rise and lengthened up to 10 years when interest rates are
expected to decline.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND seeks a high level of current
income by investing primarily in obligations issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities. Under normal
circumstances, as a non-fundamental policy at least 65% of the
Fund's assets will be invested in government securities.
The Fund invests primarily in obligations issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities (U.S. government
securities), including U.S. Treasury bonds, notes and bills, Government
National Mortgage Association mortgage-backed pass-through certificates
(Ginnie Maes) and mortgage-backed securities issued by the Federal National
Mortgage Association (Fannie Maes) or the Federal Home Loan Mortgage
Corporation (Freddie Macs). The U.S. government securities the Fund invests
in may or may not be fully backed by the U.S. government. The Fund may
enter into repurchase agreements involving any securities in which it may
invest and also may enter into reverse repurchase agreements. The Fund
considers "government securities" to include U.S. government securities
subject to repurchase agreements. The Fund is not restricted as to the
percentage of its assets that may be invested in any one type of U.S.
government security. The Fund may for temporary defensive purposes invest
without limit in U.S. government securities having a maturity of 365 days
or less. The Fund may invest in delayed - delivery transactions,
options and futures contracts, indexed securities, swap agreements and zero
coupon bonds. In seeking current income, the Fund also may consider the
potential for capital gain.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND seeks to obtain a high level of
current income, consistent with preservation of capital, by investing
primarily in a broad range of investment-grade fixed-income securities.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in fixed - income securities. Where consistent with its
investment objective, the Fund will take advantage of opportunities to
realize capital appreciation.
The Fund normally will invest primarily in investment-grade fixed-income
securities of all types. Investment-grade fixed-income securities are
considered to be securities rated Baa or higher by Moody's or BBB or higher
by S&P, and unrated securities that are of equivalent quality in FMR's
opinion. The Fund may invest in lower-quality, high-yielding securities
(commonly referred to as "junk bonds"), as long as they are consistent with
the Fund's objective of obtaining a high level of current income consistent
with the preservation of capital. The Fund currently intends to limit its
investments in these securities to 35% of its assets. As a non-fundamental
policy, the Fund does not currently expect to invest in securities rated
lower than B by S&P or Moody's.
Fixed-income securities may include, in any proportion, bonds, notes, U.S.
government and government agency obligations, mortgage-related and
asset-backed securities, zero coupon securities, foreign securities,
indexed securities and convertible securities, and short-term obligations
such as certificates of deposit, repurchase agreements, bankers'
acceptances and commercial paper. The Fund also may purchase or engage
in illiquid investments, loans and other direct debt instruments,
options and futures contracts, restricted securities, and swap agreements.
In making investment decisions for the Fund, FMR will consider many factors
other than current yield, including the preservation of capital, the
potential for realizing capital appreciation, maturity and yield to
maturity. FMR will adjust the Fund's investments in particular securities
or in types of debt securities in response to its appraisal of changing
economic conditions and trends. FMR may sell securities in anticipation of
a market decline or purchase securities in anticipation of a market rise.
In addition, FMR may sell one security and purchase another security of
comparable quality and maturity to take advantage of what FMR believes to
be short-term differentials in market values or yield disparities. The Fund
may invest a portion of its assets in securities issued by foreign
companies and foreign governments, which may be less liquid or more
volatile than domestic investments. The Fund's investments, other than
those backed by the U.S. government, are subject to the ability of the
issuer to make payment at maturity.
The Fund will maintain a dollar-weighted maturity of three years or less.
The Fund may hold individual securities with remaining maturities of more
than three years, as long as the Fund's average maturity is three years or
less.
MUNICIPAL/TAX-EXEMPT FUNDS . Tax-exempt funds invest primarily in
municipal securities which are issued by state and local governments and
their agencies to raise money for various public purposes, including
general purpose financing for state and local governments as well as
financing for specific projects or public facilities. Municipal securities
may be backed by the full taxing power of a municipality or by the revenues
from a specific project or the credit of a private organization. Some
municipal securities are insured by private insurance companies, while
others may be supported by letters of credit furnished by domestic or
foreign banks. FMR monitors the financial condition of parties (including
insurance companies, banks, and corporations) whose creditworthiness is
relied upon in determining the credit quality of securities the Funds may
purchase.
Yields on municipal bonds, and therefore the yield of High Income Municipal
and Limited Term Tax-Exempt , depend on factors such as general
market conditions, interest rates, the size of a particular
offering, the maturities of the obligations and the quality of the issues.
The ability of the Funds to achieve their investment objectives is also
dependent on the continuing ability of the issuers of the municipal
obligations in which the Funds invest to meet their obligations for the
payment of interest and principal when due.
Bonds generally are considered to be interest rate sensitive, which means
that their values move inversely to interest rates. Long-term municipals
generally are more exposed to market fluctuations resulting from changes in
interest rates than are short-term municipals.
While the market for municipals is considered to be substantial, adverse
publicity and changing investor perceptions may affect the ability of
outside pricing services used by a Fund to value its portfolio securities
and the Fund's ability to dispose of lower-rated bonds. The outside pricing
services are consistently monitored to assure that securities are valued by
a method that the Board believes accurately reflects fair value. The impact
of changing investor perceptions may be especially pronounced in markets
where municipal securities are thinly traded.
The Funds' investments in municipal securities may include fixed, variable,
or floating rate general obligation and revenue bonds (including municipal
lease obligations and resource recovery bonds); zero coupon and
asset-backed securities; inverse floaters; tax, revenue, or bond
anticipation notes; and tax-exempt commercial paper. The Funds may buy or
sell securities on a when-issued or delayed-delivery basis (including
refunding contracts), and may purchase restricted securities. The Funds may
also buy and sell options and futures contracts.
Municipal obligations, including industrial development revenue
bonds, are issued by or on behalf of states, territories, and possessions
of the U.S. and the District of Columbia and their political
subdivisions, agencies, and instrumentalities.
Each Fund may from time to time invest more than 25% of its
total assets in securities whose revenue sources are
from similar types of projects (e.g., education, electric utilities,
health care, housing, transportation, or water, sewer and gas utilities) or
whose issuers share the same geographic location. As a result, a Fund may
be more susceptible to a single economic, political or regulatory
development than would a portfolio of bonds with a greater variety of
issuers. These developments include proposed legislation or pending court
decisions affecting the financing of such projects and market factors
affecting the demand for their services or products.
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND seeks to provide a high current
yield by investing in a diversified portfolio of municipal obligations. It
is the policy of the Fund that under normal conditions at least 80% of its
net assets will be invested in municipal obligations whose interest is not
included in gross income for purposes of calculating federal income tax.
Interest from all or a portion of the Fund's municipal bonds may be a "tax
preference" item for some shareholders in determining their federal
alternative minimum tax. Stability and growth of principal also will be
considered when choosing securities.
Interest on some "private activity" municipal obligations is subject to the
federal alternative minimum tax AMT bonds. AMT bonds are municipal
obligations that benefit a private or industrial user or finance a
private facility. The Fund reserves the right to invest up to 100% of its
assets in AMT bonds.
The Fund may invest in municipal obligations which are rated in the medium
and lower rating categories of NRSROs (such as obligations rated Caa
by Moody's or CCC by S&P) or which are unrated, but judged by FMR,
pursuant to procedures established by the Board of Trustees, to meet the
quality standards of the Fund. Municipal obligations which are in the
medium and lower rating categories or which are unrated generally offer a
higher current yield than those offered by municipal obligations which are
in the higher rating categories. Since available yields and the yield
differential between higher and lower-rated obligations vary over time, no
specific level of income or yield differential can be assured. Lower-rated
bonds (those rated Ba/BB or lower) involve greater risk, including risk of
default.
The Fund also may purchase tax-exempt instruments that become available in
the future as long as FMR believes that their quality is equivalent to
those rated Caa or CCC or better by Moody's or S&P, respectively.
The Fund's yield depends in part on the quality of its investments.
Obligations rated investment grade or better (Baa/BBB or higher) generally
are of medium to high quality. These securities typically have moderate to
poor protection of principal and interest payments and have speculative
characteristics.
Unrated obligations may be either investment grade or lower quality, but
usually are not attractive to as many buyers. The Fund relies heavily on
FMR's credit analysis when purchasing unrated or lower-rated bonds.
While lower-rated bonds traditionally have been less sensitive to interest
rate changes than higher-rated investments, as with all bonds, the prices
of lower-rated bonds will be affected by interest rate changes. Economic
changes may affect lower-rated securities differently than other
securities. Lower-rated municipal bonds may be more sensitive to adverse
economic changes (including recession) in specific regions or localities or
among specific types of issuers. During an economic downturn or a prolonged
period of rising interest rates, issuers of lower-rated debt may have
problems servicing their debt, meeting projected revenue goals, or
obtaining additional financing. Periods of economic uncertainty and
interest rate changes may cause market price volatility for lower-rated
bonds and corresponding volatility in the Fund's share price.
During periods when, in FMR's opinion, a temporary defensive posture in the
market is appropriate, the Fund may invest without limitation in cash or in
obligations whose interest payments may be federally taxable. Taxable
obligations include, but are not limited to, certificates of deposit,
commercial paper, obligations issued by the U.S. government or any of its
agencies or instrumentalities, and repurchase agreements.
The Fund may purchase long-term municipals with maturities of 20 years or
more, which generally produce higher yields than short-term
municipals. The Fund also may purchase short-term municipal obligations in
order to provide for short-term capital needs. The average maturity of the
Fund is currently expected to be greater than 20 years. Since the Fund's
objective is to provide a high current yield, the Fund will purchase
municipals with an emphasis on income. FMR may vary the Fund's average
maturity depending on anticipated market conditions. Generally, the average
maturity will be shortened when interest rates are expected to rise and
lengthened when rates are expected to decline.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND seeks the highest level of
income exempt from federal income taxes that can be obtained consistent
with the preservation of capital, from a diversified portfolio of high
quality or upper-medium quality municipal obligations. Under normal
conditions, at least 80% of the Fund's annual income will be exempt from
federal income taxes and at least 80% of the Fund's net assets will be
invested in obligations having remaining maturities of 15 years or less.
The Fund will maintain a dollar-weighted average maturity of 10 years or
less.
The Fund will invest in municipal obligations which, in the judgment of
FMR, are high quality or at least upper-medium quality. The Fund's
standards for high quality and upper-medium quality obligations are
essentially the same as those described by Moody's in rating municipal
obligations within its three highest ratings of Aaa, Aa, and A and as those
described by S&P in rating such obligations within its three highest
ratings of AAA, AA and A. As a non-fundamental policy, the Fund will not
purchase a security rated by Moody's or S&P unless it has received at
least an A rating from either rating service.
The Fund may invest up to 20% of its total assets in municipal obligations
which are unrated by Moody's or S&P if, in the judgment of FMR, such
municipal obligations meet the standards of quality as set forth above.
Unrated bonds are not necessarily of lower quality and may have higher
yields than rated bonds, but the market for rated bonds is usually broader.
The Fund may engage in delayed delivery transactions and may purchase
restricted securities. The Fund also may purchase and sell futures
contracts and may purchase and write put and call options. The Fund may use
futures contracts and options to hedge a portion of its investments against
changes in value, or as an alternative to purchasing or selling actual
securities.
The Fund may invest up to 25% of its total assets in a single issuer's
securities. The Fund may invest any portion of its assets in industrial
revenue bonds (IRBs) backed by private issuers, and may invest up to 25% of
its total assets in IRBs related to a single industry.
The Fund currently does not intend to invest in taxable obligations;
however, consistent with that portion of its investment objective concerned
with the preservation of capital, from time to time the Fund may invest a
portion (normally not to exceed 20%) of its net assets on a temporary basis
in fixed-income obligations whose interest is subject to federal income
tax. These taxable obligations may include repurchase agreements. The
Fund does not currently intend to invest in AMT bonds.
INVESTMENT LIMITATIONS
Each Fund has adopted the following investment limitations designed to
reduce investment risk. The policies and limitations discussed below, and
in the Appendix beginning on page , are considered at the time of purchase.
With the exception of each Fund's borrowing policy, the sale of portfolio
securities is not required in the event of a subsequent change in
circumstances.
DIVERSIFICATION: These limitations do not apply to U.S. government
securities and are fundamental.
(bullet) Equity Portfolio Growth and Strategic Opportunities each may not
purchase a security if, as a result, more than 5% of its total assets would
be invested in the securities of any issuer;
(bullet) With respect to 75% of its total assets, each other
Fund may not purchase a security if, as a result, more than 5% of its total
assets would be invested in the securities of any issuer.
(bullet) Each Fund may not purchase a security if, as a result, it
would hold more than 10% of the outstanding voting securities of any issuer
(except that Overseas, Growth Opportunities, Equity Portfolio Income,
Income & Growth, High Yield, Government Investment, and Short
Fixed-Income each may invest up to 25% of its total assets without
regard to this limitation).
(bullet) Limited Term Tax-Exempt may not purchase the securities of any
issuer if, as a result, more than 25% of its total assets would be invested
in industrial development bonds whose issuers are in any one industry.
(bullet) E ach other Fund may not purchase the securities of
any issuer if, as a result, more than 25% of the Fund's total assets would
be invested in the securities of issuers having their principal business
activities in the same industry.
BORROWING: The following limitations are fundamental.
(bullet) Each fund may borrow money for temporary or emergency
purposes, in an amount not exceeding 33 1/3% of the value of its total
assets;
(bullet) Strategic Opportunities , Limited Term Bond, Income &
Growth and Limited Term Tax-Exempt may not purchase any security while
borrowings representing more than 5% of its total assets are outstanding.
(bullet) Growth Opportunities, Income & Growth, Government
Investment Short Fixed Income and High Income Municipal may not
purchase any security while borrowings representing more than 5% of its net
assets are outstanding.
The following limitations are non-fundamental.
(bullet) Growth Opportunities and Income & Growth , may
not purchase any security while borrowings representing more than 5% of its
net assets are outstanding.
(bullet) Each other fund may not purchase any security while
borrowings representing more than 5% of its total assets are outstanding.
(bullet) Each Fund may borrow money from banks or from other
funds advised by FMR, or by engaging in reverse repurchase agreements.
LENDING: Percentage limitations are fundamental.
(bullet) High Income Municipal and Limited Term Tax-Exempt do not
currently intend to engage in repurchase agreements or make loans (but this
limitation does not apply to purchases of debt securities).
(bullet) Each f und (a) may lend securities to a broker-dealer or
institution when the loan is fully collateralized; and (b) may lend money
to a mutual fund advised by FMR or an affiliate. Each Fund will limit loans
in the aggregate to 33 1/3% of its total assets.
Each Fund has received permission from the SEC to lend money to and
borrow money from other funds advised by FMR or its affiliates, High Income
Municipal and Limited Term Tax-Exempt will participate only as
borrowers . If a Fund borrows money, its share price may be subject to
greater fluctuation until the borrowing is paid off. To this extent,
purchasing securities when borrowings are outstanding may involve an
element of leverage.
As a non-fundamental policy, each Fund may not purchase a security, if
as a result, more than 15% (Overseas and High Yield) or 10% (all others) of
its assets would be invested in illiquid investments.
FEES
20.MANAGEMENT AND OTHER SERVICES. For managing its investments and business
affairs, each Fund pays a monthly fee to FMR.
Each Fund (with the exception of Equity Portfolio Income, see below) pays a
monthly fee to FMR based on a basic fee rate, which is the sum of two
components:
1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by FMR. This rate for Equity Funds cannot rise above
.52% and it drops (to as low as a marginal rate of .31%*) as total assets
in all of these funds rise. The effective E quity F und group
fee rate for September 1993, October 1993 and November 1993 was
.3262 %, .3254 % and .3250 %, respectively. The group fee
rate for Fixed-Income Funds cannot rise above .37% and it drops (to as low
as a marginal rate of .15%*) as total assets in all of these funds rise.
The effective F ixed- I ncome group fee rate for October 1993
and November 1993 was .1631 % and .1627 %, respectively.
2. An individual fund fee rate, which varies for each Fund.
* FMR VOLUNTARILY AGREED TO ADOPT REVISED GROUP FEE RATE SCHEDULES WHICH
PROVIDE FOR A MARGINAL RATE AS LOW AS .285% (EQUITY FUNDS) AND .1325%
(FIXED-INCOME FUNDS) WHEN AVERAGE GROUP NET ASSETS EXCEED $336 BILLION. A
NEW MANAGEMENT CONTRACT WITH A REVISED GROUP FEE RATE SCHEDULE WILL BE
PRESENTED FOR APPROVAL AT EACH FUND'S NEXT SHAREHOLDER MEETING.
One-twelfth of the annual management fee rate is applied to each Fund's net
assets averaged over the most recent month, giving a dollar amount which is
the management fee for that month.
Equity Portfolio Income pays FMR a monthly management fee at an annual rate
of .50% of its average net assets.
The following are the individual fund fee rates and total management
fee s for each Fund 's most recent fiscal year end.
TOTAL
MANAGEMENT FEE
INDIVIDUAL (AS A PERCENT OF AVERAGE
FUND FEE RATE NET ASSETS)
(AS A PERCENTAGE OF BEFORE REIMBURSEMENTS,
AVERAGE NET ASSETS) IF ANY
EQUITY FUNDS:
Overseas 0.45% 0. 77 %(dagger)
Equity Portfolio Growth 0.33% 0. 66 %
Growth Opportunities 0.30% 0. 68 %
Global Resources 0.45% 0. 77 % (dagger)
Strategic Opportunities 0.30% 0. 54 %
Equity Portfolio Income .NA 0. 50 %
Income & Growth 0.20% 0. 53 %
FIXED - INCOME FUNDS:
High Yield 0.45% 0. 51 %
Limited Term Bond 0.25% 0. 42 %
Government Investment 0.30% 0. 46 %
Short Fixed-Income 0.30% 0. 47 %
MUNICIPAL/TAX-EXEMPT FUNDS:
High Income Municipal Fund 0.25% 0. 42 %
Limited Term Tax-Exempt Fund 0.25% 0. 42 %
(dagger) TOTAL MANAGEMENT FEES ARE HIGHER THAN THOSE CHARGED BY MOST
MUTUAL FUNDS, BUT NOT NECESSARILY HIGHER THAN THOSE OF A TYPICAL
INTERNATIONAL FUND, DUE TO THE GREATER COMPLEXITY, EXPENSE AND COMMITMENT
OF RESOURCES INVOLVED IN INTERNATIONAL INVESTING.
In addition to the basic fee, the management fee s for Overseas,
Growth Opportunities, and Strategic Opportunities vary based on
performance. The performance adjustment is added to or subtracted from the
basic fee and is calculated monthly. It is based on a comparison of each
Fund's performance to that of an index, over the most recent 36-month
period. The difference is converted into a dollar amount that is added to
or subtracted from the basic fee. This adjustment rewards FMR when the Fund
outperforms the index and reduces FMR's fee when the Fund underperforms the
index. The maximum annualized performance index adjustment rate for each
Fund is +/- .20%. Overseas compares itself to the Morgan Stanley Capital
International Europe, Australia, Far East Index. (Prior to December 1,
1992, Overseas Fund's performance adjustment was based on a comparison with
the Morgan Stanley Capital International Europe Index.) Growth
Opportunities and Strategic Opportunities compare themselves to the S&P
500. Investment performance will be measured separately for each class of
Strategic Opportunities, and the lesser of the two results obtained will be
used in calculating the performance adjustment.
FMR may, from time to time, agree to reimburse a Fund for expenses
(excluding interest, taxes, brokerage commissions, and extraordinary
expenses) above a specified percentage of average net assets. FMR retains
the ability to be repaid by a Fund for these expense reimbursements in the
amount that expenses fall below the limit prior to the end of the fiscal
year. Fee reimbursements by FMR will increase a Fund's yield and total
return, and repayment by a Fund will lower its yield and total
return. FMR has voluntarily agreed to reimburse expenses of
Government Investment and Limited Term Tax-Exempt to the
extent that total expenses exceed 0. 60%, and 0.90%,
respectively , of the Fund's average net assets.
FMR has entered into sub-advisory agreements on behalf of certain Funds.
Sub-advisors provide research and investment advice and research services
with respect to companies based outside the U.S. and FMR may
grant sub-advisers investment management authority as well as the authority
to buy and sell securities if FMR believes it would be beneficial to a
Fund.
Overseas, Equity Portfolio Growth, Strategic Opportunities, Equity
Portfolio Income, and High Yield each have entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
and Fidelity Management & Research (Far East) Inc. (FMR Far East). FMR
U.K. focuses primarily on companies based in Europe, and FMR Far East
focuses primarily on companies based in Asia and the Pacific Basin. Under
the sub-advisory agreements, FMR, and not the Fund, may pay FMR U.K. and
FMR Far East fees equal to 110% and 105%, respectively, of each
sub-advisor's costs incurred in connection with its sub-advisory agreement.
In addition, Overseas has entered into a sub-advisory agreement with
Fidelity International Investment Advisors (FIIA). FIIA, in turn, has
entered into a sub-advisory agreement with its wholly owned subsidiary
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.).
Currently, FIIAL U.K. focuses on companies other than the U.S. ,
including countries in Europe, Asia, and the Pacific Basin. Under the
sub-advisory agreement, FMR pays FIIA 30% of its monthly management fee
with respect to the average market value of investments held by the Fund
for which FIIA has provided FMR with investment advice. FIIA, in turn, pays
FIIAL U.K. a fee equal to 110% of FIIAL U.K.'s costs incurred in connection
with providing investment advice and research services.
The Transfer Agent has delegated certain transfer, dividend paying and
shareholder services to Fidelity Investments Institutional Operations
Company (FIIOC), 82 Devonshire Street, Boston, Massachusetts 02109, an
affiliate of FMR. The Transfer Agent reallows to FIIOC a portion of its fee
for accounts for which FIIOC provides limited services, or its full fee for
accounts that FIIOC maintains on its behalf.
The Fund s pay t ransfer a gent fees based on the type,
size and number of accounts in a Fund and the number of monetary
transactions made by shareholders.
The fees for pricing and bookkeeping services are based on a Fund's average
net assets, but must fall within a range of $45,000 to $750,000 per year.
Fidelity Service Co. (Service), 82 Devonshire Street, Boston,
Massachusetts 02109, an affiliate of FMR, calculates each Fund's daily
share price, and maintains its general accounting records (with the
exception of High Income Municipal and Limited Term Tax-Exempt, see below).
For those Funds which can engage in securities lending, Service also
administers its securities lending program. For the most recent fiscal year
ended, each Fund's fees for pricing and bookkeeping services (including
related out-of-pocket expenses) amounted to: $57,711 (Overseas); $234,813
(Equity Portfolio Growth); $513,950 (Growth Opportunities); $45,425 (Global
Resources); $145,494 (Strategic Opportunities); $113,026 (Equity Portfolio
Income); $410,561 (Income & Growth); $121,204 (High Yield); $81,106
(Limited Term Bond); $46,457 (Government Investment); and $143,813 (Short
Fixed-Income).
For High Income Municipal and Limited Term Tax-Exempt, United Missouri
Bank, N.A. (United Missouri), 1010 Grand Avenue, Kansas City, Missouri
64106, acts as the custodian, transfer agent and pricing and
bookkeeping agent. United Missouri has a sub-arrangement with the Transfer
Agent for transfer agent services and a sub-arrangement with Service for
pricing and bookkeeping services. For the most recent fiscal year ended,
fees paid to Service (including related out-of-pocket expenses) amounted to
$ 157,559 (High Income Municipal) and $ 45,724 (Limited Term
Tax-Exempt). All of the fees are paid to the Transfer Agent and Service by
United Missouri, which is reimbursed by the Funds for such payments.
The Fund s' operating expenses include custodial, legal and
accounting fees, charges to register a Trust or Fund with federal and state
regulatory authorities and other miscellaneous expenses. Each Fund's total
operating expenses after reimbursement, if any, as a percent of average net
assets, including the 12b-1 fee (see below), for the most recent fiscal
year ended w ere as follows: 2.38 % (Overseas); 1.84 %
(Equity Portfolio Growth); 1.64 % (Growth Opportunities);
2.62 % (Global Resources); 1.57 % (Strategic Opportunities);
1.77 % (Equity Portfolio Income); 1.51 % (Income & Growth);
1.11 % (High Yield); 1.23 % (Limited Term Bond); .68 %
(Government Investment); .95 % (Short Fixed-Income); .92 %
(High Income Municipal); .90 % (Limited Term Tax-Exempt). If FMR had
not reimbursed certain Funds, total operating expenses for the most recent
fiscal year ended would have been as follows: 1.32% (Government
Investment) and 1.36 % (Limited Term Tax-Exempt).
21.DISTRIBUTION AND SERVICE PLAN S . The Board of Trustees of each
Trust has adopted a Distribution and Service Plan (the Plan s ) on
behalf of each Fund pursuant to Rule 12b-1 under the 1940 Act (the
Rule) . The Rule provides in substance that a mutual fund may not engage
directly or indirectly in financing any activity that is intended primarily
to result in the sale of shares of a Fund except pursuant to the
plan adopted by the Fund under the Rule. The Board s of Trustees
have adopted the Plan s to allow each Fund and FMR to incur
certain expenses that might be considered to constitute direct or indirect
payment by a Fund of distribution expenses.
Under each Plan, each Fund is authorized to pay Distributors a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of shares of the Fund. The Equity
f unds pay Distributors a distribution fee at an annual rate of each
Fund's average net assets determined as of the close of business on each
day throughout the month. The Board of Trustees for certain Funds has
approved a distribution fee less than the maximum allowed. The fee may be
increased only when, in the opinion of the Trustees, it is in the best
interests of the Fund's shareholders to do so. This distribution fee is
paid by each Fund, not by individual accounts. Overseas, Growth
Opportunities, Global Resources, Strategic Opportunities, and Income &
Growth each pay .65%. Equity Portfolio Growth and Equity Portfolio Income
each pay .65% (the Board can approve a maximum rate of .75%). High Yield,
Limited Term Bond, Government Investment, High Income Municipal and Limited
Term Tax-Exempt each pay .25% (the Board can approve a maximum rate of
.40%). Short Fixed-Income pays .15%.
All or a portion of the distribution fee may be paid by Distributors to
investment professionals as compensation for selling shares of the Funds
and providing ongoing sales support services or for shareholder support
services. The distribution fee is a Fund expense in addition to the
management fee and the Fund's other expenses. Such expenses will reduce the
Fund's net investment income and total return.
The Plan also provides that, through Distributors, FMR may make payments
from its management fee or other resources to investment professionals in
connection with the distribution of Fund shares. Investment professionals
will be compensated with a fee of .25% for if the assets on which
the .25% is paid remain within the Fidelity Advisor Funds for one
uninterrupted year or the investment professional will be required to
refund this fee to Distributors. The fee will not be paid on
purchases through a bank or bank-affiliated broker-dealers that qualify for
a Sales Charge Waiver described on page 12 . FMR may terminate the
program at any time.
Fees paid pursuant to each Fund's Distribution and Service
Plan will be limited by the restrictions imposed by the NASD rule.
The NASD has approved amendments which subject asset based sales charges to
its maximum sales charge rule.
Distributors may pay all or a portion of the applicable sales charge and
distribution and service fee to investment professionals who sell shares of
the Funds. Investment professionals who provide enhanced inquiry, order
entry and sales facilities in connection with transactions in Fund shares
by their clients may receive an administrative fee up to the maximum
applicable sales charge described in "Sales Charge s and Investment
Professional Concessions," on page . In addition, Distributors will,
at its expense, provide promotional incentives such as sales contests and
trips to investment professionals who support the sale of shares of the
Funds. In some instances, these incentives will be offered only to certain
types of investment professionals, such as bank-affiliated or non-bank
affiliated broker-dealers, or to investment professionals whose
representatives provide services in connection with the sale or expected
sale of significant amounts of shares.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been fully defined, in Distributors' opinion it
should not prohibit banks from being paid for shareholder servicing and
recordkeeping. If, because of changes in law or regulation, or because of
new interpretations of existing law, a bank or a Fund were prevented from
continuing these arrangements, it is expected that the Board would make
other arrangements for these services and that shareholders would not
suffer adverse financial consequences. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
VALUATION
A Fund's shares are valued at NAV. NAV is determined for shares of each
Fund by adding the value of all security holdings and other assets of the
Fund, deducting liabilities allocated to each class (when appropriate), and
then dividing the result by the proportional number of shares of the Fund
outstanding in a class.
NAV normally is calculated as of the close of business of the NYSE
(normally 4:00 p.m. Eastern time). The Funds are open for business and NAV
is calculated each day the NYSE is open for trading. Fund securities and
other assets are valued primarily on the basis of market quotations
furnished by pricing services, or if quotations are not available, by a
method that the Board of Trustees believes accurately reflects fair value.
Foreign securities are valued based on quotations from the primary market
in which they are traded and are converted from the local currency into
U.S. dollars using current exchange rates.
PERFORMANCE
Each Fund's performance may be quoted in advertising in terms of total
return. All performance information is historical and is not intended to
indicate future performance. Share price and total return fluctuate in
response to market conditions and other factors, and the value of a Fund's
shares when sold may be worth more or less than their original cost.
Excluding a sales charge from a performance calculation produces a higher
total return figure. TOTAL RETURN is the change in value of an investment
in a Fund over a given period, assuming reinvestment of any dividends and
capital gains. A CUMULATIVE TOTAL RETURN reflects actual performance over
a stated period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical
rate of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the entire
period. Average annual total returns smooth out variations in performance;
they are not the same as actual year-by-year results. Average annual and
cumulative total returns usually will include the effect of paying a Fund's
maximum sales charge.
The Funds also may quote performance in terms of yield. YIELD refers
to the income generated by an investment in a Fund over a given period of
time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds. High
Income Municipal Fund and Limited Term Tax-Exempt Fund may quote a
TAX-EQUIVALENT YIELD, which show s the taxable yield an investor
would have to earn after taxes to equal the Fund's tax -free yield. A
tax-equivalent yield is calculated by dividing a Fund's yield by the result
of one minus a stated federal or state tax rate. Because yield
calculations differ from other accounting methods, the quoted yield may not
equal the income actually paid to shareholders. This difference may be
significant for funds whose investments are denominated in foreign
currencies. In calculating yield, the Funds may from time to time use a
security's coupon rate instead of its yield to maturity in order to reflect
the risk premium on that security. This practice will have the effect of
reducing a F und's yield .
For additional performance information, please contact your investment
professional or Distributors for a free A nnual R eport and
SAI .
PORTFOLIO TRANSACTIONS
FMR uses various brokerage firms to carry out each Fund's equity security
transactions Fixed-income securities are generally traded in the
over-the-counter market through broker-dealers. A broker-dealer is a
securities firm or bank which makes a market for securities by offering to
buy at one price and sell at a slightly higher price. The difference is
known as a spread. Foreign securities are normally traded in foreign
countries since the best available market for foreign securities is often
on foreign markets. In transactions on foreign stock exchanges ,
brokers' commissions are generally fixed and are often higher than in
the U.S. , where commissions are negotiated. Since FMR, directly or
through affiliated sub-advisers, places a large number of transactions,
including those of Fidelity's other funds, the Funds pay lower commissions
than those paid by individual investors, and broker-dealers are willing to
work with the Funds on a more favorable spread.
The Funds have authorized FMR to allocate transactions to some
broker-dealers who help distribute the Fund's shares or the shares of
Fidelity's other funds to the extent permitted by law, and on an agency
basis to Fidelity Brokerage Services, Inc. (FBSI) and Fidelity
Brokerage Services Ltd. (FBSL), affiliates of FMR. FMR will make such
allocations if commissions are comparable to those charged by
non-affiliated qualified broker-dealers for similar services.
FMR may also allocate brokerage transactions to a Fund's custodian, acting
as a broker-dealer, or other broker-dealers, so long as transaction quality
is comparable to those of other broker-dealers, where the
broker-dealer will allocate a portion of the commissions paid toward
payment of a Fund's expenses. These expenses currently include transfer
agent fees and custodian fees.
Higher commissions may be paid to those firms that provide research,
valuation and other services to the extent permitted by law. FMR also is
authorized to allocate brokerage transactions to FBSI in order to secure
from FBSI research services produced by third party, independent entities.
FMR may use this research information in managing each Fund's assets, as
well as assets of other clients.
When consistent with its investment objective, each
F ixed- I ncome f und may engage in short-term trading.
Also, a security may be sold and another of comparable quality
simultaneously purchased to take advantage of what FMR believes to be a
temporary disparity in the normal yield relationship of the two securities.
The frequency of portfolio transactions - the turnover rate - will vary
from year to year depending on market conditions. Each Fund's turnover rate
for the most recent fiscal year ended was: 42% (Overseas); 160%
(Equity Portfolio Growth); 69% (Growth Opportunities); 208% (Global
Resources); 183% (Strategic Opportunities); 120 % (Equity Portfolio
Income); 200% (Income & Growth); 79% (High Yield); 59% (Limited Term
Bond); 333 % (Government Investment); 58% (Short Fixed
Income); 27% (High Income Municipal); and 46% Limited Term Tax-Exempt.
Because a high turnover rate increases transaction costs and may increase
taxable capital gains, FMR carefully weighs the anticipated benefits of
short-term investing against these consequences.
THE TRUSTS AND THE FIDELITY ORGANIZATION
Each Trust is an open-end diversified management investment company. Each
Trust was established by a separate Declaration of Trust as a Massachusetts
business trust on each date as follows: June 24, 1983, Fidelity Advisor
Series I; April 24, 1986, Fidelity Advisor Series II; May 17, 1982,
Fidelity Advisor Series III; May 6, 1983, Fidelity Advisor Series
IV ; April 24, 1986, Fidelity Advisor Series V; June 1, 1983,
Fidelity Advisor Series VI; March 21, 1980, Fidelity Advisor Series VII;
and September 23, 1983, Fidelity Advisor Series VIII. Each Trust has its
own Board of Trustees that supervises Fund activities and reviews the
Fund's contractual arrangements with companies that provide the Funds with
services. As Massachusetts business trusts, the Funds are not required to
hold annual shareholder meetings, although special meetings may be called
for a class of shares, a Fund or a Trust as a whole for purposes such as
electing or removing Trustees, changing fundamental investment policies or
limitations or approving a management contract or plan of distribution. As
a shareholder, you receive one vote for each share and fractional votes for
fractional shares of the Fund you own. For shareholders of Equity
Portfolio Income the number of votes you are entitled to is based on the
dollar value of your investment. Separate votes are taken by each class
of shares, or each Fund if a matter affects just that class of shares or
Fund, respectively. There is a remote possibility that one Fund might
become liable for any misstatement in the Prospectus about another Fund.
Each class of shares is offered by separate prospectus.
Fidelity Advisor Equity Portfolio Growth, Fidelity Advisor Equity Portfolio
Income, Fidelity Advisor Limited Term Bond Fund, and Fidelity Advisor
Limited Term Tax-Exempt Fund are each comp o sed of two classes of
shares, one sold to institutional shareholders ("institutional class") and
the other sold to retail shareholders. Both classes of shares of a Fund
share a common investment objective and investment portfolio. Institutional
class share s are offered continuously at NAV to (i) banks and trust
institutions investing for their own accounts or for accounts of their
trust customers, (ii) plan sponsors meeting the ERISA definition of
fiduciary, (iii) government entities or authorities and (iv) corporations
with at least $100 million in annual revenues. The initial and subsequent
investment minimums for institutional class are $100,000 and $2,500,
respectively. The minimum account balance is $40,000. Shares may be
exchanged for shares of certain other Fidelity funds, including
institutional class shares of other Fidelity Advisor Funds. Transfer and
shareholder servicing is performed by FIIOC. For the fiscal year ended
November 30, 1993, total operating expenses as a percent of average net
assets were: .94% (Fidelity Advisor Institutional Equity Portfolio
Growth); .79% (Fidelity Advisor Institutional Equity Portfolio Income) ;
1.23 % (Fidelity Advisor Institutional Limited Term Bond); and
.64 %, after reimbursement (Fidelity Advisor Institutional Limited
Term Tax-Exempt). Because it has lower total expenses, institutional class
will generally have a higher return than the class offered by this
prospectus. The Distribution and Service Plan of institutional class does
not provide for payment of a separate distribution fee; rather the Plan
recognizes that FMR may use its management fee and other resources to pay
expenses for distribution - related activities and may make payments
to investment professionals that provide shareholder support services or
sell shares. Investment professionals currently do not receive compensation
in connection with distribution and/or shareholder servicing of shares
of institutional class . (Investment professionals receive compensation
for selling, or providing shareholder support services to the holders of
the class offered by this P rospectus , see page 11 )
Fidelity Advisor Series VIII is also composed of two classes of
shares, Fidelity Strategic Opportunities Fund and Fidelity Advisor
Strategic Opportunities Fund. Both classes of the Fund share a
common investment objective and investment portfolio. Fidelity Advisor
Strategic Opportunities Fund shares are offered by this Prospectus to
investors who engage an investment professional for investment advice.
Fidelity Strategic Opportunities Fund is available only to existing
shareholders of that class.
Fidelity Investments is one of the largest investment management
organizations in the U.S. and has its principal business address at 82
Devonshire Street, Boston, MA 02109. It includes a number of different
companies that provide a variety of financial services and products. The
Trusts employ various Fidelity companies to perform certain activities
required to operate the Funds.
Fidelity Management & Research Company is the original Fidelity company
founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 1993 , FMR advised
funds having approximately 15 million shareholder accounts with a
total value of more than $ 225 billion. Fidelity Distributors Corp.
distributes shares for the Fidelity funds.
FMR Corp. is the parent company for the Fidelity companies. Through
ownership of voting common stock, Edward C. Johnson 3d (President and a
Trustee of the T rust), Johnson family members, and various trusts
for the benefit of Johnson family members form a controlling group with
respect to FMR Corp.
Peter J. Allegrini is manager of Advisor High Income
Municipal, which he has managed since February 1992 . Mr. Allegrini
also manages Spartan Connecticut Municipal High Yield , Michigan
Tax-Free High Yield and Ohio Tax-Free High Yield. Mr. Allegrini joined
Fidelity in 1982.
Bettina E. Doulton has been manager of Advisor Equity Portfolio
Income since August 1993, and VIP Equity-Income since July 1993.
Previously, she managed Select Automotive Portfolio and assisted on
Equity-Income Portfolio and Magellan (Registered trademark) . Ms.
Doulton also served as an analyst following the domestic and European
automotive and tire manufacturing industry as well as the gaming and
lodging industry. She joined Fidelity in 1985.
Margaret L. Eagle is vice president and manager of Advisor High
Yield, which she has managed since it began in January 1987. Ms. Eagle also
manages several pension fund accounts. Previously, she managed Spartan High
Income, and High Income (now Capital & Income). She also managed the
bond portion of Puritan (Registered trademark) . Ms. Eagle joined
Fidelity in 1980.
Daniel R. Frank is vice president and manager of Advisor Strategic
Opportunities which he has managed since December 1983. Previously,
he was an assistant to Peter Lynch on Magellan. Mr. Frank joined Fidelity
in 1979.
Michael S. Gray is vice president and manager of Advisor
Limited Term Bond, which he has managed since August 1987. Mr. Gray also
manages Investment Grade Bond, Spartan Investment Grade Bond, and
Intermediate Bond. Mr. Gray joined Fidelity in 1982.
Robert E. Haber is vice president and manager of Advisor
Income & Growth, which he has managed since January 1987. Mr. Haber
also manages Balanced and co-manages Global Balanced. Previously, he
managed Convertible Securities. Mr. Haber joined Fidelity in 1985.
John (Jack) F. Haley Jr. is vice president and manager of
Advisor Limited Term Tax-Exempt, which he has managed since 1985. Mr. Haley
also manages California Tax-Free Insured, California Tax-Free High Yield,
and Spartan California Municipal High Yield. Mr . Haley joined
Fidelity in 1981.
John R. Hickling is manager of Advisor Overseas, which he has managed since
February 1993. Mr. Hickling also manages Japan, Overseas, VIP: Overseas
and International Growth & Income. Previously he managed Emerging
Markets, Europe and Pacific Basin. Mr. Hickling joined Fidelity in
1982.
Curtis Hollingsworth is vice president and manager of Advisor
Government Investment, which he has managed since January 1992. Mr.
Hollingsworth also manages Short-Intermediate Government, Government
Securities, Institutional Short-Intermediate Government, Spartan Limited
Maturity Government Bond, Spartan Long-Term Government Bond and Spartan
Short-Intermediate Government. He joined Fidelity in 1983.
Malcolm W. MacNaught is manager and vice president of Advisor Global
Resources, which he has managed since November 1988. Mr. MacNaught also
manages Select Pre c ious Metals and Minerals and Select American
Gold. Mr. MacNaught joined Fidelity in 1968.
Robert E. Stansky is manager and vice president of Advisor Equity Portfolio
Growth, which he has managed since April 1987. Mr. Stansky also manages
Growth Company. Previously, he managed Emerging Growth and Select Defense
and Aerospace. Mr. Stansky joined Fidelity in 1983.
Donald G. Taylor is manager and vice president of Advisor Short
Fixed - Income, which he has managed since September 1989. Mr.
Taylor also manages Short-Term Bond, Spartan Short-Term Bond, and VIP II:
Investment Grade Bond. In addition, he manages Income Plus for Fidelity
International and serves as an assistant on Asset Manager: Income.
Previously, he managed Corporate Trust, Qualified Dividend, VIP: Zero
Coupon Bond and Utilities Income. Mr. Taylor joined Fidelity in 1986.
George A. Vanderheiden is manager and vice president of Advisor Growth
Opportunities, which he has managed since November 1987. Mr. Vanderheiden
also manages Destiny I and Destiny II. He is a managing director of
FMR Corp. , Leader of the Growth Group , and joined
Fidelity in 1971.
APPENDIX
The following paragraphs provide a brief description of securities in which
the Funds may invest and transactions they may make. Consistent with its
investment objective and policies, each Fund may invest in or engage
in one or more of the following securities transactions . However,
the Funds are not limited by this discussion and may purchase or engage in
one or more of the following securities or transactions. However, the Funds
are not limited by this discussion and may purchase other types of
securities and enter into other types of transactions if they are
consistent with a Fund's investment objective and policies.
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and sold on
a when-issued or delayed-delivery basis, with payment and delivery taking
place at a future date. The market value of securities purchased in this
way may change before the delivery date which could increase fluctuations
in a Fund's yield. Ordinarily, a Fund will not earn interest on
securities purchased until they are delivered.
FOREIGN INVESTMENTS involve additional risks. Foreign securities and
securities denominated in or indexed to foreign currencies may be affected
by the strength of foreign currencies relative to the U.S. dollar, or by
political or economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information
about their operations. In addition, foreign markets may be less liquid or
more volatile than U.S. markets, and may offer less protection to investors
such as a Fund. These risks are typically greater for investments in
less developed countries whose governments and financial markets may be
more susceptible to adverse political and economic developments. FMR
considers these factors in making investments for the Funds.
A Fund may enter into currency exchange contracts (agreements
to exchange one currency for another at a future date) to manage currency
risks and to facilitate transactions in foreign securities. Although
currency forward contracts can be used to protect the Fund from adverse
exchange rate changes, they involve a risk of loss if FMR fails to predict
foreign currency values correctly.
ILLIQUID INVESTMENTS. Under the supervision of the Board of Trustees, FMR
determines the liquidity of each Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for a Fund to sell them promptly at an acceptable price.
INDEXED SECURITIES. I ndexed securitie s value s
are linked to currencies, interest rates, commodities, indices, or
other financial indicators. Most indexed securities are short to
intermediate term fixed-income securities whose values at maturity or
interest rates rise or fall according to the change in one or more
specified underlying instruments. Indexed securities may be positively or
negatively indexed (i.e., their value may increase or decrease if the
underlying instrument appreciates), and may have return characteristics
similar to direct investments in the underlying instrument or to one or
more options on the underlying instrument. Indexed securities may be more
volatile than the underlying instrument itself.
INTERFUND BORROWING PROGRAM. Interfund loans and borrowings normally
will extend overnight, but can have a maximum duration of seven days. A
Fund will lend through the program only when the returns are
higher than those available at the same time from other short-term
instruments (such as repurchase agreements), and will borrow through the
program only when the costs are equal to or lower than the cost of bank
loans. Each Fund will not lend more than 5% ( E quity
F unds) or 7.5% ( F ixed- I ncome F unds) of its
assets to other funds, and will not borrow through the program if, after
doing so, total outstanding borrowings would exceed 15% of total assets.
Loans may be called on one day's notice, and a Fund may have to borrow from
a bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENT S are interests in amounts
owed by a corporate, governmental or other borrower to another party. They
may represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the risk
of loss in case of default or insolvency of the borrower and may
offer less legal protection to a Fund in the event of fraud or
misrepresentation. In addition, loan participations involve a risk of
insolvency of the lending bank or other financial intermediary. Direct debt
instruments may also include standby financing commitments that obligate
a Fund to supply additional cash to the borrower on demand.
LOWER-QUALITY DEBT SECURITIE S are those rated Ba or lower by Moody's
or BB or lower by S&P that have poor protection against default
in the payment of principal and interest or may be in default. These
securities are often considered to be speculative and involve greater risk
of loss or price changes due to changes in the issuer's capacity to pay.
The market prices of lower-rated debt securities may fluctuate more than
those of higher-rated debt securities, and may decline significantly in
periods of general economic difficulty, which may follow periods of rising
interest rates. See "Debt Obligations" on page .
MORTGAGE-BACKED SECURITIE S are issued by government entities
and non-government entities such as banks, mortgage lenders, or other
financial institutions.
A mortgage-backed security may be an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations ( CMOs ) , make payments of both principal and
interest at a variety of intervals; others make semiannual interest
payments at a predetermined rate and repay principal at maturity (like a
typical bond). Mortgage-backed securities are based on different types of
mortgages including those on commercial real estate or residential
properties. Other types of mortgage-backed securities will likely be
developed in the future, and a Fund may invest in them if FMR
determines they are consistent with a Fund's investment objective and
policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
STRIPPED MORTGAGE-BACKED SECURITI ES are created when a U.S.
government agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as
individual securities. The holder of the "principal-only" security (PO)
receives the principal payments made by the underlying mortgage-backed
security, while the holder of the "interest-only" security (IO) receives
interest payments from the same underlying security. The prices of stripped
mortgage-backed securities may be particularly affected by changes in
interest rates. As interest rates fall, prepayment rates tend to increase,
which tends to reduce prices of IOs and increase prices of POs. Rising
interest rates can have the opposite effect.
ASSET-BACKED SECURITIES represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured as
pass-through securities. Interest and principal payments ultimately depend
on payment of the underlying loans by individuals, although the securities
may be supported by letters of credit or other credit enhancements. The
value of asset-backed securities may also depend on the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing the credit enhancement.
A Fund may purchase units of beneficial interest in pools of
purchase contracts, financing leases, and sales agreements entered into by
municipalities. These municipal obligations may be created when a
municipality enters into an installment purchase contract or lease with a
vendor and may be secured by the assets purchased or leased by the
municipality. However, except in very limited circumstances, there will be
no recourse against the vendor if the municipality stops making payments.
The market for tax-exempt asset-backed securities is still relatively new.
These obligations are likely to involve unscheduled prepayments of
principal.
OPTIONS AND FUTURES CONTRACTS are bought and sold to manage a
Fund's exposure to changing interest rates, security prices, and
currency exchange rates. Some options and futures strategies, including
selling futures, buying puts, and writing calls, tend to hedge a Fund's
investment against price fluctuations. Other strategies, including buying
futures, writing puts, and buying calls, tend to increase market exposure.
Options and futures may be combined with each other or with forward
contracts in order to adjust the risk and return characteristics of the
overall strategy. A Fund may invest in options and futures based on
any type of security, index, or currency, including options and futures
traded on foreign exchanges and options not traded on exchanges.
Options and futures can be volatile investments and involve certain risks.
If FMR applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a Fund's return. A
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could
not close out its positions because of an illiquid secondary market.
Options and futures do not pay interest, but may produce taxable capital
gains.
Each Fund will not hedge more than 25% of its total assets by selling
futures, buying puts, and writing calls under normal conditions. In
addition each Fund will not buy futures or write puts whose underlying
value exceeds 25% of its total assets, and will not buy calls with a value
exceeding 5% of its total assets .
REAL ESTATE BACKED SECURITIES. Real estate industry companies may
include among others: real estate investment trusts; brokers or real estate
developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. Companies
engaged in the real estate industry may be subject to certain risks
including: declines in the value of real estate, risks related to general
and local conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, and variations in rental income.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase agreement, a
Fund buys a security at one price and simultaneously agrees to sell it back
at a higher price. A Fund may also make securities loans to broker-dealers
and institutional investors, including FBSI. In the event of the bankruptcy
of the other party to either a repurchase agreement or a securities loan, a
Fund could experience delays in recovering its cash or the securities it
lent. To the extent that, in the meantime, the value of the securities
purchased had decreased or the value of the securities lent had
increased, a Fund could experience a loss. In all cases, FMR must
find the creditworthiness of the other party to the transaction
satisfactory.
RESTRICTED SECURITIE S are securities which cannot be sold to the
public without registration under the Securities Act of 1933 . Unless
registered for sale, these securities can only be sold in privately
negotiated transactions or pursuant to an exemption from registration.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a Fund
temporarily transfers possession of a portfolio instrument to another
party, such as a bank or broker-dealer, in return for cash. At the same
time, the Fund agrees to repurchase the instrument at an agreed-upon price
and time. A Fund expects that it will engage in reverse repurchase
agreements for temporary purposes such as to fund redemptions. Reverse
repurchase agreements may increase the risk of fluctuation in the market
value of a Fund's assets or in its yield.
SHORT SALES. If a Fund enter s into short sales with respect
to stocks underlying its convertible security holding s, the
transaction may help to hedge against the effect of stock price
declines, but may result in losses if a convertible security's price does
not track the price of its underlying equity. Under normal conditions
c onvertible securities hedged with short sales are not currently
expected to exceed 15% of a Fund's total assets .
SWAP AGREEMENTS. As one way of managing its exposure to different
types of investments, a Fund may enter into interest rate swaps,
currency swaps, and other types of swap agreements such as caps, collars,
and floors. In a typical interest rate swap, one party agrees to make
regular payments equal to a floating interest rate times a "notional
principal amount," in return for payments equal to a fixed rate times the
same amount, for a specified period of time. If a swap agreement provides
for payments in different currencies, the parties might agree to exchange
the notional principal amount as well. Swaps may also depend on other
prices or rates, such as the value of an index or mortgage prepayment
rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a Fund's investments and its share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also
suffer losses if it is unable to terminate outstanding swap agreements or
reduce its exposure through offsetting transactions.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal obligations, have interest rate adjustment formulas
that help to stabilize their market values. Many variable and floating rate
instruments also carry demand features that permit the fund to sell them at
par value plus accrued interest on short notice.
WARRANT S entitle the holder to buy equity securities at a specific
price for a specific period of time. Warrants tend to be more volatile than
their underlying securities. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to the expiration
date.
ZERO COUPON BOND S do not make interest payments; instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a Fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros. Government Investment Fund has
been advised that the staff of the Division of Investment Management of the
SEC does not consider these instruments U.S. government securities as
defined by the 1940 Act. Therefore, Government Investment Fund will not
treat these obligations as U.S. government securities for purposes of the
65% portfolio composition test mentioned on page 21 .
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. ORIGINAL ISSUE ZEROS are zero coupon securities
originally issued by the U.S. government or a government agency.
DEBT OBLIGATIONS. The table below provides a summary of ratings assigned to
debt holdings (not including money market instruments) in Funds which have
the ability to invest over 5% in lower-rated debt securities. These
figures are dollar-weighted averages of month-end portfolio holdings during
the thirteen months ended September 30, 1993 (Strategic
Opportunities), October 31, 1993 ( Income & Growth, High Yield,
Short Fixed-Income, and High Income Municipal,) and November 30,
1993 ( and Equity Portfolio Income), presented as a percentage of
total investments. These percentages are historical and are not necessarily
indicative of the quality of current or future portfolio holdings, which
may vary.
The dollar-weighted average of debt securities not rated by either Moody's
or S&P amounted to 0% (Equity Portfolio Growth), .89%
(Strategic Opportunities), .57 % (Equity Portfolio Income),
6.72 % (Income & Growth), 18.74 % (High Yield),
5.85 % (Short Fixed-Income), and 25.23 % (High Income
Municipal) of total investments. This may include securities rated by other
nationally recognized rating organizations, as well as unrated securities.
Unrated securities are not necessarily lower-quality securities.
As of October 31, 1993, Global Resources had no investments below
Baa/BBB.
MOODY'S RATING & PERCENTAGE OF INVESTMENTS
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<S> <C> <C> <C> <C> <C> <C> <C>
MOOD EQUIT STRAT EQUITY
INCOME
HIGH
SHORT
HIGH
Y'S
Y EGIC
PORTFOLIO
&
YIELD FIXED-
INCOME
RATIN PORTF OPPO INCOME GROWTH INCOME MUNICI
G OLIO RTUNIT PAL
GROW IES
TH
Aaa/A -- 15.99 1.02% 22.75% .02% 25.81% 27.39%
a/A %
Baa -- -- .77% .86% -- 34.74% 20.40%
Ba -- .18% 1.25% 6.09% 6.60% 12.76% 8.10%
B .07% .22% 1.27% 3.89% 34.26% 1.08% .63%
Caa -- 1.63 .06% .66% 9.09% -- --
%
Ca/C -- -- -- -- 4.50% -- --
</TABLE>
S&P RATING & PERCENTAGE OF INVESTMENTS
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S&AM EQUIT STRAT EQUITY
INCO HIGH
SHORT
HIGH
P;P
Y EGIC
PORTFOL ME
YIELD FIXED-
INCOME
RATIN PORTF OPPO IO & INCOM MUNICI
G OLIO RTUNIT INCOM ;
E PAL
GROW IES E GROW
TH TH
AAA/A -- 15.99 1.03% 21.98 .97% 27.08 29.05%
A/A % % %
BBB -- -- .84% 2.03% 1.09% 33.92 18.73%
%
BB -- -- .98% 2.22% 6.94% 7.55% 4.37%
B .07% .80% 1.35% 2.51% 33.28 1.13% 1.75%
%
CCC -- -- .15% .69% 7.62% .04%
CC/C -- -- -- --% 1.55%
D -- .89% .03% 5.58%
</TABLE>
THE FOLLOWING DESCRIBES MUNICIPAL INSTRUMENTS:
MUNICIPAL SECURITIES include GENERAL OBLIGATION SECURITIES, which are
backed by the full taxing power of a municipality, and REVENUE
SECURITIES , which are backed by the revenues of a specific tax,
project, or facility. INDUSTRIAL REVENUE BONDS are a type of revenue bond
backed by the credit and security of a private issuer and may involve
greater risk. PRIVATE ACTIVITY MUNICIPAL SECURITIES, which may be subject
to the federal alternative minimum tax, include securities issued to
finance housing projects, student loans, and privately - owned solid
waste disposal and water and sewage treatment facilities.
TAX AND REVENUE ANTICIPATION NOTES are issued by municipalities in
expectation of future tax or other revenues, and are payable from those
specific taxes or revenues. BOND ANTICIPATION NOTES normally provide
interim financing in advance of an issue of bonds or notes, the proceeds of
which are used to repay the anticipation notes. TAX-EXEMPT COMMERCIAL PAPER
is issued by municipalities to help finance short-term capital or operating
needs.
MUNICIPAL LEASE OBLIGATIONS are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities.
These obligations typically are not fully backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, the
lease may terminate, with the possibility of significant loss to a
Fund. CERTIFICATES OF PARTICIPATION in municipal lease obligations or
installment sales contracts entitle the holder to a proportionate interest
in the lease-purchase payments made.
RESOURCE RECOVERY BONDS are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents
paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and
project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
A DEMAND FEATURE is a put that entitles the security holder to repayment of
the principal amount of the underlying security, upon notice at any
time or at specified intervals. A STANDBY COMMITMENT is a put that entitles
the security holder to same-day settlement at amortized cost plus accrued
interest.
Issuers or financial intermediaries who provide demand features or standby
commitments often support their ability to buy securities on demand by
obtaining LETTERS OF CREDIT (LOCS) or other guarantees from domestic or
foreign banks. LOCs also may be used as credit supports for other types of
municipal instruments. FMR may rely upon its evaluation of a bank's credit
in determining whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank may be
subject to unfavorable political or economic developments, currency
controls, or other governmental restrictions that might affect the bank's
ability to honor its credit commitment.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
REFUNDING CONTRACTS. A Fund may purchase securities on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and the Fund
to buy refunded municipal obligations at a stated price and yield on a
settlement date that may be several months or several years in the future.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through C in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to D may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAIs , in connection
with the offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the Fund or Distributors. This Prospectus and the related
SAIs do not constitute an offer by a Fund or by Distributors to sell
or to buy shares of a Fund to any person to whom it is unlawful to make
such offer.
FIDELITY ADVISOR OVERSEAS FUND
A FUND OF FIDELITY ADVISOR SERIES VII
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 29, 1994
This Statement is not a prospectus but should be read in conjunction with
the current Prospectus (dated January 29, 1994) for Fidelity Advisor
Overseas Fund (the Fund). Please retain this document for future
reference. The Fund's Annual Report for the fiscal year ended October 31,
1993, a separate report supplied with this Statement of Additional
Information, incorporated herein by reference. Additional copies of the
Prospectus, Statement of Additional Information or Annual Report are
available without charge upon request from Fidelity Distributors
Corporation, 82 Devonshire Street, Boston, Massachusetts 02109, or from
your investment professional.
NATIONWIDE 800 - 522 - 7297
TABLE OF CONTENTS PAGE
<TABLE>
<CAPTION>
<S> <C>
Investment Policies and Limitations 2
Special Considerations Affecting Europe 11
Special Considerations Affecting Japan, the Pacific Basin and Southeast Asia 12
Special Considerations Affecting Canada 13
Special Considerations Affecting Latin America 1 3
Portfolio Transactions 1 4
Valuation of Portfolio Securities 1 6
Performance 1 6
Additional Purchase, Exchange and Redemption Information 2 1
Distributions and Taxes 2 3
FMR 2 4
Trustees and Officers 2 4
Management and Other Services 26
The Distributor 29
Distribution and Service Plan 30
Description of the Trust 3 0
Financial Statements 31
</TABLE>
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB - ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.)
DISTRIBUTOR
Fidelity Distributors Corporation (Distributors)
TRANSFER AGENT
State Street Bank and Trust Company (State Street)
CUSTODIAN
The Chase Manhattan Bank N.A. (Chase)
A.OS-SAI-194
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the Fund's assets that may be
invested in any security or other assets, or sets forth a policy regarding
quality standards, such percentage limitation or standard shall be
determined immediately after and as a result of the Fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets or other circumstances will not be considered when
determining whether the investment complies with the Fund's investment
policies and limitations.
The Fund's fundamental policies and limitations may not be changed without
approval by a "majority of the outstanding shares" (as defined in the
Investment Company Act of 1940) of the Fund. However, except for the
fundamental investment limitations set forth below, the investment policies
and limitations described in this Statement of Additional Information are
not fundamental and may be changed without shareholder approval. THE
FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN
THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than obligations issued or guaranteed by the
government of the United States, its agencies or instrumentalities) if, as
a result thereof: (i) more than 5% of the Fund's total assets would be
invested in the securities of such issuer or (ii) the Fund would hold more
than 10% of the outstanding voting securities of such issuer; or
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed), less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the 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.
(4) underwrite any issue of securities, except to the extent that the Fund
may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States, its agencies or
instrumentalities) if, as a result thereof, more than 25% of the Fund's
total assets (taken at current value) would be invested in the securities
of issuers having their principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(8) 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.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The Fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short - term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) 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 fundamental investment limitation (3)). The Fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The Fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the Fund's total
assets.
(iv) The Fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the price
at which they are valued.
(v) The Fund does not currently intend to lend assets other than securities
to other parties, except by (i) lending money (up to 5% of the Fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (ii) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities
or to repurchase agreements).
(vi) The Fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open - end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(vii) The Fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The Fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 10% of the Fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the Fund in units or attached to
securities are not subject to these restrictions.
(ix) The Fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 7.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the Fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the Fund under the Investment Company Act of 1940 (the 1940
Act). Such transactions may be entered into only pursuant to procedures
established and periodically reviewed by the Board of Trustees. These
transactions may include repurchase agreements with custodian banks;
purchases, as principal, of obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
FUND'S RIGHTS AS A SHAREHOLDER. The Fund does not intend to direct or
administer the day - to - day operations of any company. The
Fund, however, may exercise its rights as a shareholder and may communicate
its views on important matters of policy to management, the Board of
Directors, and shareholders of a company when FMR determines that such
matters could have a significant effect upon the value of the Fund's
investment in the company. The activities that the Fund may engage in,
either individually or in conjunction with others, may include, among
others, supporting or opposing proposed changes in a company's corporate
structure or business activities; seeking changes in a company's directors
or management; seeking changes in a company's direction or policies;
seeking the sale or reorganization of the company or a portion of its
assets; or supporting or opposing third - party takeover efforts.
This area of corporate activity is increasingly prone to litigation, and it
is possible that the Fund could be involved in lawsuits related to such
activities. FMR will monitor such activities with a view to mitigating, to
the extent possible, the risk of litigation against the Fund and the risk
of actual liability if the Fund is involved in litigation. No guarantee
can be made, however, that litigation against the Fund may not be
undertaken or liabilities incurred.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the Fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the Fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset a the Fund's rights and
obligations relating to the investment). Investments currently considered
by the Fund to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days and
over - the - counter options and non-government stripped
fixed-rate mortgage-backed securities.
Also, FMR may determine some restricted securities, government-stripped,
fixed-rate mortgage-backed securities, loans and other direct debt
instruments, and swap agreements to be illiquid. However, with respect to
over - the - counter options the Fund writes, all or a portion of
the value of the underlying instrument may be illiquid depending on the
assets held to cover the option and the nature and terms of any agreement
the Fund may have to close out the option before expiration. In the
absence of market quotations, illiquid investments are priced at fair value
as determined in good faith by a committee appointed by the Board of
Trustees. If through a change in values, net assets, or other
circumstances, the Fund were in a position where more than 15% of its net
assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the Fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the Fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
LOWER - RATED DEBT SECURITIES. The Fund may purchase
lower - rated debt securities (those rated Ba or lower by Moody's
Investors Service, Inc. (Moody's) , or BB or lower by Standard and
Poor's Corporation (S&P) ) that have poor protection with respect
to the payment of interest and repayment of principal. These securities
are often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The market
prices of lower - rated debt securities may fluctuate more than those
of higher - rated debt securities and may decline significantly in
periods of general economic difficulty, which may follow periods of rising
interest rates.
While the market for high - yield corporate debt securities has been
in existence for many years and has weathered previous economic downturns,
the 1980s brought a dramatic increase in the use of such securities to fund
highly leveraged corporate acquisitions and restructurings. Past
experience may not provide an accurate indication of the future performance
of the high - yield bond market, especially during periods of economic
recession. In fact, from 1989 to 1991, the percentage of
lower - rated debt securities that defaulted rose significantly above
prior levels although the default rate decrease in 1992.
The market for lower - rated debt securities may be thinner and less
active than that for higher - rated debt securities, which can
adversely affect the prices at which the former are sold. If market
quotations are not available, lower - rated debt securities will be
valued in accordance with procedures established by the Board of Trustees,
including the use of outside pricing services. Judgment plays a greater
role in valuing high - yield corporate debt securities than is the
case for securities for which more external sources for quotations and
last - sale information are available. Adverse publicity and changing
investor perceptions may affect the ability of outside pricing services to
value lower - rated debt securities and the Fund's ability to
sell these securities.
Since the risk of default is higher for lower - rated debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by the Fund. In considering
investments for the Fund, FMR will attempt to identify those issuers of
high - yielding debt securities whose financial condition is adequate
to meet future obligations, has improved, or is expected to improve in the
future. FMR's analysis focuses on relative values based on such factors as
interest or dividend coverage, asset coverage, earnings prospects, and the
experience and managerial strength of the issuer.
The Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the Fund's shareholders.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to the Fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If the Fund does not receive scheduled interest
or principal payments on such indebtedness, the Fund's share price and
yield could be adversely affected. Loans that are fully secured offer the
Fund more protections than an unsecured loan in the event of
non - payment of scheduled interest or principal. However, there is
no assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral can be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks, and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of developing countries will also involve a risk that the
governmental entities responsible for the repayment of the debt may be
unable, or unwilling, to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to the Fund.
For example, if a loan is foreclosed, the Fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable
that under emerging legal theories of lender liability, the Fund could be
held liable as a co - lender. Direct debt instruments may also
involve a risk of insolvency of the lending bank or other intermediary.
Direct debt instruments that are not in the form of securities may offer
less legal protection to the Fund in the event of fraud or
misrepresentation. In the absence of definitive regulatory guidance, the
Fund relies on FMR's research in an attempt to avoid situations where fraud
or misrepresentation could adversely affect the Fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the
loan, as specified in the loan agreement. Unless, under the terms of the
loan or other indebtedness, the Fund has direct recourse against the
borrower, it may have to rely on the agent to apply appropriate credit
remedies against a borrower. If assets held by the agent for the benefit
of the Fund were determined to be subject to the claims of the agent's
general creditors, the Fund might incur certain costs and delays in
realizing payment on the loan or loan participation and could suffer a loss
of principal or interest.
Direct indebtedness purchased by the Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the Fund to pay additional cash on demand. These commitments
may have the effect of requiring the Fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
company's condition makes it unlikely that the amount will even be repaid.
The Fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
The Fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations (1) and
(5)). For purposes of these limitations, the Fund generally will treat the
borrower as the "issuer" of indebtedness held by the Fund. In the case of
loan participations where a bank or other lending institution serves as
financial intermediary between the Fund and the borrower, if the
participation does not shift to the Fund the direct debtor - creditor
relationship with the borrower, SEC interpretations require the Fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for the purposes of determining
whether the Fund has invested more than 5% of its total assets in a single
issuer. Treating a financial intermediary as an issuer of indebtedness may
restrict the Fund's ability to invest in indebtedness related to a single
financial intermediary, or a group of intermediaries engaged in the same
industry, even if the underlying borrowers represent many different
companies and industries.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed - upon price on an agreed - upon date within a
number of days from the date of purchase. The resale price reflects the
purchase price plus an agreed - upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security. A
repurchase agreement involves the obligation of the seller to pay the
agreed upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed - upon resale price and marked
to market daily) of the underlying security. The Fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
of a decline in the market value of the underlying securities, as well as
delays and costs to the Fund in connection with bankruptcy proceedings), it
is the current policy of the Fund to limit repurchase agreement
transactions to those parties whose creditworthiness has been reviewed and
found satisfactory by FMR.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may include
agreements to purchase and sell foreign securities in exchange for fixed
U.S. dollar amounts, or in exchange for specified amounts of foreign
currency. Unlike typical U.S. repurchase agreements, foreign repurchase
agreements may not be fully collateralized at all times. The value of the
security purchased by the Fund may be more or less than the price at which
the counterparty has agreed to repurchase the security. In the event of a
default by the counterparty, the Fund may suffer a loss if the value of the
security purchased is less than the agreed - upon repurchase price, or
if the Fund is unable to successfully assert a claim to the collateral
under foreign laws. As a result, foreign repurchase agreements may involve
higher credit risks than repurchase agreements in U.S. markets, as well as
risks associated with currency fluctuations. In addition, as with other
emerging market investments, repurchase agreements with counterparties
located in emerging markets or relating to emerging market securities may
involve issuers or counterparties with lower credit ratings than typical
U.S. repurchase agreements.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the Fund
sells a portfolio instrument to another party, such as a bank or
broker - dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the Fund will maintain appropriate liquid assets
in a segregated custodial account to cover its obligation under the
agreement. The Fund will enter into reverse repurchase agreements only
with parties whose creditworthiness has been found satisfactory by FMR.
S uch transactions may increase fluctuations in the market value of the
Fund's assets and may be viewed as a form of leverage.
SECURITIES LENDING. The Fund may lend securities to parties such as
broker - dealers or institutional investors, including Fidelity
Brokerage Services, Inc. (FBSI). FBSI a member of the New York Stock
Exchange (NYSE) and a subsidiary of FMR Corp.
Securities lending allows the Fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the staff of the SEC that
the Fund is permitted to engage in loan transactions only under the
following conditions: (1) the Fund must receive 100% collateral in the
form of cash or cash equivalents (e.g., U.S. Treasury bills or notes) from
the borrower; (2) the borrower must increase the collateral whenever the
market value of the securities (determined on a daily basis) rises above
the level of the collateral; (3) after giving notice, the Fund must be able
to terminate the loan, at any time; (4) the Fund must receive reasonable
interest on the loan or a flat fee from the borrower, as well as amounts
equivalent to any dividends, interest or other distributions on the
securities loaned and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) the
Board of Trustees must be able to vote proxies either by terminating the
loan or entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in
which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
FOREIGN SECURITIES. Investing in securities issued by companies or other
issuers whose principal activities are outside the United States may
involve significant risks not present in U.S. investments. The value of
securities denominated in foreign currencies and of dividends and interest
paid with respect to such securities will fluctuate based on the relative
strength of the U.S. dollar. In addition, there is generally less publicly
available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Foreign companies are generally not bound by uniform accounting,
auditing, and financial reporting requirements and standards of practice
comparable to those applicable to U.S. companies. Investments in foreign
securities also involve the risk of possible adverse changes in investment
or exchange control regulations, expropriation or confiscatory taxation,
limitation on the removal of monies or other assets of the Fund, political
or financial instability or diplomatic and other developments which could
affect such investments. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of
the United States.
It is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over - the - counter
markets located outside of the United States. Foreign stock markets, while
growing in volume and sophistication, are generally not as developed as
those in the United States, and securities of some foreign companies
(particularly those located in developing countries) may be less liquid and
more volatile than securities of comparable U.S. companies. Foreign
security trading practices, including those involving securities settlement
where Fund assets may be released prior to receipt of payment, may expose
the Fund to increased risk in the event of a failed trade or the insolvency
of a foreign broker - dealer. In addition, foreign brokerage
commissions and other fees are generally higher than on securities traded
in the United States and may be non - negotiable. In general, there
is less overall governmental supervision and regulation of securities
exchanges, brokers and listed companies than in the United States.
The Fund may invest in foreign securities that impose restrictions on
transfer within the United States or to United States persons. Although
securities subject to such transfer restrictions may be marketable abroad,
they may be less liquid than foreign securities of the same class that are
not subject to such restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Fund may conduct foreign
currency exchange transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or by entering
into forward contracts to purchase or sell foreign currencies at a future
date and price (i.e., a "forward foreign currency contract" or "forward
contract"). The Fund will convert currency on a spot basis from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Fund at one rate, while offering a lesser
rate of exchange should the Fund desire to resell that currency to the
dealer. Forward contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. The parties to a forward contract may agree to offset or
terminate the contract before maturity, or may hold the contract to
maturity and complete the contemplated currency exchange.
The Fund may use currency forward contracts for any purpose consistent with
its investment objective. The following discussion summarizes some, but
not all, of the possible currency management strategies involving forward
contracts that could be used by the Fund. The Fund may also use options
and futures contracts relating to foreign currencies for the same purposes.
When the Fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, the Fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. The Fund may also enter into forward contracts to purchase or
sell a foreign currency in anticipation of future purchases or sales of
securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
The Fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if the Fund owned securities denominated in Pounds Sterling, the
Fund could enter into a forward contract to sell Pounds in return for U.S.
dollars to hedge against possible declines in the Pound's value. Such a
hedge (sometimes referred to as a "position hedge") will tend to offset
both positive and negative currency fluctuations, but will not offset
changes in security values caused by other factors. The Fund could also
hedge the position by selling another currency expected to perform
similarly to the Pound, for example, by entering into a forward contract to
sell Deutsche Marks in exchange for U.S. dollars. This type of strategy,
sometimes known as a "proxy hedge," may offer advantages in terms of cost,
yield or efficiency, but generally will not hedge currency exposure as
effectively as a simple hedge into U.S. dollars. Proxy hedges may result
in losses to the Fund if the currency used to hedge does not perform
similarly to the currency in which the hedged securities are denominated.
The Fund may enter into forward contracts to shift its investment exposure
from one currency into another currency that is expected to perform better
relative to the U.S. dollar. For example, if the Fund held investments
denominated in Deutsche Marks, the Fund could enter into forward contracts
to sell Deutsche Marks and purchase Swiss Francs. This type of strategy,
sometimes known as a "cross - hedge," will tend to reduce or eliminate
exposure to the currency that is sold, and increase exposure to the
currency that is purchased, much as if the Fund had sold a security
denominated in one currency and purchased an equivalent security
denominated in another. Cross - hedges protect against losses
resulting from a decline in the hedged currency, but will cause the Fund to
assume the risk of fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the Fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The Fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the Fund's investment exposure to changes in currency
exchange rates, and could result in losses to the Fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the Fund by selling that currency in exchange for
dollars, the Fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
Fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the Fund's exposure to a foreign currency, and that
currency's value declines, the Fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the Fund or that they will hedge at an appropriate time.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund intends to file
a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets, before engaging in any purchases or sales of futures
contracts or options on futures contracts. The Fund intends to comply with
Section 4.5 of the regulations under the Commodity Exchange Act, which
limits the extent to which the fund can commit assets to initial margin
deposits and option premiums.
In addition, the Fund will not: (a) sell futures contracts, purchase put
options or write call options if, as a result, more than 25% of the Fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the Fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the Fund would
exceed 5% of the Fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the Fund's investments in futures contracts and
options, and the Fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information m ay
be changed as regulatory agencies permit.
FUTURES CONTRACTS. When the Fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the Fund enters into the contract.
Futures can be held until their delivery dates, or can be closed out before
then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if the
Fund had purchased the underlying instrument directly. When the Fund sells
a futures contract, by contrast, the value of its futures position will
tend to move in a direction contrary to the market. Selling futures
contracts, therefore, will tend to offset both positive and negative market
price changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller of a futures contract are required to deposit "initial margin" with
a futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal to a
percentage of the contract's value. If the value of either party's
position declines, that party will be required to make additional
"variation margin" payments to settle the change in value on a daily basis.
The party that has a gain may be entitled to receive all or a portion of
this amount. Initial and variation margin payments do not constitute
purchasing securities on margin for purposes of the Fund's investment
limitations. In the event of the bankruptcy of an FCM that holds margin on
behalf of the Fund, the Fund may be entitled to return of margin owed to it
only in proportion to the amount received by the FCM's other customers
potentially result in losses to the Fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indexes of securities prices, and futures contracts. The Fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the Fund will lose the entire premium it paid. If the Fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The Fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to
suffer a loss if security prices do not rise sufficiently to offset the
cost of the option.
WRITING PUT AND CALL OPTIONS. When the Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the Fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract, the Fund will be required to make margin payments to an FCM as
described above for futures contracts. The Fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the Fund has written, however, the
Fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would expect to profit, although its
gain would be limited to the amount of the premium it received. If
security prices remain the same over time, it is likely that the writer
will also profit, because it should be able to close out the option at a
lower price. If security prices fall, the put writer would expect to
suffer a loss. This loss should be less than the loss from purchasing the
underlying instrument directly, however, because the premium received for
writing the option should mitigate the effects of the decline.
Writing a call option obligates the Fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The Fund may purchase and write options in combination
with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the Fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing
a call option at one strike price and buying a call option at a lower
price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be
more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange - traded options and futures contracts, it is likely that
the standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short - term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same
way. Imperfect correlation may also result from differing levels of demand
in the options and futures markets and the securities markets, from
structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. The Fund may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends
to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may
not be successful in all cases. If price changes in the Fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that
are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the Fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the Fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange - traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size
and strike price, the terms of over - the - counter options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this type
of arrangement allows the Fund greater flexibility to tailor an option to
its needs, OTC options generally involve greater credit risk than
exchange - traded options, which are guaranteed by the clearing
organization of the exchanges where they are traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
Fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The Fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the Fund's investments. A currency hedge, for example, should protect a
Yen - denominated security from a decline in the Yen, but will not
protect the Fund against a price decline resulting from deterioration in
the issuer's creditworthiness. Because the value of the Fund's
foreign - denominated investments changes in response to many factors
other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the Fund's investments exactly
over time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Fund will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in
a segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
the Fund's assets could impede portfolio management or the Fund's ability
to meet redemption requests or other current obligations.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the Fund's exposure to long - or
short - term interest rates (in the U.S. or abroad), foreign currency
values, mortgage securities, corporate borrowing rates, or other factors
such as security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The Fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the Fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed - upon level, while the seller of an interest rate
floor is obligated to make payments to the extent that a specified interest
rate falls below an agreed - upon level. An interest rate collar
combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift the Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the Fund's investments and its share price .
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The Fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
The Fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the
Fund enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the
Fund is entitled to receive under the agreement. If the Fund enters into a
swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the Fund's accrued obligations under the
agreement.
INDEXED SECURITIES. The Fund may purchase securities whose prices are
indexed to the prices of other securities, securities indexes, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold - indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency - indexed securities typically
are short - term to intermediate - term debt securities whose
maturity values or interest rates are determined by reference to the values
of one or more specified foreign currencies, and may offer higher yields
than U.S. dollar - denominated securities of equivalent issuers.
Currency - indexed securities may be positively or negatively indexed;
that is, their maturity value may increase when the specified currency
value increases, resulting in a security that performs similarly to a
foreign - denominated instrument, or their maturity value may decline
when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency - indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
SHORT SALES "AGAINST THE BOX." If the Fund enters into a short sale
against the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The Fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales against the box.
WARRANTS. Warrants are securities that give the Fund the right to purchase
equity securities from the issuer at a specific price (the strike price)
for a limited period of time. The strike price of warrants typically is
much lower than the current market price of the underlying securities, yet
they are subject to greater price fluctuations. As a result, warrants may
be more volatile investments than the underlying securities and may offer
greater potential for capital appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with respect
to the underlying securities and do not represent any rights in the assets
of the issuing company. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to the expiration
date. These factors can make warrants more speculative than other types of
investments.
SPECIAL CONSIDERATIONS AFFECTING EUROPE
New developments surrounding the creation of a unified common market in
Europe have helped to reduce physical and economic barriers promoting the
free flow of goods and services throughout Western Europe. These new
developments could make this new unified market one of the largest in the
world.
The European Community (EC) consists of Belgium, Denmark, France, Germany,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and the
United Kingdom (the member states). In 1986, the member states of the EC
signed the "Single European Act," an agreement committing these countries
to the establishment of a market among themselves, unimpeded by internal
barriers or hindrances to the free movement of goods, persons, services, or
capital. To meet this goal, a series of directives have been issued to the
member states. Compliance with these directives is designed to eliminate
three principal categories of barriers: 1) physical frontiers, such as
customs posts and border controls; 2) technical barriers (which include
restrictions operating within national territories) such as regulations and
norms for goods and services (product standards); discrimination against
foreign bids (bids by other EC members) on public purchases; or
restrictions on foreign requests to establish subsidiaries; and ( 3)
fiscal frontiers, notably the need to levy value - added taxes,
tariffs, or excises on goods or services imported from other EC states.
The ultimate goal of this project is to achieve a large unified domestic
European market in which available resources would be more efficiently
allocated through the elimination of the above - mentioned barriers
and the added costs associated with those barriers. Elimination of these
barriers would simplify product distribution networks, allow economies of
scale to be more readily achieved, and free the flow of capital and other
resources.
The total European market, as represented by both EC and non - EC
countries, consists of over 32 8 million consumers, making it larger
currently than either the United States or Japanese markets. European
businesses compete nationally and internationally in a wide range of
industries including: telecommunications and information services, roads
and transportation, building materials, food and beverages, broadcast and
media, financial services, electronics, and textiles. Actual and
anticipated actions on the part of member states to conform to the unified
Europe directives has prompted interest and activity not only by European
firms, but also by foreign entities anxious to establish a presence in the
Europe that will result from these changes. Indications of the effect of
this response to a unified Europe can be seen in the areas of mergers and
acquisitions, corporate expansion and development, GNP growth, and national
stock market activity.
Most Eastern European nations, including Hungary, Poland and Romania, have
had centrally planned, socialist economies since shortly after World War
II. A number of their governments, including those of Hungar y, and
Poland, are currently implementing or considering reforms directed at
political and economic liberalization, including efforts to foster
multi - party political systems, decentralize economic planning, and
move toward free market economies. At present, no Eastern European country
has a developed stock market, but Poland, and Hungary have
small securities markets in operation. Ethnic and civil conflict currently
rage throughout the former Yugoslavia. The outcome is uncertain.
Both the EC and Japan, among others, have made overtures to establish
trading arrangements and assist in the economic development of the Eastern
European nations. A great deal of interest also surrounds opportunities
created by the reunification of East and West Germany. Following
reunification, the Federal Republic of Germany has remained a firm and
reliable member of the EC and numerous other international alliances and
organizations. To reduce inflation caused by the unification of East and
West Germany, Germany has adopted a tight monetary policy which has led to
weakened exports and a reduced domestic demand for goods and services.
However, in the long - term, reunification could prove to be an engine
for domestic and international growth.
The conditions that have given rise to these developments are
changeable, and there is no assurance that reforms will continue or that
their goals will be achieved.
REAL GNP / GDP ANNUAL RATE OF GROWTH
FOR 1993
Denmark 0.0%
France 1.3
Germany 1.2
Italy 2.9
Netherlands 3.6
Spain 0.1
Switzerland (1.1)
United Kingdom 1.1
Source: International Monetary Fund
(Figures are quoted based on each country's domestic currency.)
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN , AND
SOUTHEAST ASIA
Thailand h as one of the fastest grow ing stock markets in the world.
The manufacturing sector is becoming increasingly sophisticated and is
benefiting from export-oriented investing. The manufacturing and service
sectors continue to account for the bulk of Thailand's economic growth.
The agricultural sector continues to become less important. The government
has followed fairly sound fiscal and monetary policies, aided by increased
tax receipts from a fast moving economy. The government also continues to
move ahead with new projects - especially telecommunications, roads
and port facilities - needed to refurbish the country's overtaxed
infrastructure. Nonetheless, political unrest coupled with the shooting of
antigovernment demonstrators in May of 1992 has caused many international
businessmen to question Thailand's political stability.
Hong Kong's impending return to Chinese dominion in 1997 has not initially
had a positive effect on its economic growth which was vigorous in the
1980's. However, authorities in Beijing have agreed to maintain a
capitalist system for 50 years, which along with Hong Kong's continued
economic growth, continued to fuel strong stock market returns. In
preparation for 1997, Hong Kong has continued to develop trade with China,
where it is the largest foreign investor, while also maintaining its
long - standing export relationship with the United States. Spending
on infrastructure improvements is a significant priority of the colonial
government while the private sector continues to diversify abroad based on
its position as an established international trade center in the Far East.
In terms of GDP, industrial standards and level of education, South Korea
is second only to Japan in Asia. It enjoys the benefits of a diversified
economy with well developed sectors in electronics, automobiles, textiles
and shoe manufacture, steel and shipbuilding among others. The driving
force behind the economy's dynamic growth has been the planned development
of an export - oriented economy in a vigorously entrepreneurial
society. Real GDP grew about 4.3 % in 1993 . Labor unrest
was noticeably calmer, unemployment averaged a low of 2.3%, and investment
was strong. Inflation rates, however, are beginning to challenge South
Korea's strong economic performance. B oth Koreas joined the United
Nations separately in late 1991, creating another forum for negotiation and
joint cooperation.
Indonesia is a mixed economy with many socialist institutions and central
planning but with a recent emphasis on deregulation and private enterprise.
Like Thailand, Indonesia has extensive natural wealth, yet with a large and
rapidly increasingly population, it remains a poor country.
M alaysia has one of the fastest growing economi e s in
the Asian - Pacific region. Malaysia has become the world's
third - largest producer of semiconductor devices (after the
U . S . and Japan) and the world's largest exporter of
semiconductor devices. More remarkable is the country's ability to achieve
rapid economic growth with relative price stability (2% inflation over the
past five years) as the government followed prudent fiscal/monetary
policies. Malaysia's high export dependence level leaves it vulnerable to
a recession in the Organization for Economic Cooperation and Development
countries or a fall in world commodity prices.
Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived
from its history. During the 1970s and the early 1980s, the economy
expanded rapidly, achieving an average annual growth rate of 9%. Per
capita GDP is among the highest in Asia. Singapore holds a position as a
major oil refining and services center.
Japan, with the world's second largest economy, occupies a position of
preeminence among the world's trading nations. As the world's largest
supplier of capital, it continues to expand its economic influence not only
in the Pacific Basin but in Europe and North America.
Government - industry cooperation, a strong work ethic, and a
comparatively small defense allocation have helped Japan advance rapidly,
notably in high - technology and manufacturing fields. Industry, the
most important sector of the economy, is heavily dependent on imported raw
materials and fuels. Japan's major industries are in the engineering,
electrical, textile, chemical, automobile, fishing, and telecommunication
fields. Japan imports iron ore, copper, and may forest products. Only 19%
of its land is suitable for cultivation. Japan's agricultural economy is
subsidized and protected. It is about 50% self - sufficient in food
production. Even though Japan produces a minute rice surplus, it is
dependent upon large imports of wheat, sorghum, and soybeans from other
countries. Japan's high volume of exports such as automobiles, machine
tools, and semiconductors have caused trade tensions with other countries,
particularly the United States. Attempts to approve trading agreements
between the countries may reduce the friction caused by the current trade
imbalance.
Japan currently has the second largest GDP in the world. The Japanese
economy has grown substantially over the last three decades. Its growth
rate averaged over 5% in the 1970's and 1980's. In 1992, the growth rate
in Japan slowed to 0.6%. Although Japan's economic growth has declined
significantly since 1990, many Japanese companies seem capable of
rebounding due to increased investments, smaller borrowings, increased
product development and continued government support. Japan's economic
growth in the early 1980's was due in part to government borrowings. Japan
is heavily dependent upon international trade and, accordingly, has been
and may continue to be adversely affected by trade barriers, and other
protectionist or retaliatory measures of, as well as economic conditions
in, the U.S. and other countries with which they trade.
Australia has a prosperous Western - style capitalist economy, with a
per capita GDP comparable to levels in industrialized West European
countries. It is rich in natural resources and is the world's largest
exporter of beef and wool, second - largest for mutton, and is among
the top wheat exporters. Australia is also a major exporter of minerals,
metals and fossil fuels. Due to the nature of its exports, a downturn in
world commodity prices can have a big impact on its economy.
SPECIAL CONSIDERATIONS AFFECTING CANADA
The economy of Canada is strongly influenced by the activities of
companies and industries involved in the production and processing of
natural resources. The companies may include those involved in the energy
industry, industrial materials (chemicals, base metals, timber and paper)
and agricultural materials (grain cereals). The securities of companies in
the energy industry are subject to changes in value and dividend yield
which depend, to a large extent, on the price and supply of energy fuels.
Rapid price and supply fluctuations may be caused by events relating to
international politics, energy conservation and the success of exploration
products. Economic prospects are changing due to recent government
attempts to reduce restrictions against foreign investment. These
considerations are especially important for Canada, which concentrates on
Canadian securities.
Canadian securities are not considered by FMR to have the same level of
risk as other nation's securities. Canadian and U.S. companies are
generally subject to similar auditing and accounting procedures, and
similar government supervision and regulation. Canadian markets are more
liquid than many other foreign markets and share similar characteristics
with U.S. markets. The political system is more stable than in some other
foreign countries, and the Canadian dollar is generally less volatile
relative to the U.S. dollar.
Many factors affect and could have an adverse impact on the financial
condition of Canada, including social, environmental and economic
conditions; factors which are not within the control of Canada. FMR is
unable to predict what effect, if any, such factors would have on
instruments held in the fund's portfolio.
Beginning in January of 1989 the U.S. - Canada Free Trade Agreement
will be phased in over a period of 10 years. This agreement will remove
tariffs on U.S. technology and Canadian agricultural products in addition
to removing trade barriers affecting other important sectors of each
country's economy. Canada, the U.S. and Mexico will implement the North
American Free Trade Agreement, beginning in 1994. This cooperation is
expected to lend to increased trade and to reduce barriers.
Canada occupies the northern part of North America and is the second
largest country in the world (3.97 million square miles in area) extending
from the Atlantic Ocean to the Pacific.
Canada is one the world's leading industrial countries, as well as a major
exporter of agricultural products. Canada is rich in natural resources
such as zinc, uranium, nickel, gold, silver, aluminum, iron and copper.
Forest covers over 44% of land area, making Canada a leading world producer
of newsprint.
Canada is a major producer of hydroelectricity, oil and gas. The business
activities of companies in the energy field may include the production,
generation, transmission, marketing, control or measurement of energy or
energy fuels.
The majority of new equity issues or initial public offerings in Canada are
through underwritten offerings. The Fund may elect to participate in these
issues.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America is a region rich in natural resources such as oil, copper,
tin, silver, iron ore, forestry, fishing, livestock, and agriculture. The
region has a large population (roughly 300 million) representing a large
domestic market. Economic growth was strong in the 1960s and 1970s, but
slowed dramatically in the 1980s as a result of poor economic policies,
higher international interest rates and the denial of access to new foreign
capital. Capital flight has proven a persistent problem and external debt
has been forcibly rescheduled. Political turmoil, high inflation, capital
repatriation restrictions and nationalization have further exacerbated
conditions.
Changes in political leadership, the implementation of market oriented
economic policies, such as privatization, trade reform and fiscal and
monetary reform are among the recent steps taken to renew economic growth.
External debt is being restructured and flight capital (domestic capital
that has left the home country) has begun to return. Inflation control
efforts have also been implemented. A Free Trade zone has been
established in various areas around the region, the most notable being
a free zone between Mexico, the U.S., and Canada. Latin American equity
markets can be extremely volatile and in the past have shown little
correlation with the U.S. market. Currencies are typically weak, but most
are now relatively free floating, and it is not unusual for the currencies
to undergo wide fluctuations in value over short periods of time due to
changes in the market.
Mexico's economy is a mixture of state - owned industrial plants
(notably oil), private manufacturing and services, and both
large - scale and traditional agriculture. In the 1980s, Mexico
experienced severe economic difficulties: the nation accumulated large
external debts as world petroleum prices fell; rapid population growth
outstripped the domestic food supply; and inflation, unemployment, and
pressures to emigrate became more acute. Growth in national output however
appears to be recovering, rising from 1.4% in 1988 to 3.9% in 1990. The
U.S. is Mexico's major trading partner, accounting for two - thirds of
its exports and imports. In fact, the U.S. now exports more goods to Mexico
than Japan. After petroleum, border assembly plants and tourism are the
largest earners of foreign exchange. The government, in consultation with
international economic agencies, is implementing programs to stabilize the
economy and foster growth. Mexico, the U.S. and Canada will implement
the North American Free Trade Agreement, beginning in 1994.
Brazil entered the 1990s with declining real growth, runaway inflation, an
unserviceable foreign debt of $122 billion, and a lack of policy direction.
A major long - run strength is Brazil's natural resources. Iron ore,
bauxite, tin, gold, and forestry products make up som e of Brazil's basic
natural resource base, which includes some of the largest mineral
reserves in the world. A vibrant private sector is marred by an inefficient
public sector. The government has embarked on an ambitious reform program
that seeks to modernize and reinvigorate the economy by stabilizing prices,
deregulating the economy, and opening it to increased foreign competition.
In terms of population, Brazil is the sixth largest in the world
with about 155 million people and represents a huge domestic market.
Chile, like Brazil, is endowed with considerable mining resources, in
particular copper. Economic reform has been ongoing in Chile for at least
15 years, but political democracy has only recently returned to Chile.
Privatization of the public sector beginning in the early 1980s has
bolstered the equity market. A well organized pension system has created a
long - term domestic investor base.
Argentina is strong in wheat production and other foodstuffs and livestock
ranching. A well - educated and skilled population boasts one of the
highest literacy rates in the region. The country has been ravaged by
decades of extremely high inflation and political instability. Recent
attempts by the present political regime to slow inflation and rationalize
government spending appear to be meeting with some success. Privatization
is ongoing and should reduce the amount of external debt outstanding .
Venezuela has substantial oil reserves. External debt is being
renegotiated, and the government is implementing economic reform in order
to reduce the size of the public sector. Internal gasoline prices, which
are one - third those of international prices, are being increased in
order to reduce subsidies. Plans for privatization and exchange and
interest rate liberalization are examples of recently introduced reforms.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by FMR pursuant to authority contained in the Management
Contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. In selecting broker - dealers, subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker - dealer firm; the
broker - dealer's execution services rendered on a continuing basis;
and the reasonableness of any commissions ; arrangements for payment of
fund expenses.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer allocates
a portion of the commissions paid by the fund toward payment of the fund's
expenses, such as transfer agent fees of FIIOC or custodian fees. The
transaction quality must, however, be comparable to those of other
qualified broker-dealers. Commissions for foreign investments traded on
foreign exchanges will generally be higher than for U.S. investments and
may not be subject to negotiation.
The Fund may execute portfolio transactions with broker - dealers who
provide research and execution services for the Fund or other
accounts over which FMR or its affiliates exercise investment discretion.
Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). The selection of
such broker - dealers is generally made by FMR (to the extent possible
consistent with execution considerations) in accordance with a ranking of
broker - dealers determined periodically by FMR's investment staff
based upon the quality of such research and execution services provided.
FMR may also allocate brokerage transactions to the fund's custodian,
acting as a broker-dealer, or other broker-dealers, so long as transaction
quality is comparable to that of other qualified broker-dealers, where the
broker-dealer will credit a portion of the commissions paid toward payment
of the fund's expenses. These expenses currently include transfer agent
fees paid to Fidelity Service Co. (Service) and custodian fees.
The receipt of research from broker - dealers that execute
transactions on behalf of the Fund may be useful to FMR in rendering
investment management services to the Fund or its other clients, and
conversely, such research provided by broker - dealers who have
executed transaction orders on behalf of other FMR clients may be useful to
FMR in carrying out its obligations to the Fund. The receipt of such
research has not reduced FMR's normal independent research activities;
however, it enables FMR to avoid the additional expenses that could be
incurred if FMR tried to develop comparable information through its own
efforts.
Subject to applicable limitations of federal securities laws,
broker - dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker - dealers in recognition of their research and execution
services. In order to cause the Fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided by
such executing broker - dealers viewed in terms of a particular
transaction or FMR's overall responsibilities to the Fund or its other
clients. In reaching this determination, FMR will not attempt to place a
specific dollar value on the brokerage and research services provided or to
determine what portion of the compensation should be related to those
services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Fund or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transaction s with FBSI and
Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non - affiliated, qualified brokerage firms for similar services.
Prior to September 4, 1992, FBSL operated under the name Fidelity Portfolio
Services, Ltd. (FPSL) as a wholly owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3rd is Chairman of FIL.
Mr. Johnson 3d, Johnson family members, and various trusts for the benefit
of the Johnson family own, directly or indirectly, more than 25% of the
voting common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the SEC. Pursuant to such regulations, the Board of
Trustees has approved a written agreement which permits FBSI to effect
portfolio transactions on national securities exchanges and to retain
compensation in connection with such transactions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Fund and review the commissions paid by the Fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the Fund.
The Fund's annual portfolio turnover rates for the fiscal years
ended October 31, 1993 and 1992 were 42 % and 168%, respectively.
As a result of the investment activities described herein, it is likely
that the Fund, as other international mutual funds, will engage in a
considerable volume of trading in securities. It can be expected that the
Fund will have a higher turnover rate, and thus a higher incidence of
short - term capital gains taxable as ordinary income, than might be
expected from investment companies that invest substantially all of their
portfolios on a long - term basis. Shareholders should realize that a
high rate of portfolio turnover involves correspondingly greater trading
costs. These trading costs must be borne directly by the Fund.
For the fiscal years ended October 31, 1993, 1992 , and 1991, the Fund paid
brokerage commissions of $ 500,186 , $119,400 and $133,571,
respectively. During the same periods, approximately $ 436,122 ,
$106,073, and $119,909 or 87 %, 89%, and 90%, respectively, of these
commissions were paid to brokerage firms that provided research services,
although the providing of such services was not necessarily a factor in the
placement of all of this business with such firms. The Fund pays both
commissions and spreads in connection with the placement of portfolio
transactions. FBSI is paid on a commission basis.
During the fiscal years ended October 31, 1993, 1992 and 1991, the Fund
paid brokerage commissions of $ 800 , $30, and $242, to FBSI,
respectively. This amounted to .16 %, .03%, and .18% of the
aggregate brokerage commissions paid by the Fund for transactions involving
.76 %, .14%, and .74%, respectively, of the aggregate dollar amount
of transactions in which the Fund paid brokerage commissions. The
difference in the percentage of the brokerage commissions paid to, and the
percentage of the dollar amount of transactions effected through FBSI is a
result of the low commission rates charged by FBSI.
During the fiscal years ended October 31, 1993, 1992 and 1991, the Fund
paid $0 , $1,179, and $3,132 in brokerage commissions to FBSL ,
respectively. This amounted to approximately 0 %, .99%, and 2.35%,
respectively, of the aggregate brokerage commissions paid by the Fund, for
transactions involving approximately 0% , 1.80%, and 3.31%,
respectively, of the dollar amount of transactions in which the Fund paid
brokerage commissions.
From time to time the Trustees will review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. The Fund seeks to recapture soliciting dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine, in the exercise of their business judgment,
whether it would be advisable for the Fund to seek such recapture.
Although the Trustees and officers of the Fund are substantially the same
as those of other funds managed by FMR, investment decisions for the Fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are engaged simultaneously in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions and prices for the
Fund. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to the Fund outweighs any disadvantages
that may be said from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Equity securities for which the
primary market is the U.S. are valued at last sale price or, if no sale has
occurred, at the closing bid price. Equity securities for which the
primary market is outside the U.S. are valued using the official closing
price or the last sale price in the principal market where they are traded.
If the last sale price (on the local exchange) is unavailable, the last
evaluated quote or last bid price is normally used. Short-term securities
are valued either at amortized cost or at original cost plus accrued
interest, both of which approximate current value. Fixed-income securities
are valued primarily by a pricing service that uses a vendor security
valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. This twofold approach is believed
to more accurately reflect fair value because it takes into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted, exchange, or over-the-counter prices. Use of pricing services has
been approved by the Board of Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the Fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments,
and repurchase agreements, is substantially completed each day at the close
of the NYSE. The values of any such securities held by the Fund are
determined as of such time for the purpose of computing the Fund's net
asset value. Foreign security prices are furnished by independent brokers
or quotation services which express the value of securities in their local
currency. Service gathers all exchange rates daily at the close of the
NYSE using the last quoted price on the local currency and then translates
the value of foreign securities from their local currency into U.S.
dollars. Any changes in the value of forward contracts due to exchange
rate fluctuations and days to maturity are included in the calculation of
net asset value. If an extraordinary event that is expected to materially
affect the value of a portfolio security occurs after the close of an
exchange on which that security is traded, then the security will be valued
as determined in good faith by a committee appointed by the Board of
Trustees.
PERFORMANCE
The Fund may quote its performance in various ways. All performance
information supplie d in advertising is historical and is not
intended to indicate future returns. S hare price and total returns
fluctuate in response to market conditions and other factors, and the value
of Fund shares when redeemed may be worth more or less than their original
cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of return, including the effect of reinvesting dividends and
capital gain distributions, and any change in the net asset value per share
(NAV) over the period. Average annual total returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment over a stated period, and then calculating the annually
compounded percentage rate that would have produced the same result if the
rate of growth or decline in value had been constant over the period. For
example, a cumulative return of 100% over ten years would produce an
average annual total return of 7.18%, which is the steady annual rate that
would equal 100% growth on a compounded basis in 10 years. While average
annual total returns are a convenient means of comparing investment
alternatives, investors should realize that performance is not constant
over time, but changes from year to year, and that average annual total
returns represent averaged figures as opposed to the actual
year - to - year performance.
In addition to average annual total returns, unaverage d returns
reflecting the simple change in value of an investment over a stated
period may be quoted. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount, and may be calculated
for a single investment, a series of investments, o r a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below. Total returns may be quoted with or
without taking the maximum sales charge into account. Total
returns may be quoted on a before-tax or after-tax basis. Excluding the
Fund's sales charge from a total return calculation produces a higher total
return figure. Total returns and other performance information may be
quoted numerically or in a table, graph or similar illustration.
To illustrate the components of overall performance, the Fund may separate
its cumulative and average annual returns into income results and capital
gains or losses.
The following chart compares the Fund's performance for the period s
ended October 31, 1993 to the Morgan Stanley Capital International Europe,
Australia, Far East Index (the EAFE Index), which is an unmanaged index of
common stock prices of more than 900 companies from the United Kingdom,
Germany, France, Switzerland, the Netherlands, Italy, Belgium, Spain,
Sweden, Denmark, Austria, Norway, Australia, Japan, Hong Kong and
Singapore converted into U.S. dollars. Total returns for the EAFE
Index reflect changes in share prices of stocks included in the Index and
assume reinvestment of dividends paid on those stocks.
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL CUMULATIVE CUMULATIVE TOTAL RETURN
TOTAL RETURNS(DAGGER) TOTAL RETURN(DAGGER) EAFE
</TABLE>
One Year 37.28 % 44.13 % 25.67%
Life of Fund* 7.10 % 33.75 % 28.14%
(DAGGER) Average annual total returns include the effect of the maximum
4.75% sales charge. Cumulative total returns do not include the effect of
this sales charge and would have been lower if the sales charge had been
taken into account.
* Life of Fund: April 23, 1990 ( c ommencement of o perations)
to October 31, 1993.
(DOUBLE DAGGER) On December 1, 1992, shareholders approved amendments to
the Fund's investment parameters. Prior to December 1, 1992, the
comparative index used in the Fund's performance adjustment was the Morgan
Stanley Capital International Europe Index (the Europe Index), which is an
unmanaged index of foreign common stock prices converted into U.S. dollars.
Currently, the common stocks of over 500 foreign companies, representing 12
European countries, make up the Europe Index.
PERFORMANCE COMPARISONS. Performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. The comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of dividends, but does not take sales
charges or redemption fees or tax consequences into consideration. Lipper
may also rank funds based on yield. In addition to mutual fund rankings,
performance may be compared to mutual fund performance indices prepared by
Lipper.
From time to time, performance may also be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, Morningstar, Inc. may be quoted in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare the
performance of Fidelity funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial strategies.
For example, Fidelity's Asset Allocation Program materials may include a
workbook describing general principles of investing, such as asset
allocation, diversification, risk tolerance, and goal setting; a
questionnaire designed to help create a personal financial profile; and an
action plan offering investment alternatives.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the Consumer Price Index), and
combinations of various capital markets. The performance of these capital
markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the Fund. Ibbotson calculates total returns in the same method as
the Fund. Performance comparisons may also be made to that of other
compilations or indices that may be developed and made available in the
future.
Performance may also be compared to that of the EAFE Index, S&P
500, the Dow Jones Industrial Average (the DOW or DJIA). The S&P 500
and the DOW are widely recognized, unmanaged indices of common stock
prices. The performance of the S&P 500 is based on changes in the
prices of stocks comprising the index and assumes the reinvestment of all
dividends paid on such stocks. Taxes, brokerage commissions and other fees
are disregarded in computing the level of the S&P 500 and the DJIA.
The DFA is a market-value-weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the AMEX and over-the-counter (OTC) with
the same or less capitalization as the upperbound of the NYSE ninth decile
stocks
In advertising materials, Fidelity may reference or discuss its
products and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications or periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund
shareholders.
The fund may present its fund number, Quotron(registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
The Fund may quote its performance in advertising and other types of
literature as compared to certificates of deposit (CDs), bank-issued money
market instruments, and money market mutual funds. Unlike CDs and money
market instruments, money market mutual funds and shares of the Fund are
not insured by the FDIC.
According to the Investment Company Institute, over the past ten years,
assets in equity funds increased from $75.8 billion in 1983 to
approximately $659.3 billion at the end of 1993. As of December 31,
1993, FMR managed approximately $130 billion in equity funds assets, as
defined and tracked by Lipper. From time to time the Fund may compare
FMR's fixed income assets under management with that of other investment
advisors.
VOLATILITY. Various measures of volatility and benchmark correlation
may be quoted in advertising. In addition, the Fund may compare these
measures to those of other funds. Measures of volatility seek to compare
historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOVING AVERAGES. Performance may be illustrated using moving averages.
A long-term moving average is the average of each week's adjusted closing
NAV for a specified period. A short-term moving average is the average of
each day's adjusted closing NAV for a specified period. Moving Average
Activity Indicators combine adjusted closing NAVs from the last business
day of each week with moving averages for a specified period to produce
indicators showing when an NAV has crossed, stayed above, or stayed below
its moving average. On October 29, 1993, the 13-week and 39-week long-term
moving averages were 12.72 and 11.59, respectively.
MOMENTUM INDICATORS indicate the Fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
percentage change in price movements over that period.
NET ASSET VALUE. Charts and graphs using net asset values, adjusted
net asset values, and benchmark indices may be used to exhibit performance.
An adjusted NAV includes any distributions paid by the Fund and reflects
all elements of its return. Unless otherwise indicated, the Fund's
adjusted NAVs are not adjusted for sales charges, if any.
Examples of the effects of periodic investment plans, including the
principle of dollar cost averaging may be advertised. In such a program,
an investor invests a fixed dollar amount in a portfolio at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares had been purchased
at the same intervals. In evaluating such a plan, investors should
consider their ability to continue purchasing shares through periods of low
price levels.
The Fund may be available for purchase through retirement plans or
other programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
TRADITION OF PERFORMANCE. Fidelity's tradition of performance is
achieved through:
(bullet) MONEY MANAGEMENT: a proud tradition of money management
motivated by the expectation of excellence backed by solid analysis and
worldwide resources. Fidelity employs a bottom-up approach to security
selection based upon in-depth analysis of the fundamentals of that
investment opportunity.
(bullet) INNOVATION: constant attention to the changing needs of
today's investors and vigilance to the opportunities that arise from
changing global markets. Research is central to Fidelity's investment
decision-making process. Fidelity's greatest resource -- over 200 skilled
investment professionals--is supported with the most sophisticated
technology available.
Fidelity provides:
(bullet) Global research resources: an opportunity to diversify
portfolios and share in the growth of markets outside the United
States.
(bullet) In-house, proprietary bond-rating system, constantly updated,
which provides extremely sensitive credit analysis.
(bullet) Comprehensive chart room with over 1500 exhibits to provide
sophisticated charting of worldwide economic, financial, and technical
indicators, as well as to provide tracking of over 800 individual stocks
for portfolio managers.
(bullet) State-of-the-art trading desk, with access to over 200
brokerage houses, providing real-time information to achieve the best
executions and optimize the value of each transaction.
(bullet) Use of extensive on-line computer-based research services.
(bullet) SERVICE: timely, accurate and complete reporting. Prompt and
expert attention when an investor or an investment professional needs
it.
HISTORICAL PERFORMANCE RESULTS. The following chart shows the income and
capital elements of the Fund's total return from April 23, 1990
(Commencement of Operations) through October 31, 1993. (Prior to December
1, 1992, the Fund compared its total return to the record of the Europe
Index, which illustrated how the Fund's total return compared to the record
of a broad range of European stocks.) Effective December 1, 1992, the
comparative index used in the Fund's performance changed to the EAFE Index.
The Fund may also compare its performance to the record of the Standard
& Poor's 500 Composite Stock Price Index (S&P 500, which is a
registered trademark of Standard & Poor's Corporation), the Dow Jones
Industrial Average (DJIA), and the cost of living (measured by the
Consumer Price Index, or CPI) over the same period. The EAFE, Europe
Index, NASDAQ, S&P 500 and DJIA comparisons are provided to show how
the Fund's total return compared to the record of a broad range of foreign
and domestic common stocks and for the DJIA, a narrower set of stocks of
major U.S. industrial companies over the same period. The Fund has the
ability to invest in securities not included in the indices, and its
investment portfolio may or may not be similar in composition to the
indices. The EAFE Index, the S&P 500, the DJIA, and the NASDAQ
are based on the prices of unmanaged groups of stocks and, unlike the
Fund's returns, their returns do not include the effect of paying brokerage
commissions and other costs of investing.
During the period from April 23, 1990 (Commencement of Operations) to
October 31, 1993 a hypothetical investment of $10,000 in the Fidelity
Advisor Overseas Fund would have grown to $12,740 , assuming all
distributions were reinvested. This was a period of widely fluctuating
stock prices, and should not necessarily be considered a representation of
the income and capital gain or loss that may be realized from an investment
in the Fund today.
FIDELITY ADVISOR OVERSEAS FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED COST
PERIOD $10,000 DIVIDEND CAPITAL GAIN TOTAL EAFE OF
ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P DJIA INDEX(see note) LIVING**
10/31/90* $9,096 $0 $0 $9,096 $9,246 $9,246 $9,815 $10,357
10/31/91 9,315 77 0 9,392 12,344 12,027 10,497 10,659
10/31/92 8,639 200 0 8,839 13,575 13,020 9,110 11,001
10/31/93 12,316 424 0 12,740 15,604 15,293 12,522 11,303
</TABLE>
* April 23, 1990 (commencement of operations) to October 31, 1990.
** From month - end closest to initial investment date.
(see note) Total returns for the EAFE Index reflect changes in share
prices of stocks included in the Index and assume reinvestment of dividends
paid on those stocks. As of November 30, 1992 the total value of the
Europe Index was $10,192. If this balance had been transferred to the EAFE
Index as of December 1, 1992 the ending balance would have been $13,879 on
October 31, 1993.
EXPLANATORY NOTES: With an initial investment of $10,000 made on April
23, 1990 (commencement of operations), the net amount invested in Fund
shares was $9,525, assuming the current 4.75% maximum sales charge was
deducted as if it had been in effect at that time. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (that is,
their cash value at the time they were reinvested), amounted to $10,308.
If distributions had not been reinvested, the amount of distributions
earned from the Fund over time would have been smaller, and the cash
payments for the period would have amounted to $305 for income dividends
and $0 for capital gain distributions. Tax consequences have not been
factored into the above figures.
MARKET CAPITALIZATION. Companies outside the U.S. now make up nearly
two - thirds of the world's stock market capitalization. According to
Morgan Stanley Capital International World Index, the size of the markets
as measured in U.S. dollars grew from $2,011 billion in 1982 to
$ 11,638 billion as of December 31, 1993 .
The following table measures the total market capitalization of certain
countries according to the Morgan Stanley Capital International Indices
database. The value of the markets are measured in billions of U.S.
dollars as of December 31, 1993 .
TOTAL MARKET CAPITALIZATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Australia $ 196 Japan $ 2,885
Austria 28 Netherlands 171
Belgium 76 Norway 26
Canada 297 Singapore/Malaysia 297
Denmark 40 Spain 115
France 453 Sweden 102
Germany 443 Switzerland 244
Hong Kong 383 United Kingdom 1,190
Italy 135 United States 4,467
</TABLE>
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents the
performance of national stock markets as measured in U.S. dollars by the
Morgan Stanley Capital International stock market indices for the twelve
month period ended December 31, 1993. The second table shows the same
performance as measured in local currency. Each table measures total
return based on the period's change in price, assuming any dividends are
reinvested monthly and net of any applicable foreign taxes. These are
unmanaged indices composed of a sampling of selected companies representing
an approximation of the market structure of the designated country.
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN U.S. DOLLARS
Australia 36.6% Japan 25.7%
Austria 28.6 Netherlands 36.6
Belgium 24.9 Norway 42.6
Canada 18.4 Singapore/Malaysia 89.0
Denmark 33.3 Spain 31.2
France 21.6 Sweden 37.6
Germany 36.3 Switzerland 46.7
Hong Kong 116.7 United Kingdom 24.4
Italy 29.5 United States 10.1
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN LOCAL CURRENCY
Australia 38.7% Japan 12.4%
Austria 38.0 Netherlands 45.8
Belgium 35.9 Norway 54.7
Canada 23.5 Singapore/Malaysia 90.4
Denmark 44.7 Spain 63.6
France 30.0 Sweden 62.5
Germany 46.2 Switzerland 48.5
Hong Kong 116.3 United Kingdom 27.4
Italy 50.0 United States 10.1
Of course, these results do not indicate future stock market performance or
the Fund's performance. Market conditions during the period measured
fluctuated widely. Brokerage commissions and other fees were not factored
into the values of the indices.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
HOLIDAY SCHEDULE. The Fund is open for business and its NAV is calculated
each day that the NYSE is open for trading. The NYSE has designated the
following holiday closings for 1994: Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day (observed). Although FMR expects the same holiday schedul e, with
the addition of New Year's Day, to be observed in the future, the NYSE
may modify its holiday schedule at any time. On any day that the NYSE
closes early, or as permitted by the SEC, the right is reserved to advance
the time on that day by which purchase and redemption orders must be
received. To the extent that portfolio securities are traded in other
markets on days the NYSE is closed NA V may be affected on days when
investors do not have access to the Fund to purchase or redeem shares.
Certain Fidelity funds may follow different holiday closing schedules.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing NAV . Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a - 3 (the Rule) under the 1940 Act, the Fund is
required to give shareholders at least 60 days' notice prior to terminating
or modifying its exchange privilege. Under the Rule, the 60 - day
notification requirement may be waived if (i) the only effect of a
modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the Fund suspends the redemption of shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the Fund has notified shareholders that it reserves the
right at any time without prior notice, to refuse exchange purchases by any
person or group if, in FMR's judgment, the Fund would be unable to invest
effectively in accordance with its investment objective and policies or
might otherwise be adversely affected.
PURCHASE INFORMATION
As provided for in Rule 22d - 1 under the 1940 Act, Distributors
exercises its right to waive maximum 4.75% sales charge in connection with
the Fund's merger with or acquisition of any investment company or trust.
NET ASSET VALUE PURCHASES. Sales charges do not apply to shares of the
Fund purchased: (1) by registered representatives, bank trust officers and
other employees (and their immediate families) of investment professionals
having agreements with Distributors; (2) by a current or former Trustee or
officer of a Fidelity fund or a current or retired officer, director or
full - time employee of FMR Corp. or its direct or indirect
subsidiaries (a "Fidelity Trustee or employee"), the spouse of a Fidelity
Trustee or employee, a Fidelity Trustee or employee acting as custodian for
a minor child, or a person acting as trustee of a trust for the sole
benefit of the minor child of a Fidelity Trustee or employee; (3) by a
charitable organization (as defined in Section 501(c)(3) of the Internal
Revenue Code) investing $100,000 or more; (4) by a charitable remainder
trust or life income pool established for the benefit of a charitable
organization (as defined in Section 501(c)(3) of the Internal Revenue
Code); (5) by trust institutions (departments) investing on
their own behalf or on behalf of their clients; (6) in accounts as to
which a bank or broker - dealer charges an investment management fee,
provided the bank or broker - dealer has an agreement with
Distributors; (7) as part of an employee benefit plan (including
Fidelity - Sponsored 403(b) and Corporate IRA programs, but otherwise
as defined in the Employee Retirement Income Security Act (ERISA)),
maintained by a U.S. Employer having more than 200 eligible employees, or a
minimum of $1,000,000 invested in Fidelity Advisor mutual funds, and the
assets of which are held in a bona fide trust for the exclusive benefit of
employees participating therein; (8) by any state, county, or city, or any
governmental instrumentality, department, authority or agency; (9) in a
Fidelity or Fidelity Advisor IRA account purchase with the proceeds of a
distribution from an employee benefit plan that is part of an employee
benefit plan having more than 200 eligible employees or a minimum of
$3,000,000 in plan assets invested in Fidelity mutual funds or $1,000,000
invested in Fidelity Advisor mutual funds; (10) with redemption proceeds
from other mutual fund complexes on which the investor has paid a
front - end sales charge only; and (11) by an insurance company
separate account used to fund annuity contracts purchased by employee
benefit plans (including 403(b) programs, but otherwise as defined in
ERISA), which, in the aggregate, have either more than 200 eligible
employees or a minimum of $3,000,000 in assets invested in Fidelity mutual
funds or a minimum of $1,000,000 invested in Fidelity Advisor mutual funds.
Distributors compensates securities dealers and banks having agreements
with Distributors (investment professionals), who sell shares according to
the schedule in the Prospectus. Distributors may, at its expense, provide
promotional incentives to investment professionals who support the sale of
shares of the Fund without reimbursement from the Fund. In some instances,
these incentives may be offered only to certain investment professionals
whose representatives provide services in connection with the sale or
expected sale of significant amounts of shares. Fidelity Investments
Institutional Operations Company (FIIOC), an affiliate of FMR, is paid fees
based on the type, size and number of bank affiliated client accounts and
number of their monetary transactions.
Distributors compensates investment professionals with a fee of .25% on
purchases of $1 million or more, except for purchases made through a bank
or bank-affiliated broker-dealer that qualify for a Sales Charge Waiver
described in the Fund's prospectus. All assets on which the .25% fee is
paid must remain within the Fidelity Advisor Funds (including shares
exchanged into Daily Money Fund and Daily Tax-Exempt Money Fund) for a
period of one uninterrupted year or the investment professional will be
required to refund this fee to Distributors. Purchases by insurance
company separate accounts will qualify for the .25% fee only if an
insurance company's client relationship underlying the separate account
exceeds $1 million. It is the responsibility of the insurance company to
maintain records of purchases by any such client relationship.
Distributors may request records evidencing any fees payable through this
program.
QUANTITY DISCOUNTS. Reduced sales charges are applicable to purchases of
$50,000 or more alone or in combination with purchases of shares of other
Fidelity Advisor Funds made at any one time (including Daily Money Fund and
Daily Tax - Exempt Money Fund shares acquired by exchange from any
Fidelity Advisor Fund with a sales charge). To obtain the reduction of the
sales charge, you or your investment professional must notify the Transfer
Agent at the time of purchase whenever a quantity discount is applicable to
your purchase. Upon such notification, you will receive the lowest
applicable sales charge.
In addition to investing at one time in any combination of funds in an
amount entitling you to a reduced sales charge, you may qualify for a
reduction in the sales charge under the following programs:
COMBINED PURCHASES. When you invest for several accounts at the same time,
you may combine these investments into a single transaction if purchased
through one investment professional and if the total is at least $50,000.
The following may qualify for this privilege: an individual, or "company"
as defined in Section 2(a)(8) of the 1940 Act; an individual, spouse, and
their children under age 21 purchasing for his, her, or their own account;
a trustee, administrator or other fiduciary purchasing for a single trust
estate or single fiduciary account or for a single or a
parent - subsidiary group of "employee benefit plans" (as defined in
Section 3(3) of ERISA); and tax - exempt organizations under Section
501(c)(3) of the Internal Revenue Code.
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced sales
charges on any future purchases after you have reached a new breakpoint in
sales charge schedule (see the Prospectus for the s ales
charge schedule). You can add the value of existing Fidelity Advisor Fund
shares (including Daily Money Fund and Daily Tax - Exempt Money Fund
shares acquired by exchange from any Fidelity Advisor Fund), held by you,
your spouse, and your children under age 21 determined at the previous
day's NAV at the close of business, to the amount of your new purchase
valued at the current offering price to determine your reduced sales
charge.
LETTER OF INTENT. If you anticipate purchasing $50,000 or more of shares
alone or in combination with shares of certain other Fidelity Advisor Funds
(excluding Daily Money Fund and Daily Tax - Exempt Money Fund) within
a 13 - month period, you may obtain shares of the portfolios at the
same reduced sales charge as though the total quantity were invested in one
lump sum, by filing a nonbinding Letter of Intent (the Letter) within 90
days of the start of the purchases. Each investment you make after signing
the Letter will be entitled to the sales charge applicable to the total
investment indicated in the Letter. For example, a $2,500 purchase toward
a $50,000 Letter would receive the same reduced sales charge as if the
$50,000 had been invested at one time. To ensure that the reduced price
will be received on future purchases, you or your investment professional
must inform the Transfer Agent that the Letter is in effect each time
shares are purchased. Neither income dividends nor capital gain
distributions taken in additional shares will apply toward the completion
of the Letter.
Your initial investment must be at least 5% of the total amount you plan to
invest. Out of the initial purchase, 5% of the dollar amount specified in
the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is
satisfied or the additional sales charges have been paid. You will earn
income dividends and capital gain distributions on escrowed shares. The
escrow will be released when your purchase of the total amount has been
completed. You are not obligated to complete the Letter.
If you purchase more than the amount specified in the Letter and qualify
for a further sales charge reduction, the sales charge will be adjusted to
reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering
price applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13 - month period, your sales charge will be adjusted upward,
corresponding to the amount actually purchased, and if after 30 days'
written notice, you do not pay the increased sales charge, sufficient
escrowed shares will be redeemed to pay such charge.
FIDELITY ADVISOR SYSTEMATIC INVESTMENT P ROGRAM . You can make
regular investments in the Fund or other Fidelity Advisor Funds with the
Systematic Investment Plan by completing the appropriate section of the
account application and attaching a voided personal check with your bank's
magnetic ink coding number across the front. If your bank account is
jointly owned, be sure that all owners sign. Investments may be made
monthly by automatically deducting $100 or more from your bank checking
account. You may change the amount of your monthly purchase at any
time. There is a $1,000 minimum initial investment requirement for the
Systematic Investment Program.
Your account will be drafted on or about the first business day of every
month. Shares will be purchased at the offering price next determined
following receipt of the order by the Transfer Agent. You may cancel the
Systematic Investment option at any time without payment of a cancellation
fee. You will receive a confirmation from the Transfer Agent for every
transaction, and a debit entry will appear on your bank statement.
ADDITIONAL EXCHANGE INFORMATION
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM . With the Systematic
Exchange Plan, you can exchange a specific dollar amount from the Fund
shares into certain other Fidelity Advisor Funds on a monthly, quarterly or
semiannual basis.
(bullet) The account from which the exchanges are to be processed must
have a minimum value of $10,000 before you may elect to begin exchanging
systematically. The account into which the exchanges are to be processed
must be an existing account with a minimum of $1,000.
(bullet) Both accounts must have identical registrations and taxpayer
identification numbers. The minimum amount to be exchanged systematically
varies by fund. The minimum amount to be exchanged systematically into
Fidelity Advisor Income & Growth Fund is $100.
(bullet) Systematic Exchanges will be processed at the NAV determined on
the transaction date, except that Systematic Exchanges into a Fidelity
Advisor Fund from any money market fund will be processed at the offering
price next determined on the transaction date, unless the shares were
acquired by exchange from another Fidelity Advisor Fund.
REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. If you have sold all or part of your shares you
may reinvest an amount equal to all or a portion of the redemption proceeds
in the Fund or in any of the other Fidelity Advisor Funds, at the NAV next
determined after receipt of your investment order, without a sales charge,
provided that such reinvestment is made within 30 days of redemption. No
charge currently is made for reinvestment in shares of the Fund. You must
reinstate your shares into an account with the same registration. This
privilege may be exercised only once by a shareholder with respect to the
Fund. For information on which funds are available for the Reinstatement
Privilege, please consult the Application.
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL P ROGRAM . If you own
shares worth $10,000 or more, you can have monthly, quarterly or semiannual
checks sent from your account to you, to a person named by you, or to your
bank checking account. You may obtain information about the Systematic
Withdrawal Plan by contacting your investment professional. Your Systematic
Withdrawal Plan payments are drawn from share redemptions. If Systematic
Withdrawal Plan redemptions exceed income dividends earned on your shares,
your account eventually may be exhausted. Since a sales charge is applied
on new shares you buy, it is to your disadvantage to buy shares while also
making systematic redemptions.
DISTRIBUTION AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, the Transfer Agent may reinvest your distributions
at the then - current NAV. All subsequent distributions will then be
reinvested until you provide the Transfer Agent with alternate
instructions.
DIVIDENDS. Gains (losses) attributable to foreign currency fluctuations
generally are taxable as ordinary income and therefore increase (decrease)
dividend distributions. Because the Fund invests primarily in foreign
securities, corporate shareholders should not expect dividends from the
Fund to qualify for the dividends received deduction. The Fund's earning
qualifying dividends from U.S. corporations will notify corporate
shareholders annually of the percentage of Fund dividends which qualify for
the dividends received deduction. Dividends are distributed annually,
usually in December.
CAPITAL GAIN DISTRIBUTIONS. Long - term capital gains earned by the
Fund on the sale of securities and distributed to shareholders are
federally taxable as long - term capital gains, regardless of the
length of time that the shareholders have held their shares. If a
shareholder receives a long - term capital gain distribution on shares
of the Fund and such shares are held for less than six months and are sold
at a loss, the portion of the loss equal to the amount of the
long - term capital gain distribution will be considered a
long - term loss for tax purposes.
Short - term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from the
short - term capital gains do not qualify for the dividends received
deduction. As of October 31, 199 3 , the Fund had a capital loss
carryover, available to offset future capital gains, of approximately
$ 949,000 of which will expire on October 31, 1999.
FOREIGN TAXES. Foreign governments may withhold taxes from dividends or
interest paid with respect to foreign securities . The Fund intends
to elect to pass through foreign taxes paid in order for a shareholder to
take a credit or deduction if, at the close of its fiscal year, more than
50% of the Fund's total assets are invested in securities of foreign
issuers.
TAX STATUS OF THE FUND. The Fund has qualified and intends to continue
to qualify each year as a "regulated investment company" for tax
purposes, so that it will not be liable for federal tax on income and
capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income and
excise taxes at the Fund level , the Fund intends to distribute
substantially all of its net taxable income and realized capital gains
within each calendar year as well as on a fiscal year basis. The Fund also
intends to comply with other tax rules applicable to regulated investment
companies, including a requirement that capital gains from the sale of
securities held for less than three months must constitute less than 30% of
the Fund's gross income for each fiscal year. Gains from some forward
currency contracts, futures contracts and options, are included in this
30% calculation, which may limit the Fund's investments in such
instruments.
If the Fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs under the
Internal Revenue Code ), it may be subject to U.S. federal income taxes
on a portion of any excess distribution or gain from the disposition of
such shares. Interest charges may also be imposed on the Fund with respect
to deferred taxes arising from such distributions or gains.
The Fund is treated as a separate entity from the other portfolios of
Fidelity Advisor Series VII for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of the Fund may be
subject to state and local taxes on distributions received from the Fund.
Investors should consult thei r tax advisors to determine
whether the Fund is suitable to thei r particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: Fidelity Service
Co. (Service) , which is the transfer and shareholder servicing agent
for certain of the funds advised by FMR; Fidelity Investments Institutional
Operations Company, which performs shareholder servicing functions for
certain institutional customers; and Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within the
Fidelity organization.
Several affiliates of FMR also are engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research , and
may supply portfolio management services to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
TRUSTEES AND OFFICERS
The Board of Trustees and executive officers of the Fund are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. All persons
named as Trustees and officers also serve in similar capacities for other
funds advised by FMR. Unless otherwise noted, the business address of each
Trustee and officer is 82 Devonshire Street, Boston, Massachusetts 02109,
which is also the address of FMR. Those Trustees who are "interested
persons" (as defined in the 1940 Act by virtue of their affiliation
with either the Fund or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983 - 1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc.
(1985 - 1991) and Nabisco Brands, Inc. In addition, she serves as a
Director of the New York City Chapter of the National Multiple Sclerosis
Society, and is a member of the Advisory Council of the International
Executive Service Corps. and the President's Advisory Council of The
University of Vermont School of Business Administration .
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. Prior to May 1990, he was Director
of National City Corporation (a bank holding company) and National City
Bank of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland - Cliffs Inc. (mining), NACCO
Industries, Inc. (mining and marketing), Consolidated Rail Corporation,
Birmingham Steel Corporation (1988), Hyster - Yale Materials Handling,
Inc. (1989), and RPM, Inc. (manufacturer of chemical products, 1990). In
addition, he serves as a Trustee of First Union Real Estate Investments;
Chairman of the Board of Trustees and a member of the Executive Committee
of the Cleveland Clinic Foundation, a Trustee and a member of the Executive
Committee of University School (Cleveland), and a Trustee of Cleveland
Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1 - North, Greenwich,
CT, Trustee, is a Professor at Columbia University Graduate School of
Business and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) , and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the
Board of Directors of the National Arts Stabilization Fund and Vice
Chairman of the Board of Trustees of the Greenwich Hospital Association
(1989).
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991 - 1992). He is a
Director of W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen
Corporation (engineering and construction ) . In addition, he serves
as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary,
Historic Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME - Cleveland Corp. (metal working,
telecommunications and electronic products), Brush - Wellman Inc.
(metal refining), York International Corp. (air conditioning and
refrigeration, 1989), C ommercial Intertech Corp. (water treatment
equipment, 1992) and Associated Estates Realty Corporation (a real
estate investment trust, 1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee (1988).
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director M.A. Hanna Company (chemicals, 1993)
and Infomart (marketing services, 1991), a Trammell Crow Co. In addition,
he serves as the Campaign Vice Chairman of the Tri-State United Way (1993)
and is a member of the University of Alabama President's Cabinet (1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee (1988), is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He
is currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting
- Fidelity Accounting & Custody Services Co. (1991); Vice
President, Fund Accounting - Fidelity Accounting & Custody
Services Co. (1990); and Senior Vice President, Chief Financial and
Operations Officer - Huntington Advisers, Inc. (1985 - 1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and
Clerk of FDC.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
Under a retirement program, which became effective on November 1, 1989, a
Trustee, upon reaching age 72, becomes eligible to participate in a defined
benefit retirement program under which t he y receive payments
during their lifetime from the Fund, based on their basic trustees
fees and length of service. Currently, Messrs. Robert L. Johnson, William
R. Spaulding, Bertram H. Witham, and David L. Yunich participate in the
program.
On October 31, 1993, the Trustees and officers owned in the aggregate less
than 1% of the Fund's outstanding shares.
MANAGEMENT AND OTHER SERVICES
The Fund employs FMR to furnish investment advisory and other
services. Under its Management Contract with the Fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of the Fund in accordance with its
investment objective, policies, and limitations. FMR also provides the
Fund with all office facilities and personnel for servicing the Fund's
investments, and compensates all officers of the Trust , all Trustees
who are "interested persons" of the Trust or of FMR, and all
personnel of the Trust or FMR performing services relating to
research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the Fund. These services include providing facilities
for maintaining the Fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters and
other persons dealing with the Fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the Fund's
records and the registration of the Fund's shares under federal and state
law; developing management and shareholder services for the Fund; and
furnishing reports, evaluations and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
Service and State Street, the Fund pays all its expenses, without
limitation, that are not assumed by those parties. The Fund pays for
typesetting, printing and mailing of its p rospectuses, statements of
additional information, reports, and proxy material to existing
shareholders, legal expenses and its proportionate share of the fees of the
Fund's custodian, auditor and non - interested Trustees. Although
the Fund's Management contract provides that the Fund will pay for
typesetting, printing and mailing prospectuses, statements of additional
information, notices, and reports to existing shareholders, the Fund has
entered into a revised transfer agent agreement with State Street pursuant
to which State Street bears the cost of providing these services to
existing shareholders. Other expenses paid by the Fund include
interest, taxes, brokerage commissions, the Fund's proportionate share of
insurance premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. The Fund is
also liable for such nonrecurring expenses as may arise, including costs of
litigation to which the Fund may be a party and any obligation it may have
to indemnify its officers and Trustees of the Trust with
respect to such litigation.
FMR is the Fund's Manager pursuant to a Management Contract dated January
1, 1993, which was approved by shareholders on December 1, 1992.
For the services of FMR under the contract, FMR is paid a monthly
management fee composed of the sum of two elements: a basic fee and a
performance adjustment based on a comparison of the Fund's performance to
that of the EAFE Index.
COMPUTING THE BASIC FEE. The group fee rate is based on the monthly
average net assets of all registered investment companies with which FMR
has management contracts and is calculated on a cumulative basis pursuant
to the graduated fee rate schedule shown on the left. On the right, the
effective fee rate schedules show the result of cumulatively
applying the annualized rates at varying asset levels. For example, the
effective annual group fee rate at $223 billion of group net
assets -- their approximate level for the month of October 1993
was . 3254 %, which is the weighted average of the respective fee
rates for each level of group net assets up to $ 223 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE
RATES
Average Group Effective
Group Annualized Net Annual
Assets Rate Assets Fee Rate
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
$ 0 - 3 billion .520% $ 0.5 billion .5200%
3 - 6 .490 10 .4840
6 - 9 .460 20 .4398
9 - 12 .430 30 .4115
12 - 15 .400 40 .3944
15 - 18 .385 50 .3823
18 - 21 .370 60 .3728
21 - 24 .360 70 .3656
24 - 30 .350 80 .3599
30 - 36 .345 90 .3552
36 - 42 .340 100 .3512
42 - 48 .335 110 .3475
48 - 66 .325 120 .3444
66 - 84 .320 130 .3417
84 - 102 .315 140 .3394
102 - 138 .310 150 .3371
138 - 174 .305 160 .3351
174 - 228 .300 170 .3333
228 - 282 .295 180 .3316
282 336 .290 190 .3299
Over 336 .285 200 .3284
</TABLE>
* The rates shown for average group assets in excess of $138 billion were
adopted by FMR on a voluntary basis on January 1, 1992. Rates in excess of
$174 billion were adopted by FMR on a voluntary basis on November 1,
1993. Each was adopted pending shareholder approval of a new management
contract reflecting the extended schedule. The extended schedule provides
for lower management fees as total assets under management increase.
The individual fund fee rate is .45%. Based on the average group net
assets of funds advised by FMR for October 1993 , the annual basic
fee rate would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE
.3254 % + .45 % = .7754 %
One-twelfth of this annual basic fee rate is applied to the Fund' s
net assets for the most recent month, giving a dollar amount which is
the fee for that month.
Prio r to January 1, 1992, the Fund's group fee rate was based on a
schedule with break points ending at .310% for average group assets in
excess of $102 billion. This shorter schedule was included in the Fund's
prior management contract with FMR dated April 20, 1990.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee will be subject to an
upward or downward adjustment, depending upon whether, and to what extent,
the Fund's investment performance for the performance period exceeds, or is
exceeded by, the record of the EAFE Index over the same period. The
performance period consists of the most recent month plus the previous 35
months. Each percentage point of difference (up to a maximum difference of
+ 10) is multiplied by a performance adjustment rate of .02%. The maximum
annualized adjustment rate is therefore + .20%. This performance
comparison is made at the end of each month. One-twelfth of this rate is
then applied to the Fund's average net assets for the entire performance
period, giving a dollar amount which will be added to (or subtracted from)
the basic fee.
The Fund's performance is calculated based on change in NAV. For purposes
of calculating the performance adjustment, any dividends or capital gain
distributions paid by the Fund are treated as if reinvested in Fund shares
at the NAV as of the record date for payment. The record of the EAFE Index
is based on change in value and is adjusted for any cash distributions from
the companies whose securities make up the EAFE Index.
THE PERFORMANCE PERIOD. The performance period commences with the Fund's
first full month of operations. Starting with the twelfth month after that
date (April 1991), the performance adjustment for the Fund took effect.
Each month subsequent to May 1991 , a new month will be added to the
performance period until the performance period equals 36 months.
Thereafter, the performance period will consist of the most recent month
plus the previous 35 months.
Because the adjustment to the basic fee is based on the Fund's performance
compared to the investment record of the EAFE Index, the controlling factor
is not whether the Fund's performance is up or down per se, but whether it
is up or down more or less than the record of the EAFE Index. Moreover,
the comparative investment performance of the Fund is based solely on the
relevant performance period without regard to the cumulative performance
over a longer or shorter period of time.
During the fiscal years ended October 31, 1993, 1992, and 1991 FMR received
$ 503,110 , $139,234, and $148,643, respectively, (before
reimbursement of expenses) for its services as investment adviser to the
Fund. These fees, which include both the basic fee and the performance
adjustment, were equivalent to .77%, .75%, and .78%, respectively, of the
average net assets of the Fund for each of those years. For fiscal 1993,
1992, and 1991, the downward performance adjustments amounted to $3,885,
$6,062, and $2,710, respectively.
To comply with the California Code of Regulations, FMR will reimburse the
Fund if and to the extent that the Fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the Fund's expenses for purposes of this regulation, the
Fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
State Street Bank and Trust Company is transfer and dividend-disbursing
and shareholder servicing agent of the Fund and maintains its shareholder
records. State Street has delegated certain transfer, dividend paying and
shareholder services to Fidelity Investments Institutional Operations
Company (FIIOC), 82 Devonshire Street, Boston, Massachusetts 02109, an
affiliate of FMR. Under a revised fee arrangement effective January 1,
1993, the Fund pays a per account fee and monetary transaction fee of $30
and $6, respectively. for accounts as to which FIIOC provides limited
services, FIIOC may receive a portion (currently up to $20 and $6,
respectively) of related per account fees and monetary transaction fees,
less applicable charges and expenses of State Street for account
maintenance and transactions.
Service , an affiliate of FMR, performs the calculations necessary to
determine the Fund's NAV and dividends and maintains the Fund's accounting
records. Prior to July 1, 1991, the annual fee for these pricing and
bookkeeping fees was based on two schedules, one pertaining to the
Fund's average net assets, and one pertaining to the type and number of
transactions the Fund made. The fee rates in effect as of July 1, 1991 are
based on the Fund's average net assets, specifically, .06% for the first
$500 million of average net assets and .03% for average net assets in
excess of $500 million. The fee is limited to a minimum of $45,000 and a
maximum of $750,000 per year. Pricing and bookkeeping services (including
related out - of - pocket expenses), paid to Service for fiscal
1993, 1992 and 1991, were $ 57,711 , $48,617, and $82,991,
respectively.
FSC also receives fees for administering the Fund's securities lending
program. Securities lending fees are based on the number and duration of
individual securities loans. For the fiscal years ended October 31, 1993,
1992, and 1991, there were no fees paid to Service for securities lending.
SUB - ADVISERS. On December 1, 1992 , FMR entered into
sub - advisory agreements with FMR U.K., FMR Far East, and FIIA.
FIIA, in turn, has entered into a sub - advisory agreement with its
wholly owned subsidiary FIIAL U.K. Pursuant to the sub - advisory
agreements, FMR may receive investment advice and research services with
respect to companies based outside the U.S. from the sub - advisors
and may grant the sub - advisors investment management authority as
well as the authority to buy and sell securities if FMR believes it would
be beneficial to the Fund.
Currently, FMR U.K., FMR Far East, FIIA, and FIIAL U.K. each focus on
companies in countries other than the United States including countries in
Europe Asia, and the Pacific Basin.
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR. FIIA is a
wholly owned subsidiary of Fidelity International Limited (FIL), a Bermuda
company formed in 1968 which primarily provides investment advisory
services to non - U.S. investment companies and institutional
investors investing in securities of issuers throughout the world. Edward
C. Johnson 3d, together with various trusts for the benefit of Johnson
family members own, directly or indirectly, more than 25% of the voting
stock of FIL. FIIA was organized in Bermuda in 1983 and FIIAL U.K. was
organized in the United Kingdom in 1984.
Under the sub - advisory agreements FMR pays fees to FMR U.K., FMR Far
East, and FIIA. FIIA, in turn, pays fees to FIIAL U.K.
For providing investment advice and research services the
sub - advisors are compensated as follows:
(bullet) FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of FMR U.K.'s and FMR Far East's costs incurred in connection
with providing investment advice and research services.
(bullet) FMR pays FIIA 30% of FMR's monthly management fee with respect to
the average market value of investments held by the Fund for which FIIA has
provided FMR with investment advice.
(bullet) FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL U.K.'s costs
incurred in connection with providing investment advice and research
services.
For providing investment management and executing portfolio
transactions, the sub-advisors are compensated as follows:
(bullet) FMR pays FMR U.K., FMR Far East, and FIIA 50% of its monthly
management fee (including any performance adjust ment) with respect to
t he Fund's average net assets managed by the sub-advisor on a
discretionary basis.
(bullet) FIIA pays FIIAL U.K. 110% of FIIAL U.K.'s costs incurred with
providing investment management services.
Prior to December 1, 1992, FMR had a sub - advisory agreement with FMR
U.K. on behalf of the Fund pursuant to which FMR U.K. provided FMR with
investment advice and research services. Under that agreement, FMR U.K. was
compensated for its services according to the same formulas as it is
currently compensated for provided investment advice and research services.
The fees paid to FMR U.K. and FMR Far East under the subadvisory
agreements for fiscal 1993 and 1992 are shown in the table below:
Fees Paid to Fees Paid to
Fiscal Year FMR U.K. FMR Far East
1993 $14,363 $22,357
1992 $13,189 $16,736
State Street is transfer and dividend-disbursing and shareholder
servicing agent and maintains its shareholder records. State Street has
delegated certain transfer, dividend paying and shareholder services to
Fidelity Investments Institutional Operations Company (FIIOC), 82
Devonshire Street, Boston, Massachusetts 02109, an affiliate of FMR. Under
a revised fee arrangement effective January 1, 1993, the Fund pays a per
account fee and monetary transaction fee of $30 and $6, respectively. For
accounts as to which FIIOC provides limited services, FIIOC may receive a
portion (currently up to $20 and $6, respectively) of related per account
fees and monetary transaction fees, less applicable charges and expenses of
State Street for account maintenance and transactions.
Service, an affiliate of FMR, performs the calculations necessary to
determine the Fund's NAV and dividends and maintains the Fund's accounting
records. Prior to July 1, 1991, the annual fee for these pricing and
bookkeeping services was based on two schedules, one pertaining to the
Fund's average net assets, and one pertaining to the type and number of
transactions the Fund made. The fee rates in effect as of July 1, 1991 are
based on the Fund's average net assets, specifically, .06% for the first
$500 million of average net assets and .03% for average net assets in
excess of $500 million. The fee is limited to a minimum of $45,000 and a
maximum of $750,000 per year. Pricing and bookkeeping fees
(in cluding related out-of-pocket expenses), p aid to Service for
fiscal 1993, 1992 and 1991, we re $57,711, $48,617, and $82,991,
respectively.
Service also receive s fees for administering the Fund's securities
lending program. Securities lending fees are based on the number and
duration of individual securities loans. For the fiscal years ended
October 31, 1993, 1992, and 1991, there were no fees paid to Service for
securities lending .
THE DISTRIBUTOR
The Fund has a General Distribution Agreement with Distributors, a
Massachusetts corporation organized July 18, 1960. Distributors, located
at 82 Devonshire Street, Boston, Massachusetts 02109, is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, INc. The General Distribution
Agreement calls for Distributors to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Fund, which
are offered continuously. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by Distributors.
Distributors also acts as general distributor for other publicly offered
Fidelity funds. The expense of these operations are borne by FMR or
Distributors.
DISTRIBUTION AND SERVICE PLAN
The Trustees of the Trust on behalf of the Fund have adopted a Distribution
and Service Plan (the Plan) pursuant to Rule 12b - 1 under the 1940
Act (the Rule) . The Plan has been approved by the Trustees and by the
Fund's shareholders at a Special Meeting held October 3, 1990. As required
by the Rule, the Trustees carefully considered all pertinent factors
relating to the implementation of the Plan prior to its approval, and have
determined that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. In particular, the Trustees noted that
payments under the Plan may provide additional incentives to promote the
sale of shares of the Fund, which may result in additional sales of the
Fund's shares and an increase in the Fund's assets. The Fund pays to
Distributors a distribution fee payable at an annual rate of .65% of its
average net assets determined as of the close of business on each day
throughout the month, but excluding assets attributable to shares purchased
more than 144 months prior to such day. This distribution fee is an
expense of the Fund and is not charged directly to individual accounts.
During the fiscal years ended October 31, 1993, 1992, and 1991, the Fund
paid distribution fees to Distributors of $ 422,735 , $120,624, and
$124,340, respectively, of which $97,554 , $27,492, and $26,850,
respectively, was retained by Distributors .
The Plan also specifically recognizes that the FMR, either directly
or through Distributors, may use its management fee revenue, past profits
or other resources, without limitation, to pay promotional and
administrative expenses in connection with the offer and sale of shares of
the Fund. Under the Plan, if the payment by th e Fund to FMR of
management fees should be deemed to be indirect financing of the
distribution of the Fund's shares, such payment is authorized by the Plan.
In addition, the Plan provides that FMR may use its resources, including
its management fee revenues, to make payments to third parties that assist
in selling shares of the Fund or in other distribution activities.
The Plan does not provide for specific payment by the Fund of any of the
expenses of Distributors, nor obligate Distributors or FMR to perform any
specific type or level of distribution activities or incur any specific
level of expense in connection with distribution activities. After
payments by Distributors for advertising, marketing and distribution and
payments to investment professionals , the amounts remaining, if any,
may be used as Distributors may elect.
The Glass - Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of
this prohibition under the Glass - Steagall Act has not been clearly
defined , in Distributors' opinion it should not preclude a bank from
performing shareholder servicing and recordkeeping functions. Distributors
intends to engage banks to perform only such functions.
However, changes in federal or state statutes and regulations pertaining to
the permissible activities of banks and their affiliates or subsidiaries,
as well as further judicial or administrative decisions or interpretations,
could prevent a bank from continuing to perform all or a part of the
contemplated services. If a bank were prohibited from so acting, the
Trustees would consider what actions, if any, would be necessary to
continue to provide efficient and effective shareholder services. In such
event, changes in the operation of the Fund might occur, including possible
termination of any automatic investment or redemption or other services
then provided by the bank. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences. The Fund may execute portfolio transactions with and purchase
securities issued by depository institutions that receive payments under
the Plans. No preference will be shown in the selection of investments for
the instruments of such depository institutions. In addition, state
securities laws on this issue may differ from the interpretations of
federal law expressed herein, and banks and financial institutions may be
required to register as dealers pursuant to state law.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Advisor Overseas Fund is a fund of
Fidelity Advisor Series V I I, an open - end management
investment company organized as a Massachusetts business trust by
Declaration of Trust dated March 21, 1980. On July 18, 1991 the Board of
Trustees voted to change the name of the Trust from Plymouth Securities
Trust to Fidelity Securities Trust, and on April 15, 1993 the Board of
Trustees voted to change the name of the Trust to Advisor Series VII.
The Declaration of Trust permits the Trustees to create additional
funds. In the event that FMR ceases to be the investment adviser to the
F und, the right of the Trust or F und to use the identifying
name "Fidelity" may be withdrawn.
As of December 31, 1993 , the following owned of record or
beneficially more than 5% of the Fund: Shearson Lehman Brothers, New
York, N.Y. owned 12.85%; National Financial Services Corporation, New York,
N.Y. owned 9.79; Merrill Lynch Pierce Fenner, Jacksonville, FL owned 7.09%;
A.G. Edwards & Sons, St. Louis, MO owned 6.93%; and Royal Alliance
Association, Inc., Birmingham, AL owned 5.34%.
SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of the
type commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the trust.
The Declaration of Trust provides that the Trust shall not have any
claim against shareholders except for the payment of the purchase price of
shares and requires that each agreement, obligation, or instrument entered
into or executed by the Trust or Trustee include a provision
limiting the obligations created thereby to the Trust and its
assets. The Declaration of Trust provides for indemnification out of a
fund 's property of any shareholder held personally liable for the
obligations of the Fund The Declaration of Trust also provides that
the Fund shall, upon request, assume the defense of any claim made
against any shareholder of the Fund for any act or obligation of the
Fund and satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his or her office.
VOTING RIGHTS. The Fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of th e Trust or the
Fund may, as set forth in the Declaration of Trust, call meetings of
the Trust or the Fund , as the case may be, for any purpose
including removal of one or more Trustees. The Trust or the Fund
may be terminated upon the sale of its assets to another open - end
management investment company, or upon liquidation and distribution of its
assets, if approved by the vote of the holders of a majority of the
outstanding shares of the Trust or the Fund. If not so terminated,
the Trust and the Fund will continue indefinitely.
CUSTODIAN. Chase Manhattan Bank , N.A., 1121 Avenue of the Americas,
New York, NY, is custodian of the assets of the Fund. The custodian is
responsible for the safekeeping of the Fund's assets and the appointment of
subcustodian and clearing agencies. The custodian takes no part in
determining the investment policies of the Fund or in deciding which
securities are purchased or sold by the Fund. The Fund, however, may
invest in obligations of the custodian and may purchase or sell securities
from or to the custodian.
FMR, its officers and directors, its affiliated companies, and the
Trust 's Trustees may, from time to time, have transactions with
various banks, including custodian banks for certain of the funds advised
by FMR. Transactions that have occurred to date include mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or othe r fund relationships.
Fund securities (including ADRs) purchased in the United States are
maintained in the custody of the custodian and may be deposited into the
Federal Reserve Treasury Department Book Entry System or the Security
Depository System of the Depository Trust Company. The custodian has
entered into sub - custodian agreements with several foreign banks or
clearing agencies, pursuant to which portfolio securities which are
purchased outside the United States are maintained in the custody of these
entities. These subcustodian arrangements with entities incorporated or
organized in countries outside of the United States are permitted in
accordance with the conditions of an exemptive order, as amended, granted
to the custodian by the SEC.
AUDITOR. Price Waterhouse, 160 Federal Street, Boston, Massachusetts,
serves as the Trust 's independent accountant. The auditor
examines financial statements for the Fund and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The Annual Report for the fiscal year ended October 31, 1993 is a separate
report supplied with this Statement of Additional Information and is
incorporated herein by reference.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Audited financial statements for the fiscal year ended October 31, 1993
are electronically filed herein.
(b) Exhibits:
(1)(c) Amended and Restated Declaration of Trust dated October 12, 1987 is
incorporated herein by reference to Exhibit 1(c) to Post-Effective
Amendment No. 8.
(b) Amendment to the Fund's Declaration of Trust is incorporated herein
as Exhibit 1(d) to Post-Effective Amendment No. 21.
(2) Bylaws of the Trust are incorporated herein by reference to Exhibit 1
of the Fund's Registration Statement filed March 21, 1980.
(3) None.
(4) Share certificate for Plymouth Europe Portfolio is incorporated herein
by reference to Exhibit 4 to Post-Effective Amendment No. 14.
(5) (a) Management Contract between Fidelity Advisor Overseas Portfolio
and Fidelity Management & Research Co., is incorporated herein by
reference to Exhibit 5(d) to Post Effective Amendment No. 20.
(b) Sub-Advisory Agreement for Fidelity Advisor Overseas Portfolio between
Fidelity Management & Research Co. and Fidelity Management &
Research (U.K.) Inc. is incorporated herein by reference to Exhibit 5(e).
(c) Sub-Advisory Agreement for Fidelity Advisor Overseas Portfolio
between Fidelity Management and Research Co. and Fidelity Management &
Research (Far East) Inc., is incorporated herein by reference to Exhibit
5(f).
(d) Sub-Advisory Agreement for Fidelity Advisor Overseas Portfolio
between Fidelity International Investment Advisors (U.K.) Limited and
Fidelity International Investment Advisors is incorporated herein by
reference to Exhibit 5(g).
(e) Sub-Advisory Agreement for Fidelity Advisor Overseas Portfolio
between Fidelity International Investment Advisors and Fidelity Management
& Research Co., is incorporated herein by reference to Exhibit 5(h).
(6)(a) General Distribution Agreement between Plymouth Europe Portfolio and
Fidelity Distributors Corporation, is incorporated herein by reference to
Exhibit 6(a).
(b) Revised form of Selling Dealer and Bank Agency Agreement is
incorporated herein by reference to Exhibit 6(c) to Post-Effective
Amendment No. 9.
(7) None.
(8)(a) Custodian Agreement between Plymouth Europe Portfolio and Chase
Manhattan Bank N.A. is incorporated herein by reference to Exhibit 8(a) to
Post Effective Amendment No. 20.
(b) Amendment No. 1, dated July 18, 1991, to the Custodian Agreement is
filed electronically herein as Exhibit 8(b).
(c) Appendix "A", dated April 15, 1993, to the Custodian Agreement is
filed electronically herein as Exhibit 8(c).
(9)(a) Transfer Agency Agreement between Registrant and State Street Bank
and Trust Company is incorporated herein by reference to Exhibit 9(a) to
Post-Effective Amendment No. 9.
(b) Pricing and Bookkeeping Agreement between Registrant and Fidelity
Service Company is incorporated herein by reference to Exhibit 9(b) to
Post-Effective Amendment No. 9.
(c) Schedule B to Pricing and Bookkeeping Agreement for Plymouth Europe
Portfolio is incorporated herein by reference to Exhibit 9(c) to Post
Effective Amendment No. 20.
(d) Schedule C to Pricing and Bookkeeping Agreement for Plymouth Europe
Portfolio is filed electronically herein as Exhibit 9(d).
(10) None.
(11) Consent of Fund's independent accountant is electronically filed
herein as Exhibit 11.
(12) None.
(13) None.
(14)(a) Form for Fidelity Advisor Funds Individual Retirment Account
Custodial Agreement Disclosure Statement in effect as of January 1, 1994 is
electronically filed herein as Exhibit 14(a)..
(b) Plymouth Investments Defined Contribution Retirement Plan and Trust
Agreement as currently in effect is incorporated herein by reference to
Exhibit 14(b) to Post-Effective Amendment No. 15.
(c) Plymouth Investments Fidelity Master Plan for Savings and Investments:
Plan and Trust Document as currently in effect is incorporated herein by
reference to Exhibit 14(c) to Post-Effective Amendment No. 15.
(d) Plymouth Investments Fidelity Master Plan for Savings and Investments:
Summary of Plan Description as currently in effect is incorporated herein
by reference to Exhibit 14(d) to Post-Effective Amendment No. 15.
(e) Plymouth Investments Fidelity Master Plan for Savings and Investments:
Adoption Agreement as currently in effect is incorporated herein by
reference to Exhibit 14(e) to Post-Effective Amendment No. 15.
(15)(a) 12b-1 Plan for Plymouth Europe Portfolio is filed electronically
herein as Exhibit 15(a).
(16)(a) A supplement of the schedule for computation of performance
quotations for Plymouth Europe Portfolio is incorporated herein by
reference to Exhibit 16(a) to Post Effective Amendment No. 11.
(b) Schedule of computation of the moving average calculation is filed
herein electronically as Exhibit 16(b).
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of the Registrant is the same as the boards of other
funds in the Fidelity family of funds, each of which has Fidelity
Management & Research Company as its investment adviser. In addition
the officers of these funds are substantially identical. Nonetheless, the
Registrant takes the position that it is not under common control with
these other funds since the power residing in the respective boards and
officers arises as the result of an official position with the respective
funds.
Item 26. Number of Holders of Securities
November 30, 1993
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Advisor Overseas Portfolio: 17,872
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of the Board and a
Director of FMR, FMR Corp., FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.; President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by FMR.
Stephan Campbell Vice President of FMR (1992).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danof Vice President of FMR (1993) and of a fund advised by FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR (1990) and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by FMR.
Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial
Officer of the Fidelity funds; Treasurer of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of funds advised by FMR.
Kathryn L. Eklund Vice President of FMR (1991).
Richard B. Fentin Senior Vice President of FMR (1991) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR (1991) and Treasurer of the funds
advised by FMR (1991). Prior to assuming the position as Treasurer he was
Senior Vice President, Fund Accounting - Fidelity Accounting & Custody
Services Co. (1991) (Vice President, 1990-1991); and Senior Vice President,
Chief Financial and Operations Officer - Huntington Advisers, Inc.
(1985-1990).
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of funds advised by FMR.
William J. Hayes Senior Vice President of FMR (1989); Income/Growth Group
Leader (1990).
Robert Haber Vice President of FMR (1991) and of funds advised by FMR.
Daniel Harmetz Vice President of FMR (1991) and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR (1991).
John Hickling Vice President of FMR (1993) and of funds advised by FMR.
Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR (1991) and of funds advised by FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR (1991) and of funds advised by FMR.
Jacques Perold Vice President of FMR (1991).
Brian Posher Vice President of FMR (1993) and of funds advised by FMR.
Anne Punzak Vice President of FMR (1990) and of funds advised by FMR.
Richard A. Spillane Vice President of FMR (1990) and of funds advised by
FMR; and Director of Equity Research (1989).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised by
FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of
funds advised by FMR; and Growth Group Leader (1990).
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised by
FMR.
Guy E. Wickwire Vice President of FMR and of funds advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary of funds advised by
FMR.
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR Corp.; Chairman
of the Board and a Director of FMR, FMR Corp., FMR Texas Inc., and Fidelity
Management & Research (Far East) Inc.; President and Trustee of funds
advised by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of FMR Texas Inc.
and Fidelity Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR U.K. (1991); Senior Vice
President of Fidelity Management & Research (Far East) Inc. (1991);
Director of Worldwide Research of FMR.
Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity
Management & Research (Far East) Inc.; Treasurer of FMR Texas Inc.;
Senior Vice President and Chief Financial Officer of the Fidelity funds.
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management &
Research (Far East) Inc.; Secretary of FMR Texas Inc.
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of
the Executive Committee of FMR; Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR, FMR Corp., FMR Texas Inc. and
Fidelity Management & Research (U.K.) Inc.; President and Trustee of
funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East; President of FMR;
Managing Director of FMR Corp.; President and a Director of FMR Texas Inc.
and Fidelity Management & Research (U.K.) Inc.; Senior Vice President
and Trustee of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East (1991); Senior
Vice President of Fidelity Management & Research (U.K.) Inc. (1991);
Director of Worldwide Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of FMR Texas Inc.; Senior
Vice President and Chief Financial Officer of the Fidelity funds.
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management
& Research (U.K.) Inc.; Secretary of FMR Texas Inc..
(4) FIDELITY INTERNATIONAL INVESTMENT ADVISORS
Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda
The directors and officers of Fidelity International Investment Advisors
(FIIA) have held, during the past two fiscal years, the following positions
of a substantial nature.
Anthony Bolton Director of FIIA and FIIAL (U.K.); Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director of FIIA and FIIAL (U.K.); Chief Financial
Officer of Fidelity International Ltd. and Fidelity Investment Services
Ltd..
Kirk Caza Vice President of FIIA.
Charles T. M. Collis Director and Secretary of FIIA; Partner in Conyers,
Dill & Pearman, Hamilton, Bermuda; Secretary to many companies in the
Fidelity international group of companies.
Stephen A. DeSilva Treasurer of FIIA and Fidelity International Limited.
Geoffrey J. Mansfield Director of FIIA.
Frank Mutch Assistant Secretary of FIIA.
David J. Saul President, Director, and Controller of FIIA; Director of
Fidelity International Limited.
Michael Sommerville Vice President of FIIA; Vice President of Fidelity
International Limited.
Toshiaki Wakabayashi Director of FIIA; Executive Vice President and
Director of FIIAL (Japan).
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
27-28 Lovat Lane, London, England
The directors and officers of Fidelity International Investment Advisors
(U.K.) Limited (FIIAL (U.K.)) have held, during the past two fiscal years,
the following positions of a substantial nature.
Anthony Bolton Director of FIIAL (U.K.) and FIIA; Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director and Secretary of FIIAL (U.K.) and FIIA; Chief
Financial Officer of Fidelity International Ltd. and Fidelity Investment
Services Ltd..
C. Bruce Johnstone Director of FIIAL (U.K.) (1991).
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (Distributors) acts as distributor
for most funds advised by FMR and the following other funds:
The ARK Funds CrestFunds, Inc. The Victory Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee, President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, Massachusetts, 02109, or the
fund's custodian: The Chase Manhattan Bank, 1211 Avenue of the Americas,
New York, NY.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Fidelity Advisor Overseas Fund undertakes,
provided the information required by Item 5A is contained in the annual
report, to furnish each person to whom a prospectus has been delivered,
upon their request and without charge, a copy of the Registrant's latest
annual report to shareholders.
LG 933490046
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 23 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 24 day of
January 1994.
Fidelity Advisor Series VII
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee January 24, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer January 24, 1994
Gary L. French
/s/J. Gary Burkhead Trustee January 24 , 1994
J. Gary Burkhead
/s/Ralph F. Cox* Trustee January 24, 1994
Ralph F. Cox
/s/Phyllis Burke Davis* Trustee January 24 , 1994
Phyllis Burke Davis
/s/Richard J. Flynn* Trustee January 24, 1994
Richard J. Flynn
/s/E. Bradley Jones* Trustee January 24, 1994
E. Bradley Jones
/s/Donald J. Kirk* Trustee January 24, 1994
Donald J. Kirk
/s/Peter S. Lynch* Trustee January 24, 1994
Peter S. Lynch
/s/Edward H. Malone* Trustee January 24, 1994
Edward H. Malone
/s/Marvin L. Mann * Trustee January 24, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee January 24, 1994
Gerald C. McDonough
/s/Thomas R. Williams* Trustee January 24, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
LG933470028
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993
Ralph F. Cox
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Phyllis Burke Davis October 20, 1993
Phyllis Burke Davis
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Marvin L. Mann October 20, 1993
Marvin L. Mann
DESIGNED FOR
YOU AND YOUR
INVESTMENT PROFESSIONAL
IN TODAY'S FAST-PACED MARKETS, PRUDENT,
INFORMED DECISIONS ARE THE KEY TO SUCCESSFUL
INVESTING. THE FIDELITY ADVISOR FUNDS PUT THE
RESOURCES OF ONE OF THE WORLD'S LARGEST MUTUAL
FUND MANAGERS AT THE SERVICE OF THE
INVEST-MENT PROFESSIONAL YOU HAVE CHOSEN TO
HELP YOU MAKE FINANCIAL DECISIONS. WE BELIEVE
YOUR INVESTMENT
PORTFOLIO AND YOUR INVESTMENT
RESULTS COULD BE STRONGER WITH THE PARTNERSHIP
OF FIDELITY(Registered trademark) AND YOUR INVESTMENT PROFESSIONAL.
OVERSEAS
FUND
ANNUAL REPORT
OCTOBER 31, 1993
(Registered trademark)
Fidelity Distributors Corporation
82 Devonshire Street
Boston, MA 02109
(Registered trademark)
AOS-1293A
PRESIDENT'S MESSAGE
As 1993 draws to a close and the stock market continues to climb, many of
you may be wondering if this is the top and what you should do. Making a
sound decision requires some perspective on the market and an understanding
of its risks.
Those of us who invested in the stock market during the '80s benefited from
a period of unusually good performance. During that time, the Standard
& Poor's 500 index - a common proxy for the U.S. stock market -
returned 18% on average each year. This was far above the market's average
annual return since 1926 of 10%. Although the S&P 500 was up 7.62% for
1992, that was less than half of what we saw in the '80s and below the
market's long-term average. Through September of 1993, the S&P was up
7.59%. We believe these could be examples of the more modest returns we
might see in the '90s.
It's impossible to predict where the market will go from here. What we do
know is that historically the market has on average had a decline of 10% or
more every two years. We haven't seen a 10% drop in the market since
October 1990. Furthermore, stocks today are not cheap. Current valuations -
yardsticks like high price-to-earnings ratios and low dividend yields - are
at extremes. Low interest rates and the record amount of money that has
poured into stock funds so far in 1993 have helped push the market higher.
As real estate investments have become less attractive, many people have
instead put money in stocks, also helping to fuel the market's rise.
When there is this much uncertainty about what's next, a long-term,
disciplined approach to the stock market seems to make the most sense. A
good definition of long term is a minimum of five years. If you leave your
money invested that long, you should be able to ride out the market's
declines. A regular investment plan - investing a certain amount of money
each month or quarter - should also help you avoid buying exclusively at
the peak of the market. While this strategy can't protect you from a loss
in a declining market, and won't guarantee a profit, it should over time
help lower the average cost of your purchase. The key is that you follow
your plan during both market ups and downs.
No matter what happens in the market, we believe you can benefit from
practicing these investment principles. If we can help, please call us at
1-800-544-8888.
Best regards,
Edward C. Johnson 3d
PERFORMANCE UPDATE
$10,000 OVER LIFE OF FUND
Advisor Overseas MS EAFE
04/23/90 9525.00 10000.00
04/30/90 9420.23 9758.32
05/31/90 9829.80 10871.75
06/30/90 10325.10 10776.00
07/31/90 10934.70 10927.78
08/31/90 9629.78 9866.60
09/30/90 8810.63 8491.55
10/31/90 9096.38 9814.69
11/30/90 9105.90 9235.74
12/31/90 9017.59 9385.36
01/31/91 9238.47 9688.93
02/28/91 9651.42 10727.57
03/31/91 9113.63 10083.57
04/30/91 9104.02 10182.59
05/31/91 9113.63 10288.84
06/30/91 8431.79 9532.81
07/31/91 8911.96 10001.17
08/31/91 9046.40 9798.07
09/30/91 9516.97 10350.28
10/31/91 9392.13 10497.00
11/30/91 9152.04 10006.96
12/31/91 9628.87 10523.75
01/31/92 9658.11 10298.96
02/29/92 9882.26 9930.34
03/31/92 9580.14 9274.77
04/30/92 10077.18 9318.86
05/31/92 10486.50 9942.63
06/30/92 10320.82 9471.02
07/31/92 9921.24 9228.63
08/31/92 9648.36 9807.46
09/30/92 9502.17 9613.79
10/31/92 8839.46 9109.50
11/30/92 8722.51 9195.22
12/31/92 9163.43 9242.78
01/31/93 9626.53 9241.65
02/28/93 9833.44 9520.81
03/31/93 10434.49 10350.70
04/30/93 11242.44 11333.00
05/31/93 11538.04 11572.36
06/30/93 11222.74 11391.80
07/31/93 11774.51 11790.57
08/31/93 12552.91 12427.06
09/30/93 12424.82 12147.34
10/31/93 12740.12 12521.69
$10,000 OVER LIFE OF FUND: LET'S SAY YOU INVESTED $10,000 IN FIDELITY
ADVISOR OVERSEAS FUND ON APRIL 23, 1990, WHEN THE FUND STARTED AND PAID
THE FUND'S MAXIMUM 4.75% SALES CHARGE. BY OCTOBER 31, 1993, THE VALUE OF
YOUR INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE GROWN TO $12,740 - A
27.40% INCREASE ON YOUR INITIAL INVESTMENT. FOR COMPARISON, LOOK AT HOW A
$10,000 INVESTMENT IN THE MORGAN STANLEY EAFE INDEX (WITH DIVIDENDS
REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO $12,522 - A
25.22% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1993
One Year Life of
Fund
FIDELITY ADVISOR
OVERSEAS 44.13% 33.75%
EAFE 37.46% 25.22%
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1993
One Year Life of
Fund
FIDELITY ADVISOR
OVERSEAS 37.28% 7.10%
EAFE 37.46% 6.58%
THE CHARTS ABOVE SHOW FIDELITY ADVISOR OVERSEAS' TOTAL RETURNS, WHICH
INCLUDE CHANGES IN SHARE PRICE, AND REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. CUMULATIVE TOTAL RETURNS DO NOT REFLECT THE FUND'S MAXIMUM 4.75%
SALES CHARGE WHICH, IF INCLUDED, WOULD HAVE RESULTED IN RETURNS OF 37.28%
FOR ONE YEAR, AND 27.40% FOR THE LIFE OF FUND. THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALIA, FAR EAST INDEX (EAFE INDEX) IS AN
UNMANAGED INDEX OF FOREIGN COMMON STOCK PRICES TRANSLATED INTO U.S. DOLLARS
AND COMPOSED OF MORE THAN 900 COMPANIES FROM EUROPE, AUSTRALIA AND THE FAR
EAST. IN EVALUATING THE LIFE OF FUND COMPARISON FIGURES, IT'S IMPORTANT TO
REMEMBER THAT BEFORE DECEMBER 1992, THE FUND WAS KNOWN AS FIDELITY ADVISOR
EUROPE FUND AND INVESTED MAINLY IN STOCKS IN EUROPE.
AVERAGE ANNUAL TOTAL RETURNS ARE LOAD ADJUSTED. FIGURES FOR MORE THAN ONE
YEAR ASSUME A STEADY COMPOUNDED RATE OF RETURN AND ARE NOT THE FUND'S
YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE PERIODS SHOWN. THE LIFE OF
FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS, APRIL 23, 1990, TO THE
PERIODS LISTED ABOVE.
IF THE ADVISER HAD NOT REDUCED CERTAIN FUND EXPENSES DURING THE PERIODS
SHOWN, THE TOTAL RETURNS WOULD HAVE BEEN LOWER.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
MARKET RECAP
THIS PAST YEAR'S INTERNATIONAL RALLY SIGNALED A DRAMATIC TURNAROUND FOR
MANY FOREIGN MARKETS THAT HAD PREVIOUSLY FALLEN OUT OF FAVOR. LOW INFLATION
AND FALLING INTEREST RATES AROUND THE WORLD HELPED FUEL STRONG RETURNS
OVERSEAS. THE EAFE INDEX - WHICH MEASURES STOCK PERFORMANCE IN EUROPE,
AUSTRALIA AND THE FAR EAST - WAS UP 37.46% FOR THE 12 MONTHS ENDED OCTOBER
31, 1993. THAT EASILY OUTDISTANCED THE 14.94% RETURN FOR THE STANDARD &
POOR'S 500 INDEX OF U.S. STOCKS OVER THE SAME PERIOD. IN ADDITION,
INVESTORS POURED INCREASING AMOUNTS OF MONEY INTO FOREIGN STOCKS AND BONDS,
WHICH ALSO PUSHED UP PRICES.
EUROPE: After trailing the U.S. market for five consecutive years, European
stocks performed strongly by historical standards, but still were easily
outpaced by other world markets. Slowly falling interest rates and
investors' hopes of economic recovery combined to lift stock prices. The
Morgan Stanley Europe Index rose 25.67% for the year ended October 31.
Europe struggled to move beyond the currency crisis that crippled much of
the continent last fall. The value of the British pound and German
deutschemark went down, which hurt foreign investments when translated back
into dollars. But strong stock gains followed currency devaluations as
exports became more attractive. Norwegian stocks, for example, returned
nearly 43% through October, while Sweden was up 41% and Germany 31%.
Disappointingly slow interest-rate cuts and sluggish economies hurt returns
in some of the larger, more stable European markets like the United Kingdom
and France, both of which gained about 15% through the end of October.
JAPAN & THE FAR EAST: This region outperformed all others, but Japan
took investors on a roller coaster ride along the way. The Morgan Stanley
Far East ex-Japan Free Index posted gains of 52.85% for the year ended
October 31. The TOPIX, an index that includes stocks from Japan's larger,
better known companies, was up 46.06% for the same period, but only 3.54%
for the last six months. Falling interest rates, a strengthening yen, and
government spending aimed at stimulating economic growth all helped trigger
the tremendous market rally in Japan that continued through late spring.
But political instability, thanks to a no-confidence vote given to Prime
Minister Miyazawa, dragged the market back down in the summer and early
fall. Also, the surging yen - up 15.02% over the U.S. dollar so far this
year - made the products of big Japanese exporters less attractive, which
further slowed the country's already troubled economy. From August through
October, the TOPIX actually lost ground, and was down 4.84%.
U.S. & CANADA: Low inflation, declining interest rates and a gradually
improving economy led to a 14.94% return for the Standard & Poor's 500
Index - a broad measure of the U.S. market's overall performance. This
return beat historical standards, but paled alongside most international
markets. In Canada, the Toronto Stock Exchange 300 Index fared better,
returning 23.19%. Canadian stocks were buoyed by falling interest rates and
an economy that was slowly climbing out of a recession. Jitters surrounding
national elections slowed returns in September and October.
AN INTERVIEW WITH
JOHN R. HICKLING,
PORTFOLIO MANAGER OF
FIDELITY ADVISOR OVERSEAS FUND
Q. HOW HAS THE FUND PERFORMED, JOHN?
A. The fund returned 44.13% for the year ended October 31, 1993. It
outperformed the EAFE Index - a broad measure of the performance of stocks
in Europe, Australia and the Far East - which rose 37.46% during the same
12 months. And it beat the average international fund, which was up 33.41%
during that period, according to Lipper Analytical Services.
Q. WHAT ACCOUNTS FOR THE FUND'S STRONG PERFORMANCE?
A. In general, the fund benefited from a great year for foreign financial
markets. I began the year with a heavy emphasis on European stocks, since
that was the fund's mission at the time. Because I believed that interest
rates were generally too high, I emphasized stocks that could benefit as
rates began to come down. I focused on bank and financial stocks in France,
Germany, Denmark and also in the Scandinavian countries during the second
half of the year. Among my largest investments were Swiss bank and
financial companies such as C.S. Holdings and Winterthur Schweiz. Both did
well during the period. And, because I don't envision a quick economic
recovery, I generally stayed away from European companies whose fortunes
are tied to the local economies. In the U.K., which has been ahead of the
continent in coming out of its recession, I stuck with financial stocks and
banks such as National Westminster and Barclays, and companies that could
benefit from a recovery, such as British Petroleum and British Steel. I
also managed to steer clear of some of the lagging sectors there, such as
pharmaceuticals, brewers, and food retailers, which helped the fund. Over
the last six months, I halved our stake in the U.K. as the fund's focus
expanded and was able to take advantage of better opportunities elsewhere.
This worked well, as other markets did much better over the period.
Q. HOW ABOUT JAPAN?
A. The Japanese stocks that I added to the fund when it's scope expanded
beyond Europe made a strong contribution to the fund's performance. I
emphasized brokerage and trust bank stocks and stayed away from the blue
chips and household names which I believe are more sensitive to currency
fluctuations and have more downside in terms of future earnings. Why the
differentiation? Because I don't believe the stop-gap government measures
that rescued the Japanese financial system were enough to significantly
bail out the economy. I expect it to remain weak for some time. As a
result, I cut back my Japanese investments during the second half of the
period, from about 33% six months ago to roughly 17% at the end of October.
Q. THE FUND'S CURRENCY CONTRACTS ARE UP SOMEWHAT FROM THE FIRST HALF OF THE
YEAR. HAS CURRENCY HEDGING HELPED THE FUND'S PERFORMANCE?
A. It has. In general, currency hedging adds flexibility to my ability to
manage an international portfolio. Over the period, hedging made a positive
contribution to the fund's performance, by offsetting devaluations of the
Spanish peseta, the Finnish markka, and the Swedish krona. I started the
period with approximately 3% in currency contracts for hedging purposes and
ended with approximately 6.5%.
Q. HAVE YOU HAD ANY DISAPPOINTMENTS?
A. Yes, on two fronts. In retrospect, I turned bearish on Hong Kong too
early and missed the most recent 20% upturn by cutting back on my
investments prematurely. Second, I missed out on the quick rise in gold
stocks, which had a very good move earlier this year. It was short, sharp,
and some of it has already been given back. Nevertheless, I'm disappointed
that I didn't have a bigger stake in gold.
Q. WHAT'S YOUR VIEW ON THE WORLD FINANCIAL MARKETS FOR THE PERIOD AHEAD?
A. I think any economic recovery in Europe or Japan will be muted. That
will make stock selection more important than ever. I'll continue to be
selective about stocks that are closely tied to the economic cycle and
instead focus more on companies that appear to have adjusted their sights
to the current slow growth environment. I expect interest rates to come
down in Europe and in Japan over the next year. However, I think the
improvement in earnings has probably been widely overestimated and I expect
disappointments to outnumber earnings surprises. Under these market
conditions, another year of double digit gains - like we've had this year -
could be hard for the fund to achieve.
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCK HOLDINGS AS OF OCTOBER 31, 1993
% OF FUND'S INVESTMENTS
IN THESE STOCKS
% OF FUND'S INVESTMENTS 6 MONTHS AGO
C.S. Holdings (Bearer) (Switzerland, Finance) 1.3 0.9
Winterthur Schweiz Ord. (Reg.) (Switzerland, 1.3 1.5
Finance)
Baloise Holdings (Reg.) (Switzerland, Finance) 1.2 0.0
Zurich Versicherung (Reg.) (Switzerland, Finance) 1.2 0.0
Deutsche Bank AG Ord. (Germany, Finance) 1.2 0.0
SIP Spa (Italy, Utilities) 1.1 0.0
International Nederlanden Groep Ord. 1.1 0.0
(Netherlands, Finance)
Allianz Versich Holdings Ord. (Reg.) 1.0 0.0
(Germany, Finance)
Great Universal Stores PLC Ord. Class A 1.0 0.0
(United Kingdom, Retail and Wholesale)
Telefonica de Espana SA Ord. (Spain, Utilities) 0.9 0.0
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE INDUSTRIES AS OF OCTOBER 31, 1993
% OF FUND'S INVESTMENTS
IN THESE INDUSTRIES
% OF FUND'S INVESTMENTS 6 MONTHS AGO
Finance 31.1 30.3
Utilities 8.4 5.4
Construction and Real Estate 8.2 18.5
Retail and Wholesale 5.7 1.7
Technology 3.6 3.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF OCTOBER 31, 1993
% OF FUND'S INVESTMENTS
IN THESE COUNTRIES
% OF FUND'S INVESTMENTS 6 MONTHS AGO
Japan 16.6 32.6
United Kingdom 11.3 24.1
France 6.7 6.0
Switzerland 6.7 4.6
Germany 6.5 3.4
</TABLE>
FIDELITY ADVISOR OVERSEAS FUND
INVESTMENTS/OCTOBER 31, 1993
(Showing Percentage of Total Value of Investment in Securities)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 73.0%
AUSTRALIA - 3.3%
FAI Insurance Ltd. Ord. 1,410,500 $ 996,118 30239330
Lend Lease Corp. Ltd. 120,000 1,507,858 52599292
TNT Ltd. (a) 1,300,000 1,515,719 93599292
Westpac Banking Corp. 520,000 1,569,419 96121410
Woolworths Ltd. 690,000 1,503,260 98088892
7,092,374
CHILE - 0.2%
Maderas Y Sinteticos Sociedad
Anonima Masisa sponsored ADR (a) 20,600 370,800 55646510
FINLAND - 0.6%
America Group Ltd. Class A free shares 28,000 448,691 02351210
Repola OY 45,800 676,320 75999A92
Unitas Bank Ltd. B free shares 37,300 102,191 90499123
1,227,202
FRANCE - 6.2%
Assurances Generales (Reg.) 5,000 615,476 04557510
BNP CI 31,400 1,507,264 05599910
BNP CI (warrants) (a) 31,400 52,103 05599995
Bail Investissement (a) 200 38,266 05699092
Banque National de Paris Ord. 1,500 73,527 05599996
Credit Lyonnais CI 3,300 414,595 22799392
Elf Aquitaine 3,400 264,470 28627199
Elf Gabon 6,000 1,209,956 87399A22
Financiere Bank de Suez Cie 30,500 1,805,418 31799110
GAN (Groupe Des Assur Natl) 17,600 1,636,031 36599792
IMETAL SA Ord. 7,400 670,335 45099910
Paribas SA (Cie Financiere) Class A (a) 20,000 1,625,466 73999192
Pechiney SA CIP 3,600 204,199 70599310
Societe Generale Class A 8,000 941,416 83357799
Sophia SA 5,300 455,875 84199C22
UFB Locabail SA (a) 11,240 721,294 90599B92
Unibail 13,400 1,182,086 90499592
13,417,777
GERMANY - 5.8%
Allianz Versich Holdings Ord. (Reg.) (a) 1,300 2,202,331 01882495
BHF Bank (Bank Berlin Hand) 5,266 1,636,791 05549991
Bayer AG 5,450 1,033,523 07273010
Commerzbanksip AG 5,700 1,157,007 20259710
Deutsche Bank AG Ord. 5,000 2,507,044 25152592
Hoechst AG Ord. 7,300 1,236,261 43439010
Munich Reinsurance (Reg.) 340 806,715 62699492
Veba Vereinigte Elektrizetaets &
Bergwerks AG Ord. 7,000 1,948,216 92239110
12,527,888
HONG KONG - 0.3%
Cathay Pacific Airways Ltd. 400,000 $ 652,216 14890610
INDIA - 0.1%
ITC Ltd. (c):
(warrants) (a) 3,000 15,750 45031811
GDR 9,000 157,500 45031810
173,250
INDONESIA - 0.5%
Bank International Indonesia Ord. (a) 168,000 559,586 06199B92
Jakarta International Hotels &
Development Ord. 86,000 552,449 47399693
1,112,035
IRELAND - 0.4%
Anglo Irish Bank 351,400 316,264 03599592
Bank of Ireland U.S. Holdings, Inc. 133,600 556,179 06278793
872,443
ITALY - 1.8%
Falck Ord. (a) 66,500 129,734 30699692
SIP Spa 1,050,000 2,274,326 78401792
Saipem Spa Ord. (a) 493,000 835,946 79299292
Simint Spa Ord. (New) 398,996 533,478 83799498
Stet Societa Finanziaria
Telefonica SPA Ord. 30,000 75,665 85982510
3,849,149
JAPAN - 16.6%
ADO Electronic Industrial Co. 18,000 416,214 00699992
Acom Co. Ltd. (a) 6,000 533,947 00499M22
Aoyama Trading Co. Ord. 12,000 897,651 03799092
Canon, Inc. 35,000 480,424 13780199
Catena Corp. 28,000 928,604 14899792
Cosmo Oil Company Ltd. 152,000 1,219,640 22199092
Daikyo, Inc. 113,000 1,207,554 23376610
Fujitsu Ltd. 147,000 1,160,562 35959010
Getz Bros Co. Ltd. 11,000 739,751 37499392
Hankyu Department Stores, Inc. 78,000 898,204 41099192
Hitachi Ltd. 117,000 928,024 43357810
Honda Motor Co. Ltd. 67,000 981,391 43812810
IO Data Device, Inc. 13,000 1,058,683 45099A92
Izumi Co. Ord. 75,000 1,526,946 46399292
Konica Corp. 165,000 1,092,907 50046M10
Kyocera Corporation 8,000 453,247 50155610
Marubeni Corp. 217,000 1,027,528 57381010
Marukyo Corp. 16,000 456,932 57899792
Mitsubishi Bank of Japan 21,000 595,854 60674210
Mitsubishi Corp. 89,000 975,679 60676910
Mitsubishi Heavy Industry 118,000 733,763 60699310
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
JAPAN - CONTINUED
Mitsubishi Trust & Banking 120,000 $ 1,636,112 60699410
Nippon Shinpan Ltd. 52,000 488,623 65461710
Nomura Securities Co. Ltd. 80,000 1,466,606 65536130
Oji Paper Ltd. 55,000 521,880 67811810
Sankyo Co. Ltd. 3,000 245,970 82299792
Santen Pharmaceutical Co. Ord. 20,000 554,583 80299110
Sanwa Bank 63,000 1,375,495 80399410
Sekisui House Ltd. 118,000 1,565,362 81607810
Sho Bond Corp. Ord. 27,000 741,225 82699692
Sony Corp. 30,000 1,359,742 83569999
Sumitomo Realty & Development Co. Ltd. 75,000 525,103 86562310
Sumitomo Trust & Banking Co. 90,000 1,210,502 86599310
Tobu Railway 50,000 344,081 88739110
Tohoku Electric Power, Inc. 22,000 654,629 88906099
Tokio Marine & Fire Insurance Co. Ltd. (The) 112,000 1,372,271
88909099
Tokyo Electric Power Co., Inc. 27,000 858,130 88910710
Toshiba Corp. 171,000 1,099,568 89149310
Toyota Motor Corporation 57,000 987,195 89399999
Yoshinoya D&C Co. Ltd. Ord. 30 525,104 98999192
35,845,686
MALAYSIA - 2.3%
Ekran Berhad Ord. (a) 81,000 491,197 28299792
Magnum Corp. BHD 405,000 998,240 55999392
Telekom Malaysia BHD 211,000 1,783,098 94099892
Tenega Nasional BHD 345,000 1,795,188 92099992
5,067,723
MEXICO - 1.3%
Grupo Dina (Consorcio G) ADR (a) 31,000 651,000 21030610
Grupo Financiero Bancomer SA de
CV sponsored ADR, Series C (c) 35,000 1,023,750 40048610
Telefonos de Mexico SA de CV
sponsored ADR, Class L 20,000 1,095,000 87940378
2,769,750
NETHERLANDS - 4.8%
ABN-AMRO Holdings NV 39,792 1,508,881 00399192
Aegon NV Ord. 9,062 466,620 00792493
Akzo NV Ord. 12,000 1,136,308 01019910
Hoogovensen Staalfabrieken (a) 12,600 282,144 43888410
International Nederlanden Groep Ord. 52,300 2,270,430 46099892
KBB NV Ord. 12,300 630,753 48130092
Philips Electronics 62,000 1,280,275 71833799
Pirelli Tyre Holdings (warrants) (a) 45,500 72,089 72499093
Stad Rotterdam 32,100 744,225 85299822
Wereldhave NV 31,900 1,913,832 95199E22
10,305,557
NEW ZEALAND - 0.1%
Brierley Investments Ltd. 414,700 $ 294,072 10901410
NORWAY - 1.4%
Bergesen Group Class B 80,000 1,619,235 08399011
Den Norske Bank Class A free shares (a) 114,500 396,625 25299792
Mosvold Shipping AS `B' 3,900 33,641 62099294
Orkla AS Class B (non-vtg.) 26,100 964,369 39299192
Smedvig AS 4,900 113,156 79799892
3,127,026
PHILIPPINES - 0.1%
Filinvest Land, Inc. Ord. (a) 667,000 179,710 31699J22
SINGAPORE - 0.3%
Kim Eng Holdings Ltd. 310,000 660,573 49499D92
SPAIN - 5.0%
Argentaria Corp. Bancaria de Esp (a) 12,600 564,667 21991392
Banco Bilbao Vizcaya SA Ord. (Reg.) 17,500 447,870 05945891
Banco Intercontinental Espanol 5,000 436,296 24699592
Banesto (Reg.) 65,000 1,319,259 05981699
Corporacion Mapfre
International Reas (Reg.) 29,200 1,345,363 16899192
Hidro Cantabrico 23,500 524,833 42899999
Iberdrola SA 175,000 1,152,406 45499892
Repsol SA Ord. 36,000 1,076,000 76026T10
Telefonica de Espana SA:
Ord. (a) 150,000 1,955,556 87938210
sponsored ADR 12,000 466,500 87938220
Vallehermoso SA 75,000 1,383,333 91899210
10,672,083
SWEDEN - 3.0%
Aktiebolaget Electrolux 30,100 1,052,911 01019810
Frontline (a) 54,000 178,327 35999F22
SKF AB Ord. (a) 102,800 1,584,247 78437530
Scribona AB B free shares (a) 50,100 214,469 81199B92
Securitas B free shares 7,500 210,066 81399792
Skandia International Holding Co. AB ADR (a) 15,000 317,392 83055510
Skandinaviska Enskilda Banken
Class A free shares 173,900 1,276,174 88099222
Skanska Class B (a) 78,300 1,647,211 93899392
6,480,797
SWITZERLAND - 6.7%
Baloise Holdings (Reg.) (a) 1,700 2,656,161 05899195
C.S. Holdings:
(Bearer) (a) 1,215 2,782,381 17599792
(Bearer) (warrants) (a) 315 23,764 15099426
Globus Magazine Part. Cert. 1,875 1,251,048 37957792
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
SWITZERLAND - CONTINUED
Swiss Bank Corp.:
(Bearer) (a) 5,000 $ 1,683,152 87083610
(Reg.) 3,280 536,677 87083694
Swiss Reinsurance Corp. (Bearer) 100 259,514 87099392
Winterthur Schweiz Ord. (Reg.) 5,250 2,707,293 97629994
Zurich Versicherung (Reg.) 2,800 2,538,541 99499597
14,438,531
THAILAND - 0.9%
Krung Thai Bank (Loc. Reg.) 410,000 962,707 50599292
Ruam Pattana Fund II (a) 1,700,000 955,998 76999522
1,918,705
UNITED KINGDOM - 11.3%
BET Public Ltd. Co. Ord. 425,400 794,090 05538H10
Barclays PLC Ord. 121,000 1,021,791 06738E10
Bass PLC Ord. 210,000 1,516,685 06990492
Bellway Ord. 90,000 606,675 07999192
British Petroleum PLC Ord. 230,000 1,189,201 11088910
British Steel PLC Ord. 449,300 860,338 11101510
British Vita Ord. 113,200 419,264 11199192
Burton Group PLC Ord. 515,000 572,229 12304910
Dixons Group PLC 286,600 1,106,078 25587592
First National Finance Corporation PLC 95,700 121,930 33599392
Great Universal Stores PLC Ord. Class A 260,000 2,060,768 39133420
Hambros Ord. 144,700 868,212 40699292
Hammerson Property Ord. 109,200 601,821 40831592
Hartstone Group PLC Ord. 750,000 677,786 41722610
Hillsdown Holdings PLC 300,000 724,455 43258610
Ladbroke Group PLC Ord. 460,400 1,176,592 50572799
McAlpine (Alfred) Ord. 243,000 756,009 57999010
Mirror Group Newspaper PLC (a) 342,900 812,810 60499792
National Westminster Bank PLC Ord. 176,000 1,444,522 63853930
North West Water Ord. 21,500 168,646 67299195
Persimmon PLC Ord. 130,000 568,156 71499092
Royale Insurance Co. Ltd. 120,000 561,785 78074910
Tesco PLC Ord. (a) 49,600 149,170 88157510
Tomkins PLC Ord. 330,000 1,217,350 89003010
Trafalgar House PLC Ord. 300,100 433,482 89270710
Vodafone Group PLC 100,000 819,270 92857T92
Westbury PLC 365,000 876,011 95799292
Westland Group PLC Ord. 250,000 803,715 96090210
Whitbread Class A 180,000 1,381,351 96341499
24,310,192
TOTAL COMMON STOCKS
(Cost $141,032,477) 157,365,539
PREFERRED STOCKS - 3.0%
CONVERTIBLE PREFERRED STOCKS - 0.0%
NETHERLANDS - 0.0%
ABN-AMRO Holdings NV 6% 652 $ 24,723 00399194
NONCONVERTIBLE PREFERRED STOCKS - 3.0%
AUSTRIA - 0.9%
Creditanstaldt Bank (a) 13,500 927,284 22539210
MaCulan Holding Ord. 10,000 1,059,996 55699594
1,987,280
GERMANY - 0.7%
RWE AG 6,100 1,387,276 76204599
ITALY - 1.4%
Banco Ambro Veneto N/C Risp 299,600 511,651 06399592
SAI (Sta Assicur Industriale) N/C Risp 156,700 931,585 78399192
Simint Spa Priv. Ord. 399,000 380,227 83799496
Stet Societa Finanziaria Telefonica Spa 631,000 1,227,169 85982592
3,050,632
TOTAL NONCONVERTIBLE PREFERRED STOCKS 6,425,188
TOTAL PREFERRED STOCKS
(Cost $6,010,706) 6,449,911
PRINCIPAL
AMOUNT (B)
CORPORATE BONDS - 0.7%
CONVERTIBLE BONDS - 0.2%
SPAIN - 0.2%
Banco Santander SA 9%,
6/24/94 ESP 50,000,000 478,705 0595749B
NONCONVERTIBLE BONDS - 0.5%
BRAZIL - 0.5%
Federative Republic of Brazil IDU
Euro 8 3/4%, 1/1/01 (d) 1,300,000 1,036,750 1057569E
TOTAL CORPORATE BONDS
(Cost $1,379,151) 1,515,455
GOVERNMENT OBLIGATIONS - 1.5%
ARGENTINA - 0.6%
Argentina Republic BOCON
3 1/4%, 4/1/01 (d) 1,444,617 1,169,418 039995AF
DENMARK - 0.4%
Danish Government Bullet
7%, 12/15/04 DKK 6,250,000 965,241 249998AV
PRINCIPAL VALUE
AMOUNT (B) (NOTE 1)
GOVERNMENT OBLIGATIONS - CONTINUED
FRANCE - 0.5%
French Government Stripped
Coupon 4/25/23 (e) FRF 42,000,000 $ 1,063,868 351996BL
TOTAL GOVERNMENT OBLIGATIONS
(Cost $2,973,923) 3,198,527
INDEXED SECURITIES - 1.2%
UNITED STATES OF AMERICA - 1.2%
Bankers Trust Company (d) (f):
note 8.0225%, 10/28/94 (coupon
inversely indexed to JPY LIBOR
and principal indexed to value of
9-year Japanese securities,
both multiplied by 3) 1,200,000 1,199,400 0669918T
floating rate 10.245%, 7/23/96 (coupon
inversely indexed to 6-month JPY
LIBOR, multiplied by 10) 1,000,000 1,272,600 0669917H
Citibank Nassau 4.625%, 7/30/96
(inversely indexed to 1-year SEK
swap rate, multiplied by 10) 225,000 219,285 223991AH
TOTAL INDEXED SECURITIES
(Cost $2,425,000) 2,691,285
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 20.6%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a
joint trading account at 2.96%
dated 10/29/93 due 11/1/93 (Note 3) $ 44,382,945 44,372,000
TOTAL investment in securities - 100%
(Cost $198,193,257) $ 215,592,717
Forward Foreign Currency Contracts
SETTLEMENT UNREALIZED
CONTRACTS TO SELL DATE VALUE GAIN/LOSS
73,700,000 BEF 2/4/94 $ 1,994,623 $ 86,710
6,737,393 DKK 2/9/94 978,601 29,734
427,275,000 ESP 11/15/93 3,155,204 95,235
23,435,051 FRF 1/27/94 3,934,366 110,110
14,776,000 NOK 2/8/94 1,994,744 23,725
16,361,000 SEK 2/4/94 1,980,072 37,389
TOTAL CONTRACTS TO SELL
(Receivable amount $14,420,513) $ 14,037,610 $ 382,903
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.5%.
CURRENCY TYPE ABBREVIATIONS:
BEF - Belgian franc
DKK - Danish krone
FRF - French franc
JPY - Japanese yen
NOK - Norwegian krone
ESP - Spanish peseta
SEK - Swedish krona
LEGEND:
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,197,000 or 0.5% of net
assets.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) Principal Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans.
(f) Inverse floating rate security (inverse floater) is a security where
the coupon is inversely indexed to a floating interest rate multiplied by a
specified factor. If the floating rate is high enough, the coupon rate may
be zero or be a negative amount that is carried forward to reduce future
interest and/or principal payments. The price of an inverse floater may be
considerably more volatile than the price of a comparable fixed rate
security.
INCOME TAX INFORMATION:
At October 31, 1993, the aggregate cost of investment securities for income
tax purposes was $198,216,404. Net unrealized appreciation aggregated
$17,376,313, of which $20,697,460 related to appreciated investment
securities and $3,321,147 related to depreciated investment securities.
At October 31, 1993, the fund had a capital loss carryforward of
approximately $949,000 which will expire on October 31, 1999.
For the period, interest and dividends from foreign countries were $999,660
or $.06 per share. Taxes paid to foreign countries were $194,435 or $.01
per share.
INDUSTRY DIVERSIFICATION
(Unaudited)
AS A PERCENTAGE OF TOTAL VALUE OF INVESTMENTS
Aerospace and Defense 0.4%
Basic Industries - 3.2%
Chemicals and Plastics 1.8
Iron and Steel 0.6
Metals and Mining 0.1
Paper and Forest Products 0.7
Conglomerates 1.6
Construction and Real Estate - 8.2%
Building Materials 0.3
Construction 3.3
Engineering 1.2
Real Estate 2.7
Real Estate Investment Trusts 0.7
Durables - 2.8%
Autos, Tires, and Accessories 1.2
Consumer Durables 0.1
Consumer Electronics 1.1
Textiles and Apparel 0.4
Energy - 2.9%
Energy Services 0.1
Oil and Gas 2.8
Finance - 31.1%
Banks 17.1
Closed End Investment Company 0.4
Credit and Other Finance 2.2
Insurance 10.4
Securities Industry 1.0
Government Obligations 2.0
Health - 0.6%
Drugs and Pharmaceuticals 0.3
Medical Equipment and Supplies 0.3
Industrial Machinery and Equipment - 1.7%
Electrical Equipment 0.6
Industrial Machinery and Equipment 1.1
Media and Leisure - 1.9%
Lodging and Gaming 1.3
Publishing 0.4
Restaurants 0.2
Nondurables - 2.5%
Beverages 1.3
Foods 0.3
Household Products 0.8
Tobacco 0.1
Retail and Wholesale - 5.7%
Apparel Stores 0.6%
General Merchandise Stores 2.1
Grocery Stores 1.0
Retail and Wholesale, Miscellaneous 1.5
Trading Companies 0.5
Services 0.8
Repurchase Agreements 20.6
Technology - 3.6%
Computers and Office Equipment 1.8
Electronics 1.3
Photographic Equipment 0.5
Transportation - 2.0%
Air Transportation 0.3
Railroads 0.2
Shipping 0.8
Trucking and Freight 0.7
Utilities - 8.4%
Cellular 0.4
Electric Utility 3.8
Telephone Services 4.1
Water 0.1
100.0%
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
October 31, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of $44,372,000) (cost $198,193,257) (Notes $ 215,592,717
1, 2 and 3) - See accompanying schedule
Short foreign currency contracts (Note 2) $ (14,037,610)
Contracts held, at value
Receivable for contracts held 14,420,513 382,903
Cash 411
Receivable for investments sold 4,364,756
Receivable for fund shares sold 9,944,851
Dividends receivable 215,512
Interest receivable 142,173
Total assets 230,643,323
LIABILITIES
Payable for investments purchased 8,623,381
Payable for fund shares redeemed 256,368
Accrued management fee 124,782
Other payables and accrued expenses 268,483
Total liabilities 9,273,014
NET ASSETS $ 221,370,309
Net Assets consist of:
Paid in capital $ 205,154,246
Accumulated net investment (208,608)
(loss)
Accumulated undistributed net realized gain (loss) on investments (1,357,692)
Net unrealized appreciation (depreciation) on:
Investment securities 17,399,460
Foreign currency contracts 382,903
NET ASSETS, for 17,116,868 shares outstanding $ 221,370,309
NET ASSET VALUE and redemption price per share ($221,370,309 (divided by) 17,116,868 shares) $12.93
Maximum offering price per share (100/95.25 of $12.93) (Note 5) $13.57
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended October 31, 1993
INVESTMENT INCOME $ 1,232,094
Dividends
Interest 436,145
Foreign exchange gain (loss) (33,055)
1,635,184
Less foreign taxes withheld (194,435)
(Note 1)
Total income 1,440,749
EXPENSES
Management fee (Note 5) $ 506,995
Basic fee
Performance adjustment (3,885)
Transfer agent fees (Note 5) 309,346
Distribution fees (Note 5) 422,735
Accounting fees and expenses (Note 5) 57,711
Non-interested trustees' compensation 314
Custodian fees and expenses 85,008
Registration fees 108,657
Audit 52,981
Legal 4,150
Miscellaneous 13,722
Total expenses 1,557,734
Net investment income (loss) (116,985)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1, 2 AND 4)
Net realized gain (loss) on:
Investment securities 1,114,424
Foreign currency contracts (411,915) 702,509
Change in net unrealized appreciation (depreciation) on:
Investment securities 18,349,767
Foreign currency contracts 382,903 18,732,670
Net gain (loss) 19,435,179
Net increase (decrease) in net assets resulting from operations $ 19,318,194
</TABLE>
Statement Of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ (116,985) $ 90,237
Net investment income (loss)
Net realized gain (loss) on investments 702,509 1,106,799
Change in net unrealized appreciation (depreciation) on investments 18,732,670 (2,322,943)
Net increase (decrease) in net assets resulting from operations 19,318,194 (1,125,907)
Distributions to shareholders from: (148,613) (267,173)
Net investment income
Net realized gain (59,260) -
Share transactions 202,379,717 6,987,589
Net proceeds from sales of shares
Reinvestment of distributions from: 117,994 201,073
Net investment income
Net realized gain 47,051 -
Cost of shares redeemed (18,936,702) (6,234,902)
Net increase (decrease) in net assets resulting from share transactions 183,608,060 953,760
Total increase (decrease) in net assets 202,718,381 (439,320)
NET ASSETS
Beginning of period 18,651,928 19,091,248
End of period (including accumulated net investment income (loss) of $(208,608) and
$56,990, respectively) $ 221,370,309 $ 18,651,928
OTHER INFORMATION
Shares
Sold 16,705,346 710,845
Issued in reinvestment of distributions from: 12,994 21,300
Net investment income
Net realized gain 5,182 -
Redeemed (1,663,185) (627,858)
Net increase (decrease) 15,060,337 104,287
</TABLE>
FINANCIAL HIGHLIGHTS
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, APRIL 23, 1990
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1993 1992 1991 1990
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.07 $ 9.78 $ 9.55 $ 10.00
Income from Investment Operations
Net investment income .03 .05 .14 .05
Net realized and unrealized gain (loss) on investments 3.93 (.62) .17 (.50)
Total from investment operations 3.96 (.57) .31 (.45)
Less Distributions
From net investment income (.07) (.14) (.07) -
From net realized gain (.03)** - (.01)** -
Total distributions (.10) (.14) (.08) -
Net asset value, end of period $ 12.93 $ 9.07 $ 9.78 $ 9.55
TOTAL RETURN (dagger) (double dagger) 44.13% (5.88)% 3.25% (4.50)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 221,370 $ 18,652 $ 19,091 $ 18,161
Ratio of expenses to average net assets 2.38% 2.64% 2.85% 3.07%*#
Ratio of net investment income to average net assets (.18)% .48% 1.48% 1.45%*
Portfolio turnover rate 42% 168% 226% 137%*
</TABLE>
* ANNUALIZED
** INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT
REDUCED CERTAIN EXPENSES DURING THE PERIOD SHOWN.
(double dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
# LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED OCTOBER 31, 1993
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Overseas Fund (the fund) (formerly Fidelity Advisor
Overseas Portfolio) is a fund of Fidelity Advisor Series VII (the trust)
(formerly Fidelity Securities Trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities for which quotations are not readily available are valued
primarily using dealer-supplied valuations or at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
3. JOINT TRADING ACCOUNT.
At the end of the period, the fund had 20% or more of its total investments
in repurchase agreements through a joint trading account. These repurchase
agreements were with entities whose creditworthiness has been reviewed and
found satisfactory by FMR. The repurchase agreements were dated October 29,
1993 and due November 1, 1993. The maturity values of the joint trading
account investments were $44,382,945 at 2.96%. The investments in
repurchase agreements through the joint trading account are summarized as
follows:
MAXIMUM
AMOUNT AGGREGATE AGGREGATE AGGREGATE
NO. OF WITH ONE PRINCIPAL MATURITY MARKET COUPON MATURITY
DEALERS DEALER AMOUNT OF AMOUNT OF VALUE OF RATES OF DATES OF
OR BANKS OR BANK AGREEMENTS AGREEMENTS COLLATERAL COLLATERAL COLLATERAL
25 11.7% $15,915,716,000 $15,919,637,945 $15,957,867,622 3.875% to 11/4/93
to
14.25% 8/15/23
4. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $160,053,014 and $24,891,725, respectively.
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .45%.
The basic fee is subject to a performance adjustment (up to a maximum of
+ or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .77% of average net
assets after the performance adjustment.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. FMR has voluntarily agreed to implement this
new group fee rate schedule as it results in the same or a lower management
fee.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
Fidelity International Investment Advisors (FIIA), entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
investment advice and research services and may grant the sub-advisers
investment management authority to buy and sell securities. FMR pays its
sub-advisers either a portion of its management fee or a fee based on costs
incurred for these services. FIIA pays FIIAL U.K. a fee based on costs
incurred for either service.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, the
fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a
distribution and service fee that is based on an annual rate of .65% of its
average net assets. For the period, the fund paid FDC $422,735 of which
$325,181 was paid to securities dealers, banks and other financial
institutions for selling shares of the fund and providing shareholder
support services.
In addition, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $3,509 for the
period.
SALES LOAD. FDC received sales charges for selling shares of the fund. The
sales charge rates ranged from 2.00% to 4.75% based on purchase amounts of
less than $1,000,000. Purchase amounts of $1,000,000 or more are not
charged a sales load. For the period, FDC received $3,895,423 of which
$3,327,440 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT FEE. State Street Bank and Trust Company (SSB) is the
transfer, dividend disbursing and shareholder servicing agent for the fund.
SSB has an arrangement for certain transfer, dividend disbursing and
shareholder servicing to be performed by Fidelity Investments Institutional
Operations Company (FIIOC), an affiliate of FMR. Under revised fee
arrangements which became effective January 1, 1993, the fund pays fees
based on the type, size, number of accounts and the number of transactions
made by shareholders.
ACCOUNTING FEE. Fidelity Service Co. an affiliate of FMR, maintains the
fund's accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $800 for the period.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VII and the Shareholders of
Fidelity Advisor Overseas Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Overseas Fund (formerly Fidelity Advisor Overseas
Portfolio (a fund of Fidelity Advisor Series VII (formerly Fidelity
Securities Trust)) at October 31, 1993, the results of its operations for
the year then ended, the changes in its net assets and the financial
highlights for the periods indicated in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Fidelity Advisor Overseas Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at October 31, 1993 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
December 8, 1993
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR
FIDELITY DISTRIBUTORS CORPORATION IS A
BANK AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY
THE FDIC.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
London, England
Fidelity Management & Research (Far East) Inc.
(FMR Far East) Tokyo, Japan
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors
(U.K.) Limited (FIIAL U.K.)
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
Boston, MA
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
THE FIDELITY ADVISOR FUND FAMILY
ASK YOUR INVESTMENT PROFESSIONAL ABOUT THE ADVISOR FUND OR FUNDS THAT BEST
SUIT YOUR INVESTMENT NEEDS.
INCOME
GROWTH
EQUITY FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund(dagger)
Fidelity Advisor Global Resources Fund(dagger)(dagger)
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Portfolio Income
Fidelity Advisor Income & Growth Fund
FIXED-INCOME FUNDS
Fidelity Advisor High Yield Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Limited Term Bond Fund
Fidelity Advisor Short Fixed-Income Fund
TAX-EXEMPT FUNDS
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Limited Term Tax-Exempt Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
ABOUT THESE CHARTS. The bar graphs shown above are intended as a relative
comparison of current income and growth potential among the various fund
types. The graphs are based solely on the general investment objective of
each fund category and do not represent actual or implied fund performance
or
portfolio composition.
(dagger) Formerly the Fidelity Special Situations Fund: Advisor Class.
(dagger)(dagger) Formerly the Fidelity Advisor Global Natural Resources
Portfolio.
AMENDMENT NO. 1 TO THE CUSTODIAN AGREEMENT
DATED AS OF JULY 18, 1991
BETWEEN FIDELITY SECURITIES TRUST
AND THE CHASE MANHATTAN BANK, N.A.
Reference is hereby made to a Custodian Agreement dated as of July 18,1
991 ("the Agreement") between Fidelity Securities Trust (the "Fund"), and
The Chase Manhattan Bank, N.A. (the "Custodian"), pursuant to which the
Custodian agreed to act as custodian of the assets of the Fund. By vote of
its Board of Trustees on April 15, 1993 the name of the Fund was changed to
Fidelity Advisor Series VII.
The first paragraph of the Agreement is hereby amended to read as follows:
"Agreement made as of July 18, 1991, as amended as of April 15, 1993
between Fidelity Advisor Series VII whose name was changed from Fidelity
Securities Trust on April 15, 1993 (the "Fund") and The Chase Manhattan
Bank, N.A. (the "Custodian").
IN WITNESS WHEREOF, the parties have executed this Agreement as of April
15, 1993.
FIDELITY ADVISOR SERIES VII
By: /s/____________________
Name: Gary L. French
Title: Treasurer
By: /s/____________________
Name: R.A. Samuel
Title: Vice President
LG940210035
APPENDIX "A"
TO
CUSTODIAN AGREEMENT
BETWEEN
Fidelity Advisor Series VII and The Chase Manhattan Bank, N.A.
Dated as of April 15, 1993
The following is a list of Portfolios for which the Custodian shall serve
under a Custodian Agreement dated as of July 18, 1991 (the "Agreement"):
Portfolio Name Effective as of:
Fidelity Advisor Overseas Portfolio January 29, 1992
IN WITNESS WHEREOF, each of the parties hereto has caused this Appendix to
be executed in its name and behalf as of the and year first set forth
opposite each such Portfolio.
Fidelity Advisor Series VII The Chase Manhattan Bank, N.A.
By: /s/___________________________ By: /s/_____________________
Name: Gary L. French Name: Don Gandy
Title: Treasurer Title: Vice President
LG940210036
Dated April 20, 1990
PLYMOUTH SECURITIES TRUST: PLYMOUTH EUROPE PORTFOLIO
(the "Portfolio")
SCHEDULE C: AGENT FOR SECURITIES LENDING TRANSACTIONS
I. Services To Be Performed. Service shall be responsible for
administering a program of securities lending from the Portfolio's
portfolio by:
A. Carrying out security loan transactions between approved borrowers and
the Portfolio, including
assisting Custodian in receiving and returning collateral for loans.
B. Marking to market loans outstanding each day.
C. Ensuring that the value of collateral for loans is 100% or more of
loaned securities at market price
and issuing demands for additional collateral should the percentage fall
below 100%.
The details of operating standards and procedures to be followed shall be
established from time to time by agreement between Service and the
Portfolio and shall be expressed in a procedures manual maintained by
Service.
II. Compensation. For the performance of its obligations hereunder, the
Portfolio shall pay Service according to the following:
Opening a loan $15
Closing a loan $15
Daily mark to market of collateral $ 5
FMR CORP.
By /s/___________________________
W. L. Flaherty
Treasurer
FIDELITY SERVICE CO.
By /s/___________________________
Richard B. Jones
Executive Vice President
Plymouth Securities Trust
Plymouth Europe Portfolio
By /s/___________________________
Jack Ferris
Treasurer
mscple90
LG940240021
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post
Effective Amendment No. 23 to the Registration Statement on Form N-1A (the
"Registration Statement") of Fidelity Advisor Overseas Fund of our report
dated December 9, 1993, relating to the financial statements and financial
highlights appearing in the October 31, 1993 Annual Report to Shareholders
of Fidelity Advisor Overseas Fund, which is incorporated by reference in
such Registration Statement. We further consent to the references to us
under the headings "Auditor" in the Statement of Additional Information and
"Financial Highlights" in the Prospectus.
PRICE WATERHOUSE
/s/PRICE WATERHOUSE
Boston, Massachusetts
January 24, 1994
FIDELITY ADVISOR FUNDS
INDIVIDUAL RETIREMENT ACCOUNT
CUSTODIAL AGREEMENT
DISCLOSURE STATEMENT
UNDER SECTION 408(a)
OF THE INTERNAL REVENUE CODE
The Depositor whose name appears on the attached Application is
establishing an
individual retirement account (under Section 408(a) of the Internal Revenue
Code) to provide for his or her retirement and for the support of his or
her
beneficiaries after death.
The Custodian named on the attached Application has given the Depositor the
Disclosure Statement required under the Income Tax Regulations under
Section
408(i) of the Code.
The Depositor has deposited with the Custodian an initial contribution in
cash,
as set forth in the attached Application.
The Depositor and the Custodian make the following Agreement:
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) of the Code (but only after
December
31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to
a
Simplified Employee Pension plan as described in Section 408(k). Rollover
contributions before January 1, 1993, include rollovers described in
Section
402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a Simplified Employee Pension Plan as described in
Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the Custodial Account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts,
nor may the assets of the Custodial Account be commingled with other
property
except in a common trust fund or common investment fund (within the meaning
of
Section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the
meaning of Section 408(m) of the Code) except as otherwise permitted by
Section
408(m)(3), which provides an exception for certain gold and silver coins
and
coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the Custodial Account shall be
made
in accordance with the following requirements and shall otherwise comply
with
Section 408(a)(6) and Proposed Regulations Section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations Section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to
the Depositor under paragraph 3, or to the surviving spouse under paragraph
4,
other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the
Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the Custodial Account must be, or
begin
to be, distributed by the Depositor's required beginning date (April 1
following the calendar year end in which the Depositor reaches age 70 1/2).
By
that date, the Depositor may elect, in a manner acceptable to the
Custodian, to
have the balance in the Custodial Account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated Beneficiary.
(d) Equal or substantially equal annual payments over a specified
period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period
that may not be longer than the joint life and last survivor expectancy of
the
Depositor and his or her designated Beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest
has begun, distribution must continue to be made in accordance with
paragraph
3.
(b) If the Depositor dies before distribution of his or her interest
has
begun, the entire remaining interest will, at the election of the Depositor
or,
if the Depositor has not so elected, at the election of the Beneficiary or
Beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the
life or life expectancy of the designated Beneficiary or Beneficiaries
starting
by December 31 of the year following the year of the Depositor's death. If,
however, the Beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in
which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has
irrevocably
commenced, distributions are treated as having begun on the Depositor's
required beginning date, even though payments may actually have been made
before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the Beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in
the
account.
5. In the case of distribution over life expectancy in equal or
substantially
equal annual payments, to determine the minimum annual payment for each
year,
divide the Depositor's entire interest in the Custodial Account as of the
close
of business on December 31 of the preceding year by the life expectancy of
the
Depositor (or the joint life and last survivor expectancy of the Depositor
and
the Depositor's designated Beneficiary, or the life expectancy of the
designated Beneficiary, whichever applies). In the case of distributions
under
paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and
designated
Beneficiary as of their birthdays in the year the Depositor reaches age 70
1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii),
determine
life expectancy using the attained age of the designated Beneficiary as of
the
Beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for
another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for
the Custodian to prepare any reports required under Section 408(i) of the
Code
and Regulations Sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and
the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any
additional articles that are not consistent with Section 408(a) of the Code
and
the related regulations will be invalid.
ARTICLE VII
This Agreement will be amended from time to time to comply with the
provisions
of the Code and related regulations. Other amendments may be made with the
consent of the Depositor and the Custodian.
ARTICLE VIII
1. DEFINITIONS. The following definitions shall apply to terms used in this
Article VIII:
(a) "Account" or "Custodial Account" means the custodial account
established hereunder for the benefit of the Depositor.
(b) "Agreement" means the Fidelity Advisor Fund IRA Custodial
Agreement,
including the information and provisions set forth in any Account
Application
that goes with this Agreement. This Agreement, including the Account
Application and any designation of Beneficiary filed with the Custodian,
may be
proved either by an original copy or by a reproduced copy thereof,
including,
without limitation, a copy reproduced by photocopying, facsimile
transmission,
or electronic imaging.
(c) "Application" shall mean the Application by which this Agreement,
as
may be amended from time to time, is established between the Depositor and
the
Custodian. The statements contained therein shall be incorporated into this
Agreement.
(d) "Authorized Agent" means the person or persons authorized by the
Depositor, on a signed form acceptable to and filed with the Custodian, to
purchase or sell Shares in the Depositor's Account.
(e) "Beneficiary" means the person or persons (including a trust or
estate)
designated as such by the Depositor on a signed form acceptable to and
filed
with the Custodian pursuant to Article VIII, Section 8 of this Agreement.
(f) "Broker" shall mean either a securities broker-dealer registered as
such under the Securities Exchange Act of 1934, or a bank as defined in
Section
3(a)(6) of the Securities Exchange Act of 1934, which the Depositor has
designated as his or her Broker in the Account Application.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Company" shall mean FMR Corp., a Massachusetts corporation, or any
successor or affiliate thereof to which FMR Corp. may, from time to time,
delegate or assign any or all of its rights or responsibilities under this
Agreement.
(i) "Custodian" shall mean State Street Bank & Trust Company, a
Massachusetts Trust Company, or its successor, as specified in the Account
Application.
(j) "Depositor" means the person named in the Account Application.
(k) "Investment Company Shares" or "Shares" shall mean shares of stock,
trust certificates, or other evidences of interest (including fractional
shares) in any corporation, partnership, trust, or other entity registered
under the Investment Company Act of 1940 for which Fidelity Management
&
Research Company, a Massachusetts corporation, or its successors or
affiliates
(collectively, for purposes of this Agreement "FMR") serves as investment
advisor and which are designated by FMR as a Fidelity Advisor Fund.
(l) "Money Market Shares" shall mean any Investment Company Shares or
other
such shares issued by a money market mutual fund and which are permitted by
the
Custodian for investment under this Agreement.
2. BROKER. The Broker shall be appointed by the Depositor in the
Application as
his or her agent to execute such investment directions with respect to
Investment Company Shares as the Depositor may give under the terms of the
Custodial Account, including the execution of purchase and sale orders
through
the Company's proprietary remote trading system.
In all cases the Broker, and not the Custodian, shall have the
responsibility
for delivering to the Depositor all notices and prospectuses relating to
such
Investment Company Shares. To the extent that the Custodian delivers to the
Broker confirmations, statements and other notices with respect to the
Account,
any such communications delivered to the Broker shall be deemed to have
been
delivered to the Depositor. The Depositor agrees to hold the Custodian and
the
Company harmless from and against any losses, cost or expenses arising in
connection with the delivery or receipt of any such communication(s),
provided
the Custodian has acted in accordance with the above.
3. INVESTMENT OF CONTRIBUTIONS. Contributions to the Account may be
invested
only in Investment Company Shares, and shall be invested as follows:
(a) General. Contributions will be invested in accordance with the
Depositor's written instructions in the Application, and with subsequent
instructions given by the Depositor or the Authorized Agent appointed by
the
Depositor (or, following the death of the Depositor, his or her
Beneficiary)
through the Broker to the Custodian in a manner acceptable to the
Custodian. By
giving such instructions to the Custodian, such person will be deemed to
have
acknowledged receipt of the then-current prospectus, if any, for any
Investment
Company Shares in which the Depositor (or the Authorized Agent appointed by
the
Depositor), through the Broker directs the Custodian to invest assets in
his or
her Account. All charges incidental to carrying out such instructions shall
be
charged and collected in accordance with Article VIII, Section 18. All
Investment Company Shares in the Custodial Account shall be held in the
name of
the Custodian or its nominee or nominees.
(b) Initial Contribution. The Custodian will invest all contributions
promptly after their receipt, as set forth below; provided, however, that
the
Custodian shall not be obligated to invest the Depositor's initial
contribution
to his Custodial Account as indicated on the Application, until at least
seven
(7) calendar days have elapsed from the date of acceptance of the
Application
by or on behalf of the Custodian.
(c) Unclear Instructions. If the Depositor's Custodial Account at any
time
contains cash as to which investment instructions in accordance with this
Section 3 have not been received by the Custodian, or if the Custodian
receives
instructions as to investment selection or allocation which are, in the
opinion
of the Custodian, not clear, the Custodian may request instructions from
the
Depositor (or the Depositor's Authorized Agent, Beneficiary, executor or
administrator). Pending receipt of such instructions any cash may be
invested
in Money Market Shares, and any other investment may remain unchanged. The
Custodian shall not be liable to anyone for any loss resulting from delay
in
investing such cash or in implementing such instructions. Notwithstanding
the
above, the Custodian may, but need not, for administrative convenience
maintain
a balance of up to $100 of uninvested cash in the Depositor's Custodial
Account.
(d) Minimum Investment. Any other provision hereof to the contrary
notwithstanding, the Depositor (or the Depositor's Authorized Agent,
Beneficiary, executor, or administrator) may not direct that any part or
all of
the Custodial Account be invested in Investment Company Shares unless the
aggregate amount to be invested is at least such amount as the Custodian
shall
establish from time to time.
(e) No Duty. The Custodian shall not have any duty to question the
directions of a Depositor (or the Depositor's Broker, Authorized Agent,
Beneficiary, executor, or administrator) in the investment of his or her
Custodial Account or to advise the Depositor or the Depositor's Broker
regarding the purchase, retention or sale of assets credited to the
Custodial
Account. The Custodian, or any of its affiliates, shall not be liable for
any
loss which results from the Depositor's (or the Depositor's Broker,
Authorized
Agent, Beneficiary, executor, or administrator) exercise of control
(whether by
his or her action or inaction) over the Custodial Account.
4. CONTRIBUTIONS BY DIVORCED OR SEPARATED SPOUSES. All alimony and separate
maintenance payments received by a divorced or separated spouse, and
taxable
under Section 71 of the Code, shall be considered compensation for purposes
of
computing the maximum annual contribution to the Custodial Account, and the
limitations for contributions by a divorced or separated spouse shall be
the
same as for any other individual.
5. TIMING OF CONTRIBUTIONS. A contribution is deemed to have been made on
the
last day of the preceding taxable year if the contribution is made by the
deadline for filing the Depositor's income tax return (not including
extensions), or such later date as may be determined by the Department of
the
Treasury or the IRS, provided the Depositor (or the Depositor's Broker or
Authorized Agent) designates, in a manner acceptable to the Custodian, the
contribution as a contribution for the preceding taxable year.
6. ROLLOVER CONTRIBUTIONS. The Custodian will accept for the Custodial
Account
all rollover contributions which consist of cash, and it may, but shall be
under no obligation to, accept all or any part of any other rollover
contribution. The Depositor shall designate each rollover contribution as
such
to the Custodian through the Broker, and by such designation shall confirm
to
the Custodian that a proposed rollover contribution qualifies as a rollover
contribution within the meaning of Sections 402(a)(5), 402(a)(6),
402(a)(7),
402(c), 403(a)(4), 403(b)(8), and/or 408(d)(3) of the Code. Submission by
or on
behalf of a Depositor of a rollover contribution consisting of assets other
than cash or property permitted as an investment under this Article VIII
shall
be deemed to be the instruction of the Depositor to the Custodian that, if
such
rollover contribution is accepted, the Custodian will use its best efforts
to
sell those assets for the Depositor's account, and to invest the proceeds
of
any such sale in accordance with Section 3. To the extent permitted by law,
the
Custodian shall not be liable to anyone for any loss resulting from such
sale
or delay in effecting such sale; or for any loss of income or appreciation
with
respect to the proceeds thereof after such sale and prior to investment
pursuant to Section 3; or for any failure to effect such sale if such
property
proves not readily marketable in the ordinary course of business. All
brokerage
and other costs incidental to the sale or attempted sale of such property
will
be charged to the Custodial Account in accordance with Article VIII,
Section
18.
7. REINVESTMENT OF EARNINGS. In the absence of other instructions pursuant
to
Section 3, distributions of every nature received in respect of the assets
in a
Depositor's Custodial Account shall be reinvested as follows:
(a) in the case of a distribution in respect of Investment Company
Shares
which may be received, at the election of the shareholder, in cash or in
additional Shares of such Investment Company, the Custodian shall elect to
receive such distribution in additional Investment Company Shares;
(b) in the case of a cash distribution which is received in respect of
Investment Company Shares, the Custodian shall reinvest such cash in
additional
Shares of that Investment Company;
(c) in the case of any other distribution of any nature received in
respect
of assets in the Custodial Account, the distribution shall be liquidated to
cash, if necessary, and shall be reinvested in accordance with the
Depositor's
instructions pursuant to Section 3.
8. DESIGNATION OF BENEFICIARY. A Depositor may designate a Beneficiary as
follows:
(a) General. A Depositor may designate a Beneficiary or Beneficiaries
at
any time, and any such designation may be changed or revoked at any time,
by
written designation signed by the Depositor on a form acceptable to, and
filed
with, the Custodian; provided, however, that such designation, or change or
revocation of a prior designation, shall not be effective unless it is
received
and accepted by the Custodian no later than thirty (30) days after the
death of
the Depositor, and provided further that the latest such designation or
change
or revocation shall control. If the Depositor had not by the date of his or
her
death properly designated a Beneficiary in accordance with the preceding
sentence, or if no designated Beneficiary survives the Depositor, the
Depositor's Beneficiary shall be his or her surviving spouse, but if he or
she
has no surviving spouse, his or her estate. Unless otherwise specified in
the
Depositor's designation of Beneficiary, if a Beneficiary dies before
receiving
his or her entire interest in the Custodial Account, his or her remaining
interest in the Custodial Account shall be paid to the Beneficiary's
estate.
(b) Minors. If a distribution upon the death of the Depositor is
payable to
a person known by the Custodian to be a minor or otherwise under a legal
disability, the Custodian may, in its absolute discretion, make all, or any
part of the distribution to (a) a parent of such person, (b) the guardian,
conservator, or other legal representative, wherever appointed, of such
person,
(c) a custodial account established under a Uniform Gifts to Minors Act,
Uniform Transfers to Minors Act, or similar act, (d) any person having
control
or custody of such person, or (e) to such person directly.
(c) QTIPs and QDOTs. A Depositor may designate as Beneficiary of his or
her
Account a trust for the benefit of his or her surviving spouse that is
intended
to satisfy the conditions of Sections 2056(b)(7) or 2056A of the Code (a
"Spousal Trust"). In that event, if the Depositor is survived by his or her
spouse, the following provisions shall apply to the Account, from and after
the
death of the Depositor until the death of the Depositor's surviving spouse:
(1)
all of the income of the Account shall be paid to the Spousal Trust
annually or
at more frequent intervals, and (2) no person shall have the power to
appoint
any part of the Account to any person other than the Spousal Trust. To the
extent permitted by Section 401(a)(9) of the Code, as determined by the
trustee(s) of the Spousal Trust, the surviving spouse of a Depositor who
has
designated a Spousal Trust as his or her Beneficiary may be treated as his
or
her "designated beneficiary" for purposes of the distribution requirements
of
that Code section. The Custodian shall have no responsibility to determine
whether such treatment is appropriate.
(d) Judicial Determination. Anything to the contrary herein
notwithstanding, in the event of reasonable doubt respecting the proper
course
of action to be taken, the Custodian may in its sole and absolute
discretion
resolve such doubt by judicial determination which shall be binding on all
parties claiming any interest in the Account. In such event all court
costs,
legal expenses, reasonable compensation of time expended by the Custodian
in
the performance of its duties, and other appropriate and pertinent expenses
and
costs shall be collected by the Custodian from the Custodial Account in
accordance with Article VIII, Section 18.
(e) No Duty. The Custodian shall not have any duty to question the
directions of a Depositor (or the Depositor's Authorized Agent,
Beneficiary,
executor or administrator) as to the time(s) and amount(s) of distributions
from the Custodial Account, or to advise him or her regarding the
compliance of
such distributions with Section 401(a)(9), Section 2056(b)(7) or Section
2056A
of the Code.
9. PAYROLL DEDUCTION. Subject to approval of the Custodian and the Broker,
a
Depositor may choose to have contributions to his or her Custodial Account
made
through payroll deduction if the Account is maintained as part of a program
sponsored by the Depositor's employer. In order to establish payroll
deduction,
the Depositor must authorize his or her employer to deduct a fixed amount
from
each pay period's salary up to a total amount of $2,000 per year, unless
such
contributions are being made pursuant to a Simplified Employee Pension Plan
described under Section 408(k) of the Code, in which case, contributions
can be
made up to 15% of the Depositor's earned income, up to $30,000 per year.
Contribution's to the Custodial Account of the Depositor's spouse may be
made
through payroll deduction if the employer authorizes the use of payroll
deductions for such contributions, but such contributions must be made to a
separate Account maintained for the benefit of the Depositor's spouse. The
payroll deduction authorization shall continue in force until such time as
written amendment or revocation is received by the Depositor's employer and
the
Custodian with reasonable advance notice.
10. TRANSFERS TO OR FROM THE ACCOUNT. Assets held on behalf of the
Depositor in
another IRA may be transferred by the trustee or custodian thereof directly
to
the Custodian, in a form and manner acceptable to the Custodian, to be held
in
the Custodial Account for the Depositor under this Agreement. The Custodian
will not be responsible for any losses the Depositor may incur as a result
of
the timing of any transfer from another trustee or custodian that are due
to
circumstances reasonably beyond the control of the Custodian.
Assets held on behalf of the Depositor in the Account may be transferred
directly to a trustee or custodian of another IRA established for the
Depositor, if so directed by the Depositor in a form and manner acceptable
to
the Custodian; provided, however, that it shall be the Depositor's
responsibility to ensure that any minimum distribution required by Section
401(a)(9) of the Code is made prior to giving the Custodian such transfer
instructions.
11. DISTRIBUTIONS FROM THE ACCOUNT. Subject to Section 13 below,
distributions
from the Account will be made only upon the request of the Depositor (or
the
Depositor's Authorized Agent, Beneficiary, executor, or administrator) to
the
Custodian through the Broker in such form and in such manner as is
acceptable
to the Custodian. For distributions requested pursuant to Article IV, life
expectancy and joint life and last survivor expectancy are calculated based
on
information provided by the Depositor (or the Depositor's Authorized Agent,
Beneficiary, executor, or administrator) using the Expected Return
Multiples in
Section 1.72-9 of the Income Tax Regulations. The Custodian shall not incur
any
liability for errors in such calculations as a result of reliance on
information provided by the Depositor (or the Depositor's Authorized Agent,
Beneficiary, executor, or administrator) or the Depositor's Broker. Without
limiting the generality of the foregoing, the Custodian is not obligated to
make any distribution, including a minimum required distribution as
specified
in Article IV above, absent a specific written direction from the Depositor
(or
the Depositor's Authorized Agent, Beneficiary, executor, or administrator)
through the Broker to do so.
12. ACTIONS IN THE ABSENCE OF SPECIFIC INSTRUCTIONS. If the Custodian
receives
no response to communications sent to the Depositor (or the Depositor's
Authorized Agent, Beneficiary, executor, or administrator) at the
Depositor's
(or the Depositor's Authorized Agent, Beneficiary, executor, or
administrator's) last known address as shown in the records of the
Custodian,
or if the Custodian determines, on the basis of evidence satisfactory to
it,
that the Depositor is legally incompetent, the Custodian thereafter may
make
such determinations with respect to distributions, investments, and other
administrative matters arising under this Agreement as it considers
reasonable,
notwithstanding any prior instructions or directions given by or on behalf
of
the Depositor. Any determinations so made shall be binding on all persons
having or claiming any interest under the Custodial Account, and the
Custodian
shall not incur any obligation or liability for any such determination made
in
good faith, for any action taken in pursuance thereof, or for any
fluctuations
in the value of the Account in the event of a delay resulting from the
Custodian's good faith decision to await additional information or
evidence.
13. RESPONSIBILITY AS TO CONTRIBUTIONS OR DISTRIBUTIONS. The Custodian will
not
under any circumstances be responsible for the timing, purpose or propriety
of
any contribution or of any distribution made hereunder, nor shall the
Custodian
incur any liability or responsibility for any tax imposed on account of any
such contribution or distribution. Notwithstanding Section 11 above, the
Custodian is empowered to make a distribution absent such an instruction if
directed to do so pursuant to a court order of any kind and neither the
Custodian nor the Company shall in such event incur any liability for
acting in
accordance with such court order.
14. WRITTEN INSTRUCTIONS AND NOTICES. All written notices or communications
required to be given by the Custodian to the Depositor shall be deemed to
have
been given when sent by mail to either the Broker or to the last known
address
of the Depositor in the records of the Custodian. All written instructions,
notices, or communications required to be given by the Depositor to the
Custodian shall be mailed or delivered to the Custodian at its designated
mailing address as specified on the Application, and no such instruction,
notice, or communication shall be effective until the Custodian's actual
receipt thereof.
15. EFFECT OF WRITTEN INSTRUCTIONS AND NOTICES. The Custodian shall be
entitled
to rely conclusively upon, and shall be fully protected in any action or
non-action taken in good faith in reliance upon, any written instructions,
notices, communications or instruments believed to have been genuine and
properly executed. Any such notification may be proved by original copy or
reproduced copy thereof, including, without limitation, a copy produced by
photocopying, facsimile transmission, or electronic imaging. For this
purpose,
the Custodian may (but is not required to) give the same effect to a
telephonic
instruction as it gives to a written instruction, and the Custodian's
action in
doing so shall be protected to the same extent as if such telephonic
instructions were, in fact, a written instruction. Any such telephonic
instruction may be proved by audio recorded tape.
16. TAX MATTERS.
(a) General. The Custodian shall submit required reports to the IRS and
the
Depositor (or the Depositor's Authorized Agent, Beneficiary, executor, or
administrator); provided, however, that such individual shall prepare any
return or report required in connection with maintaining the Account, or as
a
result of liability incurred by the Account for tax on unrelated business
taxable income, or windfall profits tax.
(b) Annual Report. As soon as is practicable after the close of each
taxable year, and whenever required by the Code, the Custodian shall
deliver to
the Depositor a written report(s) reflecting receipts, disbursements and
other
transactions effected in the Custodial Account during such period and the
fair
market value of the assets and liabilities of the Custodial Account as of
the
close of such period in a manner prescribed by the Internal Revenue
Service.
Unless the Depositor sends the Custodian written objection to a report
within
ninety (90) days of receipt, the Depositor shall be deemed to have approved
of
such report, and the Custodian and the Company, and their officers,
employees
and agents shall be forever released and discharged from all liability and
accountability to anyone with respect to their acts, transactions, duties
and
responsibilities as shown on or reflected by such report(s). The Company
shall
not incur any liability in the event the Custodian does not satisfy its
obligations as described herein.
(c) Withholding. Any distributions from the Custodial Account may be
made
by the Custodian net of any required tax withholding.
17. SPENDTHRIFT PROVISION. The interest of a Depositor in the Account shall
not
be transferred or assigned by voluntary or involuntary act of the Depositor
or
by operation of law; nor shall it be subject to alienation, assignment,
garnishment, attachment, receivership, execution or levy of any kind.
However,
this Section 17 shall not in any way be construed to, and the Custodian is
in
no way obligated or expected to, commence or defend any legal action in
connection with this Agreement or the Custodial Account. Commencement of
legal
action or proceeding or defense of such legal action or proceeding shall be
the
sole responsibility of the Depositor unless agreed upon by the Custodian
and
the Depositor, and unless the Custodian is fully indemnified for doing so
to
the Custodian's satisfaction. Notwithstanding the foregoing, in the event
of a
property settlement between a Depositor and his or her former spouse
pursuant
to which the transfer of a Depositor's interest hereunder, or a portion
thereof, is incorporated in a divorce decree or in a written instrument
incident to such divorce or legal separation, then the interest so decreed
by a
Court to be the property of such former spouse shall be transferred to a
separate Custodial Account for the benefit of such former spouse, in
accordance
with Section 408(d)(6) of the Code.
18. FEES AND EXPENSES.
(a) General. The fees of the Custodian for performing its duties
hereunder
shall be in such amount as it shall establish from time to time. All such
fees,
as well as expenses (such as, without limitation, brokerage commissions
upon
the investment of funds, fees for special legal services, taxes levied or
assessed, or expenses in connection with the liquidation or retention of
all or
part of a rollover contribution), shall be collected by the Custodian from
cash
available in the Custodial Account, or if insufficient cash shall be
available,
by sale of sufficient assets in the Custodial Account and application of
the
sales proceeds to pay such fees and expenses. Alternatively, but only with
the
consent of the Custodian, fees and expenses may be paid directly to the
Custodian by the Depositor by separate check.
(b) Advisor Fees. The Custodian shall, upon direction from the
Depositor,
disburse from the Custodial Account payment to the Depositor's registered
investment advisor of any fees for financial advisory services rendered
with
regard to the assets held in the Account. Such direction must be provided
in a
form and manner acceptable to the Custodian, and the Custodian shall not
incur
any liability for executing such direction.
(c) Sale of Assets. Whenever it shall be necessary in accordance with
this
Section 18 to sell assets in order to pay fees or expenses, the Custodian
shall
request the Depositor (or the Depositor's Authorized Agent, Beneficiary,
executor, or administrator) to provide specific instructions. If such
instructions are not received by the Custodian within ten (10) business
days of
the Custodian's request, the Custodian may sell any or all of the assets
credited to the Custodial Account at that time, and shall invest the
portion of
the sales proceeds remaining after collection of the applicable fees and
expenses therefrom in accordance with Section 3. The Custodian shall not
incur
any liability on account of its sale or retention of assets under such
circumstances.
19. VOTING WITH RESPECT TO SECURITIES. The Custodian shall mail to the
Depositor all prospectuses and proxies that may come into the Custodian's
possession by reason of its holding of Investment Company Shares or other
securities in the Custodial Account. A Depositor may direct the Custodian
as to
the manner in which any securities or Investment Company Shares held in the
Custodial Account shall be voted with respect to any matters as to which
the
Custodian as holder of record is entitled to vote, coming before any
meeting of
shareholders of the corporation which issued such securities, or of holders
of
interest in the Investment Company which issued such Investment Company
Shares.
All such directions shall be in writing on a form approved by the Custodian
and
signed by the Depositor, and delivered to the Custodian within the time
prescribed by it. The Custodian shall vote only those securities and Shares
with respect to which it has received timely written directions from the
Depositor.
20. LIMITATIONS ON CUSTODIAL LIABILITY AND INDEMNIFICATION. The Depositor
and
the Custodian intend that the Custodian shall have and exercise no
discretion,
authority, or responsibility as to any investment in connection with the
Account and the Custodian shall not be responsible in any way for the
purpose,
propriety or tax treatment of any contribution, or of any distribution, or
any
other action or nonaction taken pursuant to the Depositor's direction or
that
of the Depositor's Authorized Agent, Beneficiary, executor or
administrator.
The Depositor who directs the investment of his or her Account shall bear
sole
responsibility for the suitability of any directed investment and for any
adverse consequences arising from such an investment, including, without
limitation, the inability of the Custodian to value or to sell an illiquid
investment, or the generation of unrelated business taxable income with
respect
to an investment. To the fullest extent permitted by law, the Depositor (or
the
Depositor's Authorized Agent, Beneficiary, executor or administrator, as
appropriate) shall at all times fully indemnify and save harmless the
Custodian, the Company and their agents, affiliates, successors and assigns
and
their officers, directors and employees, from any and all liability arising
from the Depositor's investment direction under this Account, or from the
Broker's execution of such direction, and from any and all other liability
whatsoever which may arise in connection with this Agreement except
liability
arising under applicable law or liability arising from gross negligence or
willful misconduct on the part of the indemnified person. Although the
Custodian shall have no responsibility to give effect to a direction from
anyone other than the Depositor (or the Depositor's Beneficiary, executor
or
administrator), the Custodian may, in its discretion, establish procedures
pursuant to which the Depositor may delegate to a third party any or all of
the
Depositor's powers and duties hereunder, provided, however, that in no
event
may anyone other than the Depositor execute the application by which this
Agreement is adopted or the form by which the Beneficiary is appointed, and
provided, further, that any such third party to whom the Depositor has so
delegated powers and duties shall be treated as the Depositor for purposes
of
applying the preceding sentences of this paragraph and the provisions of
Article VIII, Section 2.
21. DELEGATION TO AGENTS. The Custodian may delegate to one or more
corporations affiliated with the Custodian the performance of record
keeping
and other ministerial services in connection with the Custodial Account,
for a
reasonable fee to be borne by the Custodian and not by the Custodial
Account.
Any such agent's duties and responsibilities shall be confined solely to
the
performance of such services, and shall continue only for so long as the
Custodian named in the Application serves as Custodian.
22. AMENDMENT OF AGREEMENT. The Depositor, the Broker, and Custodian
authorize
and direct the Company to amend this Agreement in any respect at any time
(including retroactively), so that it may conform with applicable
provisions of
the Internal Revenue Code, or with any other applicable law as in effect
from
time to time, or to make such other changes to this Agreement as the
Company
deems advisable. Any such amendment shall be effected by delivery to the
Custodian and mailing to the Depositor at his or her last known address (as
shown in the records of the Custodian) a copy of such amendment or a
restatement of this Custodial Agreement, including any such amendment. The
Depositor shall be deemed to consent to any such amendment(s) if he or she
fails to object thereto by written notice received by the Custodian within
fifteen (15) calendar days from the date of the Company's mailing to the
Depositor a copy of such amendment(s) or restatement.
23. RESIGNATION OR REMOVAL OF CUSTODIAN. The Company may remove the
Custodian
at any time, and the Custodian may resign at any time, upon thirty (30)
days'
written notice to the Depositor and the Broker. Upon the removal or
resignation
of the Custodian, the Company may, but shall not be required to, appoint a
successor custodian under this Custodial Agreement; provided that any
successor
custodian shall satisfy the requirements of Section 408(a)(2) of the Code.
Upon
any such successor's acceptance of appointment, the Custodian shall
transfer
the assets of the Custodial Account, together with copies of relevant books
and
records, to such successor custodian; provided, however, that the Custodian
is
authorized to reserve such sum of money or property as it may deem
advisable
for payment of any liabilities constituting a charge on or against the
assets
of the Custodial Account, or on or against the Custodian or the Company.
The
Custodian shall not be liable for the acts or omissions of any successor to
it.
If no successor custodian is appointed by the Company, the Custodial
Account
shall be terminated, and the assets of the Account, reduced by the amount
of
any unpaid fees or expenses, will be distributed to the Depositor.
24. TERMINATION OF THE CUSTODIAL ACCOUNT. The Depositor may terminate the
Custodial Account at any time upon notice to the Custodian in a manner and
form
acceptable to the Custodian. Upon such termination, the Custodian shall
transfer the assets of the Custodial Account, reduced by the amount of any
unpaid fees or expenses, to the custodian or trustee of another individual
retirement account (within the meaning of Section 408 of the Code) or other
retirement plan designated by the Depositor, as described in Article VIII,
Section 10. The Custodian shall not be liable for losses arising from the
acts,
omissions, delays or other inaction of any such transferee custodian or
trustee. If notice of the Depositor's intention to terminate the Custodial
Account is received by the Custodian and the Depositor had not designated a
transferee custodian or trustee for the assets in the Account, then the
Account, reduced by any unpaid fees or expenses, will be distributed to the
Depositor.
25. GOVERNING LAW. THIS AGREEMENT, AND THE DUTIES AND OBLIGATIONS OF THE
COMPANY AND THE CUSTODIAN UNDER THE AGREEMENT, SHALL BE CONSTRUED,
ADMINISTERED
AND ENFORCED ACCORDING TO THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
EXCEPT
AS SUPERSEDED BY FEDERAL LAW OR STATUTE.
26. WHEN EFFECTIVE. This Agreement shall not become effective until
acceptance
of the Application by or on behalf of the Custodian at its principal
office, as
evidenced by a written notice to the Depositor.
NO-NAME
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
The following information is provided to you in accordance with the
requirements of the Internal Revenue Code (the "Code") and should be
reviewed
in conjunction with both the Custodial Agreement and the Application for
your
Individual Retirement Account ("IRA"). This information reflects the
provisions
of the Internal Revenue Code as are effective January 1, 1987, and
therefore
applies to contributions for years after, and to distributions taken after
1986.
RIGHT TO CANCEL
You may revoke this Account at any time within seven (7) calendar days
after it
is established by mailing or delivering a written request for revocation
to:
State Street Bank & Trust
P.O. Box 8302
Boston, Massachusetts 02266-8302
Upon revocation, you will receive a full refund of your initial
contribution,
including sales commissions (if any) and/or administrative fees. To
determine
where to send a revocation request, or if you have any questions relative
to
this procedure, please call our toll-free number, 1-800-522-7297.
TYPES OF IRAs
REGULAR IRA. You may make a Regular IRA contribution of $2,000 or 100% of
your
compensation, whichever is less. (To determine the amount of your income
tax
deduction for your IRA contribution, see "Limits on Deductible
Contributions"
below.)
SPOUSAL IRA. If you and your spouse file a joint federal income tax return,
you
may make a Spousal IRA contribution, even if your spouse has received
compensation during the tax year. Your contribution to a Spousal IRA must
not
exceed the lesser of (1) $2,000 or (2) the excess of $2,250 (or if less,
100%
of your compensation) over your contribution to your Regular IRA. Note: If
your
spouse has more than $250 in compensation for the tax year, the two of you
may
make a larger total contribution if you each contribute to a Regular IRA.
ROLLOVER IRA. If you retire or change jobs, you may be eligible for a
distribution from your employer's retirement plan. To avoid mandatory
withholding of 20% of your distribution for federal income tax, and to
preserve
the tax-deferred status of this distribution, you can transfer it directly
to a
Rollover IRA. If you choose to have the distribution paid directly to you,
you
will be subject to the 20% withholding rules. You may still reinvest up to
100%
of the total amount of your distribution which is eligible for rollover in
a
Rollover IRA by replacing the 20% which was withheld for taxes with other
assets you own. You must reinvest in a Rollover IRA within 60 days of
receipt
of your distribution. The amount invested in a Rollover IRA will not be
included in your taxable income for the year in which you receive the
qualified
plan distribution.
DESCRIPTION OF ACCOUNT
Your IRA is a custodial account created for your exclusive benefit. Your
interest in the account is nonforfeitable.
ELIGIBILITY
Employees and self-employed individuals are eligible to contribute to an
IRA
even if they are already covered under another tax-qualified plan.
Employers
may contribute to IRAs established by their employees, and employers may
contribute to IRAs used as part of a Simplified Employee Pension plan
("SEP,"
described below).
CONTRIBUTIONS
GENERAL. You may make annual cash contributions to an IRA in any amount up
to
100% of your compensation for the year or $2,000, whichever is less. Your
employer may make contributions to your account, but, except as noted below
under a SEP, the total contributions from you and your employer may not
exceed
this limitation. Contributions (other than rollover contributions described
below) must be made in "cash" and not in "kind." Therefore, securities or
other
assets already owned cannot be contributed to an IRA but can be converted
to
cash and then contributed. No part of your contribution may be invested in
life
insurance or be commingled with other property, except in a common trust
fund
or common investment fund.
SPOUSAL ACCOUNTS. If you are married and file a joint tax return, you may
make
cash contributions to a "spousal" IRA in addition to your own IRA (even if
your
spouse has compensation). The total amounts contributed to your own and to
your
spouse's IRA may not exceed 100% of your combined compensation or $2,250,
whichever is less. In no event, however, may the annual contribution to
either
your account or your spouse's account exceed $2,000.
COMPENSATION means wages, salaries, professional fees, or other amounts
derived
from or received for personal service actually rendered and includes the
earned
income of a self-employed individual, and any alimony or separate
maintenance
payment includible in the individual's gross income.
ADJUSTED GROSS INCOME is determined prior to adjustments for personal
exemptions and itemized deductions. For purposes of determining the IRA
deduction (see below), adjusted gross income is modified to take into
account
deductions for IRA contributions, taxable benefits under the Social
Security
Act and the Railroad Retirement Act, and passive loss limitations under
Code
Section 86.
TIME OF CONTRIBUTION. You may make contributions to your IRA anytime, up to
and
including the due date for filing your tax return for the year. You may
continue to make annual contributions to your IRA up to (but not including)
the
calendar year in which you reach age 70 1/2. You may continue to make
annual
contributions to your spouse's IRA up to (but not including) the calendar
year
in which your spouse reaches age 70 1/2.
ROLLOVER IRA CONTRIBUTIONS. Qualifying distributions from tax-qualified
plans
(for example, pension, profit-sharing, and Keogh plans) may be eligible for
rollover into your IRA. However, strict limitations apply to such rollovers
and
you should seek competent tax advice regarding these restrictions.
SIMPLIFIED EMPLOYEE PENSION PLAN CONTRIBUTIONS. A separate IRA may be
established for use by your employer as part of a SEP arrangement. Your
employer may contribute to your SEP-IRA up to a maximum of 15% of your
compensation or $30,000, whichever is less. If your SEP-IRA is used as part
of
a salary reduction SEP, you may elect to reduce your annual compensation,
up to
a maximum of 15% of your compensation or $7,000 (indexed to reflect
cost-of-living adjustments), whichever is less, and have your employer
contribute that amount to your SEP-IRA. If your employer maintains both a
salary reduction SEP and a regular SEP, the annual contribution limit to
both
SEPs together is 15% of your compensation or $30,000, whichever is less.
You
may contribute, in addition to the amount contributed by your employer to
your
SEP-IRA, an amount not in excess of the limits referred to under "General"
above. It is your and your employer's responsibility to see that
contributions
in excess of normal IRA limits are made under a valid SEP and are,
therefore,
proper.
EXCESS CONTRIBUTIONS. Contributions which exceed the allowable maximum per
year
are considered excess contributions. A nondeductible penalty tax of 6% of
the
excess amount contributed will be incurred for each year in which the
excess
contribution remains in your IRA. If you make a contribution (or your
employer
makes a SEP contribution, including a salary reduction contribution, on
your
behalf) in excess of your allowable maximum for any taxable year, you may
correct the excess contribution and avoid the 6% penalty tax for that year
by
withdrawing the excess contribution and its earnings on or before the date,
including extensions, for filing your tax return for that year.
The amount of the excess contribution withdrawn will not be considered a
premature distribution nor (except in the case of a salary reduction
contribution) be taxed as ordinary income, but the earnings withdrawn will
be
taxed as ordinary income to you. Alternatively, excess contributions for
one
year may be carried forward and reported in the next year to the extent
that
the excess, when aggregated with your IRA contribution (if any) for the
subsequent year, does not exceed the maximum amount for that year. The 6%
excise tax will be imposed on excess contributions in each year they are
neither returned nor carried forward.
DEDUCTIBLE IRA CONTRIBUTIONS
If you are not married and are not an active participant in an
employer-maintained retirement plan, you may make a fully deductible IRA
contribution in any amount up to 100% of your compensation for the year or
$2,000, whichever is less. The same limits apply if you are married and you
file a joint return with your spouse, and neither of you is an active
participant in an employer-maintained retirement plan. An
"employer-maintained
retirement plan" includes any of the following types of retirement plans:
o a qualified pension, profit-sharing, or stock bonus plan established in
accordance with IRC (Sec. Mk.)401(a) or 401(k).
o a Simplified Employee Pension Plan (SEP) (IRC (Sec. Mk.)408(k)).
o a deferred compensation plan maintained by a governmental unit or
agency.
o tax sheltered annuities and custodial accounts (IRC (Sec. Mk.)403(b) and
403(b)(7)).
o a qualified annuity plan under IRC (Sec. Mk.)403(a).
You are an active participant in an employer maintained retirement plan
even if
you do not have a vested right to any benefits under your employer's plan.
Whether you are an "active participant" depends on the type of plan
maintained
by your employer. Generally, you are considered an active participant in a
defined contribution plan if an employer contribution or forfeiture was
credited to your account under the plan during the year. You are considered
an
active participant in a defined benefit plan if you are eligible to
participate
in the plan, even though you elect not to participate. You are also treated
as
an active participant for a year during which you make a voluntary or
mandatory
contribution to any type of plan, even though your employer makes no
contribution to the plan.
If you (or your spouse, if you are filing a joint tax return) are covered
by an
employer-maintained retirement plan, your IRA contribution is tax
deductible
only to the extent that your adjusted gross income does not exceed the
deductibility limits discussed below.
LIMITS ON DEDUCTIBLE CONTRIBUTIONS
The deduction of your IRA contribution is reduced proportionately for
adjusted
gross income which exceeds the applicable dollar amount. The applicable
dollar
amount for an individual is $25,000 and $40,000 for married couples filing
a
joint tax return. The applicable dollar limit for married individuals
filing
separate returns is $0. If your adjusted gross income exceeds the
applicable
dollar amount by not more than $10,000, you may make a deductible IRA
contribution (but the deductible amount will be less than $2,000). To
determine
the amount of your deductible contribution, use the following calculation:
1. Subtract the applicable dollar amount from your adjusted gross income.
If
the result is $10,000 or more, stop; you can only make a nondeductible
contribution.
2. Subtract the above figure from $10,000.
3. Divide the above figure by $10,000.
4. Multiply $2,000 by the fraction resulting from the above steps. This is
your
maximum deductible contribution limit.
If the deduction limit is not a multiple of $10, then it is to be rounded
up to
the next highest $10. There is a $200 minimum floor on the deduction limit
if
your adjusted gross income does not exceed $35,000 (for a single taxpayer),
$50,000 (for married taxpayers filing jointly) or $10,000 (for a married
taxpayer filing separately).
Adjusted gross income for married couples filing a joint tax return is
calculated by aggregating the compensation of both spouses. The deduction
limitations on IRA contributions, as determined above, then apply to each
spouse.
NONDEDUCTIBLE IRA CONTRIBUTIONS
Even if your income exceeds the limits described above, you may make a
contribution to your IRA up to the lesser of $2,000 or 100% of your
compensation. To the extent that your contribution exceeds the deductible
limits, it will be nondeductible. Earnings on all IRA contributions are tax
deferred until distribution.
You are required to designate on your tax return the extent to which your
IRA
contribution is nondeductible. Therefore, your designation must be made by
the
due date (including extensions) for filing your tax return. If you
overstate
the amount of nondeductible contributions for a taxable year, a penalty of
$100
will be assessed for each overstatement unless you can show that the
overstatement was due to a reasonable cause.
INVESTMENT OF ACCOUNT
The assets in your IRA will be invested in accordance with your
instructions.
As with any investment, you should read any publicly available information
(e.g., prospectuses, annual reports, the terms and conditions of any
insurance
annuity contract, etc.) which would enable you to make an informed
investment
decision.
If no investment instructions are received from you, or if the instructions
received are, in the opinion of the Custodian, unclear, you may be
requested to
provide instructions. In the absence of such instructions, your investment
may
be invested in Money Market Shares, which strive to maintain a stable $1
per
share balance. Keep in mind that with respect to investments in regulated
investment company shares (i.e., mutual funds) held in your account, growth
in
the value of your account cannot be guaranteed or projected.
DISTRIBUTIONS
GENERAL. Distributions from your IRA should begin no earlier than the date
you
reach age 59 1/2 (except in cases of your earlier disability or death) and
no
later than the April 1 following the year in which you reach age 70 1/2.
Distributions from your account will be included in your gross income for
federal income tax purposes for the year in which you receive them.
PREMATURE DISTRIBUTIONS. To the extent they are included in income,
distributions from your IRA made before you reach age 59 1/2 will be
subject to
a 10% nondeductible penalty tax (in addition to being taxable as ordinary
income) unless the distribution is an exempt withdrawal of an excess
contribution, or the distribution is rolled over to another qualified
retirement plan, or the distribution is made on account of your death or
disability, or the distribution is one of a scheduled series of payments
over
your life or life expectancy or the joint life expectancies of yourself and
your Beneficiary.
LATEST TIME TO WITHDRAW. You must begin receiving distributions of the
assets
in your account by April 1 of the calendar year following the calendar year
in
which you reach age 70 1/2. Subsequent distributions must be made by
December
31 of each year. If you maintain more than one IRA, you may take from any
of
your IRAs the aggregate amount to be withdrawn.
MINIMUM DISTRIBUTIONS. Once distributions are required to begin, they must
not
be less than the amount each year (determined by actuarial tables) which
would
exhaust the value of the account over the required distribution period,
which
is generally your life expectancy or the joint life and last survivor
expectancy of you and an individual you have designated as your
Beneficiary.
You will be subject to a 50% excise tax on the amount by which the
distribution
you actually received in any year falls short of the minimum distribution
required for the year.
METHODS OF DISTRIBUTION. Assets may be distributed from your account
according
to one or more of the following methods selected by you:
(a) total distribution
(b) distribution over a certain period
(c) purchase of an annuity contract
(See Article IV of your IRA Custodial Agreement for a full description of
these
distribution methods.)
DISTRIBUTION UPON DEATH. The assets remaining in your Account will be
distributed upon your death to the beneficiary(ies) named by you on record
with
the Custodian. If there is no beneficiary designated for your Account in
the
Custodian's records, or if the beneficiary you had designated dies before
you
do, your Account will be paid to your surviving spouse, or if none, to your
estate.
If your spouse was your primary beneficiary and you had started to receive
distributions from your account, but die before receiving the balance of
your
account, your spouse has several options. Your spouse can either keep
receiving
distributions from your account at least as rapidly, or roll over all or
part
of your account into an IRA in his or her name. If distributions from your
account had not yet begun, your spouse may defer taking distributions until
April 1st of the year you would have turned 70 1/2, and then receive
distributions over his or her life expectancy, or roll over the account
into an
IRA in their name, and treat the IRA as his or her own.
If your beneficiary is not your spouse, and distributions had begun from
your
account, your beneficiary may continue to receive them at least as rapidly
as
the payment schedule you had established. If distributions had not yet
begun,
your beneficiary must deplete your account within 5 years of your death, or
start taking distributions from your account within one year of your death
over
their own life expectancy.
DISTRIBUTION OF NONDEDUCTIBLE CONTRIBUTIONS. To the extent that a
distribution
constitutes a return of your nondeductible contributions, it will not be
included in your income. The amount of any distribution excludable from
income
is the portion that bears the same ratio to the total distribution that
your
aggregate nondeductible contributions bear to the balance at the end of the
year (calculated after adding back distributions during the year) of your
IRA.
For this purpose, all of your IRAs are treated as a single IRA.
Furthermore,
all distributions from an IRA during a taxable year are to be treated as
one
distribution. The aggregate amount of distributions excludable from income
for
all years is not to exceed the aggregate nondeductible contributions for
all
calendar years. There is a 10% additional income tax assessed against
premature
distributions to the extent such distributions are includible in income
(see
"Premature Distributions" above).
EXCESS DISTRIBUTIONS. There is a 15% excise tax assessed against annual
distributions from tax-favored retirement plans, including IRAs, which
exceed
the greater of $150,000 or $112,500 (indexed to reflect cost-of-living
increases). To determine whether you have distributions in excess of this
limit, you must aggregate the amounts of all distributions received by you
during the calendar year from all retirement plans, including IRAs. Please
consult with your tax advisor for more complete information, including the
availability of favorable elections.
ROLLOVER TREATMENT. Distributions from your IRA representing all or any
part of
the assets in your IRA account are also eligible for rollover treatment.
You
may roll over all or any part of the same property from this distribution
of
assets, within 60 days of receipt, into another IRA or individual
retirement
annuity, and maintain the tax-deferred status of these assets. A 60-day
rollover can be made once every twelve months per IRA.
DIVORCE OR LEGAL SEPARATION
If all or any portion of your IRA is awarded to a former spouse pursuant to
divorce or legal separation, such portion can be transferred to an IRA in
the
receiving spouse's name. This transaction can be processed without any tax
implications to you provided a written instrument executed by a court
incident
to the divorce or legal separation in accordance with Section 408(d)(6) of
the
Code is received by the Custodian, and specifically directs such transfer.
In
addition, you must also provide the Custodian with a letter of instruction
and
an IRA application executed by the receiving spouse, if she or he doesn't
already maintain such IRA at Fidelity.
FEES AND EXPENSES
Fees and other expenses of maintaining your Fidelity IRA account are
described
in the Application and may be changed from time to time, as provided in the
Custodial Agreement.
PROHIBITED TRANSACTIONS
If any of the events prohibited by Section 4975 of the Code (such as any
sale,
exchange or leasing of any property between you and your IRA) occurs during
the
existence of your IRA, your account will be disqualified and the entire
balance
in your account will be treated as if distributed to you as of the first
day of
the year in which the prohibited event occurs. This "distribution" would be
subject to ordinary income tax and, if you were under age 59 1/2 at the
time,
to the 10% penalty tax on premature distributions.
If you or your Beneficiary use (pledge) all or any part of your IRA as
security
for a loan, then the portion so pledged will be treated as if distributed
to
you, and will be taxable to you as ordinary income and subject to the 10%
penalty during the year in which you make such a pledge.
OTHER TAX CONSIDERATIONS
NO SPECIAL TAX TREATMENT. No distribution to you or anyone else from your
account can qualify for capital gain treatment under the federal income tax
laws. It is taxed to the person receiving the distribution as ordinary
income.
(Similarly, you are not entitled to the five-year averaging rule for
lump-sum
distributions available to persons receiving distributions from certain
other
types of retirement plans.)
GIFT TAX. If you elect during your lifetime to have all or any part of your
account payable to a Beneficiary at or after your death, the election will
not
subject you to any gift tax liability.
TAX WITHHOLDING. Federal income tax will be withheld from distributions you
receive from an IRA unless you elect not to have tax withheld. However, if
IRA
distributions are to be delivered outside of the United States, this tax is
mandatory and you may not elect otherwise unless you certify to the
Custodian
that you are not a U.S. citizen residing overseas or a "tax-avoidance
expatriate" as described in Code Section 877. Federal income tax will be
withheld at the rate of 10%.
REPORTING FOR TAX PURPOSES. Contributions to your IRA must be reported on
your
tax Form 1040 or 1040A for the taxable year contributed. You will be
required
to designate your IRA contribution as deductible or nondeductible. You are
also
required to attach a Form 8606 to your 1040 or 1040A form. Form 8606 is
used to
report nondeductible IRA contributions and to calculate the basis
(nontaxable
part) of your IRA. Other reporting will be required by you in the event
that
special taxes or penalties described herein are due. You must also file
Treasury Form 5329 with the IRS for each taxable year in which the
contribution
limits are exceeded, a premature distribution takes place, or less than the
required minimum amount is distributed from your IRA. The Tax Reform Act of
1986 also requires you to report the amount of all distributions you
received
from your IRA and the aggregate account balance of all IRAs as of the end
of
the calendar year.
IRS APPROVAL
The form of your Individual Retirement Account has been approved by the
Internal Revenue Service. The Internal Revenue Service approval is a
determination only as to the form and does not represent a determination of
the
merits of the Account. You may obtain further information with respect to
your
IRA from any district office of the Internal Revenue Service.
[logo]
Fidelity Distributors Corporation
82 Devonshire Street
Boston, MA 02109
I.BD-IRA CA-1193
dated as of March 16, 1990
DISTRIBUTION AND SERVICE PLAN
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for Plymouth Europe Portfolio (the
"Portfolio"), a portfolio of Plymouth Securities Trust (the "Fund").
2. The Fund has entered into a General Distribution Agreement on behalf
of the Portfolio with Fidelity Distributors Corporation (the
"Distributor"), under which the Distributor uses all reasonable efforts,
consistent with its other business, to secure purchasers of the Portfolio's
shares of beneficial interest (the "Shares"). Such efforts may include,
but neither are required to include nor are limited to, the following: (1)
formulation and implementation of marketing and promotional activities,
such as mail promotions and television, radio, newspaper, magazine and
other mass media advertising; (2) preparation, printing and distribution of
sales literature; (3) preparation, printing and distribution of
prospectuses of the Portfolio and reports to recipients other than existing
shareholders of the Portfolio; (4) obtaining such information, analyses and
reports with respect to marketing and promotional activities as the
Distributor may, from time to time, deem advisable; (5) making payments to
securities dealers and others engaged in the sale of Shares or who engage
in shareholder support services; and (6) providing training; marketing and
support to such dealers and other with respect to the sale of Shares.
3. In consideration for the services provided and the expenses incurred
by the Distributor pursuant to the General Distribution Agreement, the
Portfolio shall pay to the Distributor a fee at the annual rate of .65% of
its average daily net assets throughout the month. The determination of
daily net assets shall be made at the close of business each day throughout
the month and computed in the manner specified in the Portfolio's then
current Prospectus for the determination of the net asset value of the
Portfolio's shares, but excluding assets attributable to shares purchased
more than 144 months prior to such day. The Distributor may use all or any
portion of the fee received pursuant to the Plan to compensate securities
dealers or other persons who have engaged in the sale of Shares or in
shareholder support services pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities authorized
under paragraph 2 hereof.
4. The Portfolio presently pays, and will continue to pay a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Portfolio and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue as well as its past profits or its resources from
any other source, to reimburse the Distributor for expenses incurred in
connection with the distribution of Shares, including the activities
referred to in paragraphs 2 and 3 hereof. To the extent that the payment
of management fees by the Portfolio to the Adviser should be deemed to be
indirect financing of any activity primarily intended to result in the sale
of Shares within the meaning of Rule 12b-1, then such payment shall be
deemed to be authorized by this Plan.
5. This Plan shall become effective upon the first business day of the
month following approval by a vote of at least a "majority of the
outstanding voting securities of the Portfolio" (as defined in the Act),
this Plan having been approved by a vote of a majority of the Trustees of
the Fund, including a majority of Trustees who are not "interest persons"
of the Fund (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement
related to the Plan (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain in
effect until July 31, 1990, and from year to year thereafter; provided,
however, that such continuance is subject to approval annually by a vote of
a majority of the Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on this Plan. This Plan may be amended at any time by the Board of
Trustees, provided that (a) any amendment to increase materially the fee
provided for in paragraph 3 hereof or any amendment of the Management
Contract to increase the amount to be paid by the Portfolio thereunder
shall be effective only upon approval by a vote of a majority of the
outstanding voting securities of the Portfolio, and (b) any material
amendment of this Plan shall be effective only upon approval in the manner
provided in the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of the Portfolio.
8. During the existence of this Plan, the Fund shall require the Adviser
and/or the Distributor to provide the Fund, for review by the Fund's
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any activity
primarily intended to result in the sale of shares of the Portfolio (making
estimates of such costs where necessary or desirable) and the purposes for
which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of shares of the Plymouth Class.
10. Consistent with the limitation of shareholder liability as set forth
in the Fund's declaration of Trust, any obligation assumed by the Portfolio
pursuant to this Plan and any agreement related to this plan shall be
limited in all cases to the Portfolio and its assets and shall not
constitute an obligation of any shareholder of the Fund or of any other
class or series of shares of the Fund.
11. If any provision of the Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
d&s-pleuro/vi
LG940210038
2
FA OVERSEAS PORTFOLIO (229)
39-Week Adjusted NAV's
ADJUSTED
DATE FACTOR NAV
29-Jan-93 1.000000 9.77
01-Feb-93 1.000000 9.75
02-Feb-93 1.000000 9.76
03-Feb-93 1.000000 9.76
04-Feb-93 1.000000 9.86
05-Feb-93 1.000000 9.97
08-Feb-93 1.000000 9.95
09-Feb-93 1.000000 9.83
10-Feb-93 1.000000 9.75
11-Feb-93 1.000000 9.73
12-Feb-93 1.000000 9.78
15-Feb-93 1.000000 9.92
16-Feb-93 1.000000 9.92
17-Feb-93 1.000000 9.93
18-Feb-93 1.000000 10.06
19-Feb-93 1.000000 10.10
22-Feb-93 1.000000 10.17
23-Feb-93 1.000000 10.11
24-Feb-93 1.000000 9.96
25-Feb-93 1.000000 9.93
26-Feb-93 1.000000 9.98
01-Mar-93 1.000000 10.04
02-Mar-93 1.000000 10.08
03-Mar-93 1.000000 10.13
04-Mar-93 1.000000 10.14
05-Mar-93 1.000000 10.09
08-Mar-93 1.000000 10.20
09-Mar-93 1.000000 10.19
10-Mar-93 1.000000 10.18
11-Mar-93 1.000000 10.18
12-Mar-93 1.000000 10.09
15-Mar-93 1.000000 10.15
16-Mar-93 1.000000 10.13
17-Mar-93 1.000000 10.17
18-Mar-93 1.000000 10.40
19-Mar-93 1.000000 10.51
22-Mar-93 1.000000 10.38
23-Mar-93 1.000000 10.36
24-Mar-93 1.000000 10.25
25-Mar-93 1.000000 10.27
26-Mar-93 1.000000 10.36
29-Mar-93 1.000000 10.45
30-Mar-93 1.000000 10.48
31-Mar-93 1.000000 10.59
01-Apr-93 1.000000 10.71
02-Apr-93 1.000000 10.81
05-Apr-93 1.000000 10.78
06-Apr-93 1.000000 10.75
07-Apr-93 1.000000 10.82
08-Apr-93 1.000000 10.95
09-Apr-93 1.000000 10.95
12-Apr-93 1.000000 11.00
13-Apr-93 1.000000 11.22
14-Apr-93 1.000000 11.17
15-Apr-93 1.000000 11.13
16-Apr-93 1.000000 11.04
19-Apr-93 1.000000 11.17
20-Apr-93 1.000000 11.16
21-Apr-93 1.000000 11.14
22-Apr-93 1.000000 11.22
23-Apr-93 1.000000 11.26
26-Apr-93 1.000000 11.32
27-Apr-93 1.000000 11.33
28-Apr-93 1.000000 11.38
29-Apr-93 1.000000 11.37
30-Apr-93 1.000000 11.41
03-May-93 1.000000 11.42
04-May-93 1.000000 11.45
05-May-93 1.000000 11.44
06-May-93 1.000000 11.51
07-May-93 1.000000 11.44
10-May-93 1.000000 11.31
11-May-93 1.000000 11.34
12-May-93 1.000000 11.28
13-May-93 1.000000 11.27
14-May-93 1.000000 11.34
17-May-93 1.000000 11.34
18-May-93 1.000000 11.34
19-May-93 1.000000 11.38
20-May-93 1.000000 11.42
21-May-93 1.000000 11.45
24-May-93 1.000000 11.43
25-May-93 1.000000 11.53
26-May-93 1.000000 11.59
27-May-93 1.000000 11.73
28-May-93 1.000000 11.71
31-May-93 1.000000 11.71
01-Jun-93 1.000000 11.70
02-Jun-93 1.000000 11.73
03-Jun-93 1.000000 11.78
04-Jun-93 1.000000 11.59
07-Jun-93 1.000000 11.62
08-Jun-93 1.000000 11.57
09-Jun-93 1.000000 11.59
10-Jun-93 1.000000 11.64
11-Jun-93 1.000000 11.68
14-Jun-93 1.000000 11.71
15-Jun-93 1.000000 11.59
16-Jun-93 1.000000 11.48
17-Jun-93 1.000000 11.47
18-Jun-93 1.000000 11.35
21-Jun-93 1.000000 11.22
22-Jun-93 1.000000 11.24
23-Jun-93 1.000000 11.26
24-Jun-93 1.000000 11.21
25-Jun-93 1.000000 11.29
28-Jun-93 1.000000 11.41
29-Jun-93 1.000000 11.44
30-Jun-93 1.000000 11.39
01-Jul-93 1.000000 11.53
02-Jul-93 1.000000 11.48
05-Jul-93 1.000000 11.53
06-Jul-93 1.000000 11.53
07-Jul-93 1.000000 11.55
08-Jul-93 1.000000 11.61
09-Jul-93 1.000000 11.57
12-Jul-93 1.000000 11.58
13-Jul-93 1.000000 11.72
14-Jul-93 1.000000 11.77
15-Jul-93 1.000000 11.76
16-Jul-93 1.000000 11.79
19-Jul-93 1.000000 11.81
20-Jul-93 1.000000 11.80
21-Jul-93 1.000000 11.75
22-Jul-93 1.000000 11.79
23-Jul-93 1.000000 11.69
26-Jul-93 1.000000 11.75
27-Jul-93 1.000000 11.77
28-Jul-93 1.000000 11.84
29-Jul-93 1.000000 11.87
30-Jul-93 1.000000 11.95
02-Aug-93 1.000000 12.14
03-Aug-93 1.000000 12.19
04-Aug-93 1.000000 12.24
05-Aug-93 1.000000 12.22
06-Aug-93 1.000000 12.29
09-Aug-93 1.000000 12.30
10-Aug-93 1.000000 12.18
11-Aug-93 1.000000 12.29
12-Aug-93 1.000000 12.38
13-Aug-93 1.000000 12.40
16-Aug-93 1.000000 12.53
17-Aug-93 1.000000 12.57
18-Aug-93 1.000000 12.74
19-Aug-93 1.000000 12.60
20-Aug-93 1.000000 12.65
23-Aug-93 1.000000 12.57
24-Aug-93 1.000000 12.56
25-Aug-93 1.000000 12.57
26-Aug-93 1.000000 12.67
27-Aug-93 1.000000 12.73
30-Aug-93 1.000000 12.74
31-Aug-93 1.000000 12.74
01-Sep-93 1.000000 12.70
02-Sep-93 1.000000 12.71
03-Sep-93 1.000000 12.85
06-Sep-93 1.000000 12.81
07-Sep-93 1.000000 12.81
08-Sep-93 1.000000 12.72
09-Sep-93 1.000000 12.76
10-Sep-93 1.000000 12.76
13-Sep-93 1.000000 12.75
14-Sep-93 1.000000 12.78
15-Sep-93 1.000000 12.73
16-Sep-93 1.000000 12.67
17-Sep-93 1.000000 12.65
20-Sep-93 1.000000 12.66
21-Sep-93 1.000000 12.55
22-Sep-93 1.000000 12.51
23-Sep-93 1.000000 12.51
24-Sep-93 1.000000 12.52
27-Sep-93 1.000000 12.60
28-Sep-93 1.000000 12.67
29-Sep-93 1.000000 12.67
30-Sep-93 1.000000 12.61
01-Oct-93 1.000000 12.64
04-Oct-93 1.000000 12.69
05-Oct-93 1.000000 12.77
06-Oct-93 1.000000 12.86
07-Oct-93 1.000000 12.86
08-Oct-93 1.000000 12.98
11-Oct-93 1.000000 12.99
12-Oct-93 1.000000 13.02
13-Oct-93 1.000000 12.97
14-Oct-93 1.000000 12.91
15-Oct-93 1.000000 12.98
18-Oct-93 1.000000 12.94
19-Oct-93 1.000000 12.93
20-Oct-93 1.000000 12.96
21-Oct-93 1.000000 12.92
22-Oct-93 1.000000 12.99
25-Oct-93 1.000000 12.94
26-Oct-93 1.000000 12.91
27-Oct-93 1.000000 12.85
28-Oct-93 1.000000 12.89
29-Oct-93 1.000000 12.93
Overseas (094)
39-Week Adjusted NAV's
ADJUSTED
DATE FACTOR NAV
29-Jan-93 1.000000 20.48
01-Feb-93 1.000000 20.45
02-Feb-93 1.000000 20.41
03-Feb-93 1.000000 20.44
04-Feb-93 1.000000 20.52
05-Feb-93 1.000000 20.74
08-Feb-93 1.000000 20.76
09-Feb-93 1.000000 20.69
10-Feb-93 1.000000 20.56
11-Feb-93 1.000000 20.59
12-Feb-93 1.000000 20.60
15-Feb-93 1.000000 20.82
16-Feb-93 1.000000 20.82
17-Feb-93 1.000000 20.80
18-Feb-93 1.000000 20.94
19-Feb-93 1.000000 20.98
22-Feb-93 1.000000 21.05
23-Feb-93 1.000000 20.86
24-Feb-93 1.000000 20.66
25-Feb-93 1.000000 20.71
26-Feb-93 1.000000 20.90
01-Mar-93 1.000000 20.97
02-Mar-93 1.000000 21.09
03-Mar-93 1.000000 21.15
04-Mar-93 1.000000 21.15
05-Mar-93 1.000000 21.06
08-Mar-93 1.000000 21.32
09-Mar-93 1.000000 21.34
10-Mar-93 1.000000 21.38
11-Mar-93 1.000000 21.45
12-Mar-93 1.000000 21.36
15-Mar-93 1.000000 21.38
16-Mar-93 1.000000 21.45
17-Mar-93 1.000000 21.43
18-Mar-93 1.000000 21.91
19-Mar-93 1.000000 22.02
22-Mar-93 1.000000 21.81
23-Mar-93 1.000000 21.74
24-Mar-93 1.000000 21.51
25-Mar-93 1.000000 21.52
26-Mar-93 1.000000 21.84
29-Mar-93 1.000000 22.07
30-Mar-93 1.000000 22.19
31-Mar-93 1.000000 22.32
01-Apr-93 1.000000 22.38
02-Apr-93 1.000000 22.49
05-Apr-93 1.000000 22.50
06-Apr-93 1.000000 22.38
07-Apr-93 1.000000 22.52
08-Apr-93 1.000000 22.79
09-Apr-93 1.000000 22.79
12-Apr-93 1.000000 22.83
13-Apr-93 1.000000 23.30
14-Apr-93 1.000000 23.24
15-Apr-93 1.000000 23.18
16-Apr-93 1.000000 23.05
19-Apr-93 1.000000 23.36
20-Apr-93 1.000000 23.36
21-Apr-93 1.000000 23.29
22-Apr-93 1.000000 23.46
23-Apr-93 1.000000 23.57
26-Apr-93 1.000000 23.76
27-Apr-93 1.000000 23.69
28-Apr-93 1.000000 23.75
29-Apr-93 1.000000 23.70
30-Apr-93 1.000000 23.87
03-May-93 1.000000 23.90
04-May-93 1.000000 23.99
05-May-93 1.000000 23.95
06-May-93 1.000000 24.03
07-May-93 1.000000 23.88
10-May-93 1.000000 23.61
11-May-93 1.000000 23.68
12-May-93 1.000000 23.61
13-May-93 1.000000 23.69
14-May-93 1.000000 23.86
17-May-93 1.000000 23.80
18-May-93 1.000000 23.74
19-May-93 1.000000 23.80
20-May-93 1.000000 23.92
21-May-93 1.000000 23.98
24-May-93 1.000000 23.96
25-May-93 1.000000 24.11
26-May-93 1.000000 24.19
27-May-93 1.000000 24.42
28-May-93 1.000000 24.42
31-May-93 1.000000 24.42
01-Jun-93 1.000000 24.30
02-Jun-93 1.000000 24.37
03-Jun-93 1.000000 24.49
04-Jun-93 1.000000 24.17
07-Jun-93 1.000000 24.24
08-Jun-93 1.000000 24.21
09-Jun-93 1.000000 24.22
10-Jun-93 1.000000 24.32
11-Jun-93 1.000000 24.39
14-Jun-93 1.000000 24.42
15-Jun-93 1.000000 24.06
16-Jun-93 1.000000 23.93
17-Jun-93 1.000000 23.92
18-Jun-93 1.000000 23.65
21-Jun-93 1.000000 23.44
22-Jun-93 1.000000 23.50
23-Jun-93 1.000000 23.59
24-Jun-93 1.000000 23.51
25-Jun-93 1.000000 23.67
28-Jun-93 1.000000 23.90
29-Jun-93 1.000000 23.93
30-Jun-93 1.000000 23.84
01-Jul-93 1.000000 24.10
02-Jul-93 1.000000 23.97
05-Jul-93 1.000000 23.99
06-Jul-93 1.000000 23.99
07-Jul-93 1.000000 24.00
08-Jul-93 1.000000 24.13
09-Jul-93 1.000000 24.07
12-Jul-93 1.000000 24.14
13-Jul-93 1.000000 24.42
14-Jul-93 1.000000 24.57
15-Jul-93 1.000000 24.47
16-Jul-93 1.000000 24.53
19-Jul-93 1.000000 24.59
20-Jul-93 1.000000 24.60
21-Jul-93 1.000000 24.45
22-Jul-93 1.000000 24.61
23-Jul-93 1.000000 24.41
26-Jul-93 1.000000 24.49
27-Jul-93 1.000000 24.58
28-Jul-93 1.000000 24.69
29-Jul-93 1.000000 24.77
30-Jul-93 1.000000 24.93
02-Aug-93 1.000000 25.18
03-Aug-93 1.000000 25.35
04-Aug-93 1.000000 25.43
05-Aug-93 1.000000 25.44
06-Aug-93 1.000000 25.54
09-Aug-93 1.000000 25.53
10-Aug-93 1.000000 25.34
11-Aug-93 1.000000 25.59
12-Aug-93 1.000000 25.77
13-Aug-93 1.000000 25.82
16-Aug-93 1.000000 26.06
17-Aug-93 1.000000 26.10
18-Aug-93 1.000000 26.38
19-Aug-93 1.000000 26.11
20-Aug-93 1.000000 26.24
23-Aug-93 1.000000 26.07
24-Aug-93 1.000000 26.02
25-Aug-93 1.000000 26.04
26-Aug-93 1.000000 26.23
27-Aug-93 1.000000 26.35
30-Aug-93 1.000000 26.34
31-Aug-93 1.000000 26.34
01-Sep-93 1.000000 26.30
02-Sep-93 1.000000 26.34
03-Sep-93 1.000000 26.58
06-Sep-93 1.000000 26.51
07-Sep-93 1.000000 26.51
08-Sep-93 1.000000 26.30
09-Sep-93 1.000000 26.38
10-Sep-93 1.000000 26.38
13-Sep-93 1.000000 26.37
14-Sep-93 1.000000 26.45
15-Sep-93 1.000000 26.31
16-Sep-93 1.000000 26.19
17-Sep-93 1.000000 26.15
20-Sep-93 1.000000 26.18
21-Sep-93 1.000000 25.96
22-Sep-93 1.000000 25.82
23-Sep-93 1.000000 25.81
24-Sep-93 1.000000 25.82
27-Sep-93 1.000000 26.04
28-Sep-93 1.000000 26.25
29-Sep-93 1.000000 26.25
30-Sep-93 1.000000 26.11
01-Oct-93 1.000000 26.19
04-Oct-93 1.000000 26.32
05-Oct-93 1.000000 26.55
06-Oct-93 1.000000 26.77
07-Oct-93 1.000000 26.84
08-Oct-93 1.000000 27.08
11-Oct-93 1.000000 27.17
12-Oct-93 1.000000 27.27
13-Oct-93 1.000000 27.17
14-Oct-93 1.000000 27.05
15-Oct-93 1.000000 27.26
18-Oct-93 1.000000 27.17
19-Oct-93 1.000000 27.11
20-Oct-93 1.000000 27.16
21-Oct-93 1.000000 27.06
22-Oct-93 1.000000 27.24
25-Oct-93 1.000000 27.12
26-Oct-93 1.000000 27.07
27-Oct-93 1.000000 26.92
28-Oct-93 1.000000 27.02
29-Oct-93 1.000000 27.16
