SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
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(Name of Registrant as Specified In Its Charter)
Fidelity Advisor Series VII
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant) Arthur S. Loring, Secretary
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a) (2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
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(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
FIDELITY ADVISOR OVERSEAS FUND
FIDELITY ADVISOR CONSUMER INDUSTRIES FUND
FIDELITY ADVISOR CYCLICAL INDUSTRIES FUND
FIDELITY ADVISOR FINANCIAL SERVICES FUND
FIDELITY ADVISOR HEALTH CARE FUND
FIDELITY ADVISOR TECHNOLOGY FUND
FIDELITY ADVISOR UTILITIES GROWTH FUND:
FUNDS OF
FIDELITY ADVISOR SERIES VII
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-522-7297
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Advisor Overseas Fund, Fidelity Advisor Consumer
Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity
Advisor Financial Services Fund, Fidelity Advisor Health Care Fund,
Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Growth
Fund (the funds) will be held at the office of Fidelity Advisor Series VII
(the trust), 82 Devonshire Street, Boston, Massachusetts 02109 on September
17, 1997, at 10:45 a.m. The purpose of the Meeting is to consider and act
upon the following proposals, and to transact such other business as may
properly come before the Meeting or any adjournments thereof.
1. To elect a B oard of Trustees.
2. To ratify the selection of Coopers & Lybrand L.L.P. and Price
Waterhouse LLP as independent accountants of the trust.
3. To amend the Declaration of Trust to provide dollar-based voting rights
for shareholders of the trust.
4. To amend the Declaration of Trust regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to provide each fund with the ability
to invest all of its assets in another open-end investment company.
6. To adopt a new fundamental investment policy for each fund to permit
each fund to invest all of its assets in another open-end investment
company with substantially the same investment objective and policies.
7. To approve an amended Management Contract for Overseas Fund.
8. To approve a new Sub-Advisory Agreement with Fidelity Investments Japan
Limited for Overseas Fund.
9. To amend the Class T Distribution and Service Plan for Overseas Fund.
10. To approve an agreement and plan providing for the reorganization of
Overseas Fund.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
11. To amend Overseas Fund's fundamental investment limitation concerning
diversification to exclude investments in other investment companies from
the limitation.
12. To amend Overseas Fund's fundamental investment limitation concerning
borrowing.
13. To amend Overseas Fund's fundamental investment limitation concerning
the underwriting of securities.
14. To amend Overseas Fund's fundamental investment limitation concerning
the concentration of its investments in a single industry.
The Board of Trustees has fixed the close of business on July 21, 1997 as
the record date for the determination of the shareholders of each of the
funds and classes entitled to notice of, and to vote at, such Meeting and
any adjournments thereof.
By order of the Board of Trustees,
ARTHUR S. LORING, Secretary
July 21, 1997
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help avoid the time and expense involved in validating your vote
if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears
in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself or
by the individual executing the proxy card. For example:
REGISTRATION VALID
SIGNATURE
A. 1) ABC Corp. John Smith,
Treasurer
2) ABC Corp. John Smith,
Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins,
Trustee
2) ABC Trust Ann B. Collins,
Trustee
3) Ann B. Collins, Trustee Ann B. Collins,
Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
PROXY STATEMENT
FIDELITY ADVISOR SERIES VII:
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY ADVISOR OVERSEAS FUND
FIDELITY ADVISOR CONSUMER INDUSTRIES FUND
FIDELITY ADVISOR CYCLICAL INDUSTRIES FUND
FIDELITY ADVISOR FINANCIAL SERVICES FUND
FIDELITY ADVISOR HEALTH CARE FUND
FIDELITY ADVISOR TECHNOLOGY FUND
FIDELITY ADVISOR UTILITIES GROWTH FUND
TO BE HELD ON SEPTEMBER 17, 1997
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity
Advisor Series VII (the trust) to be used at the Special Meeting of
Shareholders of Fidelity Advisor Overseas Fund, Fidelity Advisor Consumer
Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity
Advisor Financial Services Fund, Fidelity Advisor Health Care Fund,
Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Growth
Fund (the funds) and at any adjournments thereof (the Meeting), to be held
on September 17, 1997 at 10:45 a.m. at 82 Devonshire Street, Boston,
Massachusetts 02109, the principal executive office of the trust and
Fidelity Management & Research Company (FMR), the funds' investment
adviser.
The purpose of the Meeting is set forth in the accompanying Notice. The
solicitation is made primarily by the mailing of this Proxy Statement and
the accompanying proxy card on or about July 21, 1997. Supplementary
solicitations may be made by mail, telephone, telegraph, facsimile, or by
personal interview by representatives of the trust. In addition, Management
Information Services Corp. (MIS) and D.F. King & Co. may be paid on a
per-call basis to solicit shareholders on behalf of the funds at an
anticipated cost of approximately $ 123,000 (Overseas Fund),
$ 1,500 (Consumer Industries Fund), $ 500 (Cyclical Industries
Fund), $ 8,000 (Financial Services Fund), $ 8,000 (Health Care
Fund), $ 10,000 (Technology Fund), and $ 2,000 (Utilities
Growth Fund). The expenses in connection with preparing this Proxy
Statement and its enclosures and of all solicitations will be paid by the
funds. The funds will reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the beneficial
owners of shares. The principal business address of Fidelity Distributors
Corporation (FDC), the funds' principal underwriter and distribution agent,
and Fidelity Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity
Management & Research (Far East) Inc. (FMR Far East), subadvisers to the
funds, is 82 Devonshire Street, Boston, Massachusetts 02109. Fidelity
International Investment Advisors (FIIA) located at Pembroke Hall, 42 Crow
Lane, Pembroke HM19, Bermuda; and Fidelity International Investment
Advisors (U.K.) Limited (FIIAL U.K.) located at 26 Lovat Lane, London,
England EC3R 8LL are also subadvisers to Overseas Fund.
If the enclosed proxy card is executed and returned, it may nevertheless
be revoked at any time prior to its use by written notification received by
the trust, by the execution of a later-dated proxy card, or by attending
the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and which are
not revoked, will be voted at the Meeting. Shares represented by such
proxies will be voted in accordance with the instructions thereon. If no
specification is made on a proxy card, it will be voted FOR the matters
specified on the proxy card. Only proxies that are voted will be counted
towards establishing a quorum. Broker non-votes are not considered voted
for this purpose. Shareholders should note that while votes to ABSTAIN will
count toward establishing a quorum, passage of any proposal being
considered at the Meeting will occur only if a sufficient number of votes
are cast FOR the proposal. Accordingly, votes to ABSTAIN and votes AGAINST
will have the same effect in determining whether the proposal is approved.
The funds may also arrange to have votes recorded by telephone. D.F. King
& Co. may be paid on a per call basis for vote-by-phone solicitations on
behalf of the funds at an anticipated cost of approximately $ 12,000
(Overseas Fund), $ 150 (Consumer Industries Fund), $ 600
(Cyclical Industries Fund), $ 600 (Financial Services Fund),
$ 600 (Health Care Fund), $ 600 (Technology Fund) , and
$ 300 (Utilities Growth Fund). The expenses in connection with
telephone voting will be paid by the funds. If the funds record votes by
telephone, they will use procedures designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their shares
in accordance with their instructions, and to confirm that their
instructions have been properly recorded. Proxies voted by telephone may be
revoked at any time before they are voted in the same manner that proxies
voted by mail may be revoked.
If a quorum is not present at the Meeting, or if a quorum is
present at the Meeting, but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those
shares present at the Meeting or represented by proxy. When voting on a
proposed adjournment, the persons named as proxies will vote FOR the
proposed adjournment all shares that they are entitled to vote with respect
to each item, unless directed to vote AGAINST the item, in which case such
shares will be voted AGAINST the proposed adjournment with respect to that
item. A shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have been
received and it is otherwise appropriate.
The following table summarizes the proposals applicable to each class of
shares of each fund.
Proposal # Proposal Description Applicable Fund(s) or
Class(es)
1. To elect as Trustees the Overseas Fund
12 nominees presented Consumer Industries Fund
in proposal 1. Cyclical Industries Fund
Financial Services Fund
Health Care Fund
Technology Fund
Utilities Growth Fund
2. To ratify the selection of Overseas Fund
Coopers & Lybrand L.L.P Consumer Industries Fund
and Price Waterhouse Cyclical Industries Fund
LLP as independent Financial Services Fund
accountants of the trust. Health Care Fund
Technology Fund
Utilities Growth Fund
3. To amend the Overseas Fund
Declaration of Trust to Consumer Industries Fund
provide voting rights Cyclical Industries Fund
based on a shareholder's Financial Services Fund
total dollar investment in Health Care Fund
a fund, rather than on Technology Fund
the number of shares Utilities Growth Fund
owned.
4. To amend the Declaration Overseas Fund
of Trust to eliminate the Consumer Industries Fund
requirement that Cyclical Industries Fund
shareholders be notified in Financial Services Fund
the event of an Health Care Fund
appointment of a Trustee Technology Fund
within three months of the Utilities Growth Fund
appointment.
5. To amend the Overseas Fund
Declaration of Trust to Consumer Industries Fund
clarify that the Trustees Cyclical Industries Fund
may authorize the Financial Services Fund
investment of all of a Health Care Fund
fund's assets in another Technology Fund
open-end investment Utilities Growth Fund
company.
Proposal # Proposal Description Applicable Fund(s) or
Class(es)
6. To adopt a new Overseas Fund
fundamental investment Consumer Industries Fund
policy for the fund that Cyclical Industries Fund
would permit it to invest Financial Services Fund
all of its assets in Health Care Fund
another open-end Technology Fund
investment company Utilities Growth Fund
managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
7. To approve an amended Overseas Fund
M anagement C ontract
for the fund that would
reduce the management
fee payable to FMR by
the fund as FMR's
assets under
management increase,
and to modify the
performance adjustment
calculation.
8. To approve a new Overseas Fund
Sub-Advisory Agreement
with Fidelity Investments
Japan Limited (FIJ) to
provide investment
advice and research
services or investment
management services.
9. To approve an amended Overseas Fund - Class T
Distribution and Service
Plan for Class T shares
of the fund that would
remove from the 12b-1
fee calculation the
exclusion of shares
purchased 144 months
prior.
10. REORGANIZATION: To Overseas Fund
approve an agreement
and plan providing for
the reorganization of the
fund from a separate
series of one
Massachusetts business
trust to another
Massachusetts business
trust.
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ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
11. DIVERSIFICATION: To Overseas Fund
amend the diversification
limitation to exclude
"securities of other
investment companies"
from issuer
diversification limits.
12. BORROWING: To amend Overseas Fund
the borrowing limitation
to require a reduction in
borrowing if borrowings
exceed the 33 1/3% limit
for any reason rather
than solely because of a
decline in net assets.
13. UNDERWRITING. To amend Overseas Fund
the fund's fundamental
investment limitation
concerning underwriting.
14. CONCENTRATION: To Overseas Fund
standardize the language
of the limitation on
industry concentration
and modify it to refer to
"companies with principal
business activities in the
same industry" rather
than "issuers in the same
industry."
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Shares of each class of each fund of the trust issued and outstanding as
of May 3 1 , 1997 are indicated in the following table:
Fidelity Advisor Overseas Fund:
Class A 147,618
Class B 1,759,334
Class T 68,390,666
Institutional Class 1,891,756
Fidelity Advisor Consumer Industries Fund:
Class A 80,685
Class B 30,762
Class T 463,871
Institutional Class 95,940
Fidelity Advisor Cyclical Industries Fund:
Class A 26,230
Class B 10,391
Class T 133,651
Institutional Class 84,003
Fidelity Advisor Financial Services Fund:
Class A 338,116
Class B 281,861
Class T 2,789,565
Institutional Class 248,997
Fidelity Advisor Health Care Fund:
Class A 326,616
Class B 193,414
Class T 2,841,200
Institutional Class 362,657
Fidelity Advisor Technology Fund:
Class A 402,051
Class B 202,095
Class T 3,198,231
Institutional Class 163,444
Fidelity Advisor Utilities Growth Fund:
Class A 44,774
Class B 82,511
Class T 468,871
Institutional Class 166,230
To the knowledge of the trust, substantial (5% or more) record or
beneficial ownership of each class on May 31, 1997 was as follows:
Advisor Consumer Industries - Class A: National Financial Services
Corporation, Boston, MA (13.97%); Sterne, Agee & Leach, Inc., Birmingham,
AL (13.40%); FMR Capital, Boston, MA (11.99%); PNC Securities, Pittsburgh,
PA (10.14%); A.G. Edwards & Sons, St. Louis, MO (6.71%); First Montauk
Securities, Red Bank, NJ (6.23%); Ilicob Sales Corp., Lockport, NY (5.87%).
Advisor Consumer Industries - Class T: Royal Alliance Assoc., Inc.,
Birmingham, AL (10.52%); Wise Planning, Hicksville, NY (7.59%); Securities
America, Inc., Omaha, NE (6.68%); G. W. & Wade Asset Management, Co.,
Wellesley, MA (6.06%).
Advisor Consumer Industries - Class B: FMR Capital, Boston, MA (26.44%);
Prudential Securities, New York, NY (13.06%); A.G. Edwards & Sons, St.
Louis, MO (7.16%); Royal Alliance Assoc., Inc., Birmingham, AL (6.77%); CFS
Brokerage Corp., Minnetonka, MN (6.74%); Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (5.45%).
Advisor Consumer Industries - Institutional Class: FMR Capital, Boston, MA
(81.73%); First Hawaiian Bank, Honolulu, HI (9.32%).
Advisor Cyclical Industries - Class A: FMR Capital, Boston, MA (40.36%);
PNC Securities, Pittsburg, PA (18.61%); LNC Equity Sales, Fort Wayne, IN
(7.23%); First Montauk Securities, Red Bank, NJ (6.03%); Lewco Securities
Corp., New York, NY (5.96%); A.G. Edwards & Sons, St. Louis, MO (5.94%);
Prudential Securities, New York, NY (5.25%).
Advisor Cyclical Industries - Class T: G.W. & Wade Asset Management, Co.,
Wellesley, MA (18.33%); Royal Alliance Assoc., Inc., Birmingham, AL
(15.13%); Dain Bosworth, Inc., Minneapolis, MN (9.15%); FMR Capital,
Boston, MA (7.71%).
Advisor Cyclical Industries - Class B: FMR Capital, Boston, MA (83.24%).
Advisor Cyclical Industries - Institutional Class: FMR Capital, Boston, MA
(99.12%).
Advisor Financial Services - Class A: Prudential Securities, New York, NY
(19.93%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL (9.44%);
Comerica Bank, Texas, Dallas, TX (6.21%); A.G. Edwards & Sons, St. Louis,
MO (5.23%).
Advisor Financial Services - Class T: Securities America, Inc., Omaha, NE
(12.95%); A.G. Edwards & Sons, St. Louis, MO (7.28%); Alpha Equity
Research, Inc., Boston, MA (6.97%); Donaldson, Lufkin & Jenrette, New York,
NY (5.49%).
Advisor Financial Services - Class B: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (19.70%); PaineWebber, Inc., Weehawken, NJ (14.51%);
Prudential Securities, New York, NY (5.01%).
Advisor Financial Services - Institutional Class: Charles Schwab and Co.,
Inc., San Francisco, CA (40.19%); FMR Capital, Boston, MA (32.63%); Sampson
Investment Management, Danville, CA (16.65%).
Advisor Health Care - Class A: A.G. Edwards & Sons, St. Louis, MO (9.05%);
PaineWebber, Inc., Weehawken, NJ (7.01%); Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (6.40%); Prudential Securities, New York, NY
(5.87%); National Financial Services Corporation, Boston, MA (5.57%).
Advisor Health Care - Class T: Donaldson, Lufkin & Jenrette, New York, NY
(9.89%); A.G. Edwards & Sons, St. Louis, MO (8.36%); Alpha Equity Research,
Inc., Boston, MA (7.28%); Securities America, Omaha, NE (7.09%).
Advisor Health Care - Class B: Morgan Keegan, Memphis, TN (13.33%); A.G.
Edwards & Sons, St. Louis, MO (8.96%).
Advisor Health Care - Institutional Class: The H Group, Portland, OR
(40.53%); FMR Capital, Boston, MA (22.05%); Charles Schwab and Co., Inc.,
San Francisco, CA (12.09%); Sampson Investment Management, Danville, CA
(9.45%).
Advisor Overseas - Class A: EQ Financial Consultants, New York, NY
(9.19%); Chase Investment Services, New York, NY (6.50%); PaineWebber,
Inc., Weehawken, NJ (6.06%).
Advisor Overseas - Class T: Great West Life/Benefits Corp., Englewood, CO
(7.56%); Smith Barney, Inc., New York, NY (7.22%).
Advisor Overseas - Class B: Royal Alliance Assoc., Inc., Birmingham, AL
(6.60%); PaineWebber, Inc., Weehawken, NJ (6.57%); Smith Barney, Inc., New
York, NY (6.54%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(5.71%).
Advisor Overseas - Institutional Class: First National Bank, Iowa City, IA
(24.65%); Bingham, Dana & Gould LLP, Boston, MA (13.34%); First Hawaiian
Bank, Honolulu, HI (9.37%); One Valley Bank, N.A., Charleston, WV (5.98%).
Advisor Technology - Class A: Prudential Securities, New York, NY
(16.23%); PaineWebber, Inc., Weehawken, NJ (10.15%); A.G. Edwards & Sons,
St. Louis, MO (7.65%); Bear, Stearns Securities Corp., New York, NY
(5.13%).
Advisor Technology - Class T: Donaldson, Lufkin & Jenrette, New York, NY
(10.82%); PaineWebber, Inc., Weehawken, NJ (7.17%); Alpha Equity Research,
Inc., Boston, MA (5.96%); Securities America, Inc., Omaha, NE (5.93%); A.G.
Edwards & Sons, St. Louis, MO (5.10%).
Advisor Technology - Class B: Morgan Keegan, Memphis, TN (12.52%); Merrill
Lynch Pierce Fenner & Smith, Jacksonville, FL (10.14%).
Advisor Technology - Institutional Class: FMR Capital, Boston, MA
(49.85%); Trimline Research & Management Co., Richmond, VA (19.35%);
Sampson Investment Management, Danville, CA (10.67%).
Advisor Utilities Growth - Class A: FMR Capital, Boston, MA (20.49%); EQ
Financial Consultants, New York, NY (9.17%); Howe Barnes Investments, Inc.,
Chicago, IL (6.28%); Piper Jaffrey & Hopwood, Inc., Minneapolis, MN
(6.08%); 1717 Capital Management Company, Newark, DE (5.21%).
Advisor Utilities Growth - Class T: Omega Securities, Inc., Fort Worth, TX
(14.55%); G.W. & Wade Asset Management Co., Wellesley, MA (7.75%);
Sunamerica Securities, Inc., Phoenix, AZ (7.46%); FSC Securities, Marietta,
GA (6.48%).
Advisor Utilities Growth - Class B: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (32.44%); PaineWebber, Inc., Weehawken, NJ (16.79%);
Vestax Securities, Hudson, OH (13.59%); FMR Capital, Boston, MA (10.49%);
A.G. Edwards & Sons, St. Louis, MO (8.50%).
Advisor Utilities Growth - Institutional Class: FMR Capital, Boston, MA
(50.23%); Bank West, Pierre, SD (43.42%); Charles Schwab and Co., Inc., San
Francisco, CA (5.31%).
FMR Capital has advised the trust that for Proposals 1 through 6 contained
in this Proxy Statement, it will vote its shares at the Meeting FOR each
Proposal. To the knowledge of the trust, no other shareholder owned of
record or beneficially more than 5% of the outstanding shares of the funds
on that date.
Shareholders of record at the close of business on July 21, 1997 will be
entitled to vote at the Meeting. Each such shareholder will be entitled to
one vote for each share held on that date.
FOR A FREE COPY OF OVERSEAS FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
OCTOBER 31, 1996, OR THE SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31,
1997 FOR CONSUMER INDUSTRIES FUND, CYCLICAL INDUSTRIES FUND, FINANCIAL
SERVICES FUND, HEALTH CARE FUND, TECHNOLOGY FUND, AND UTILITIES GROWTH
FUND, CALL 1-800-843-3001 OR WRITE TO FIDELITY DISTRIBUTORS CORPORATION AT
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS SUFFICIENT
TO APPROVE PROPOSALS 1 AND 2. APPROVAL OF PROPOSAL 3 REQUIRES THE
AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF
BOTH THE TRUST AND OF EACH FUND OF THE TRUST AND OF EACH CLASS OF A FUND
AND, IN THE CASE OF PROPOSALS 4 AND 5 A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" OF THE ENTIRE TRUST. APPROVAL OF PROPOSAL 9 REQUIRES THE
AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF
CLASS T SHAREHOLDERS OF THE FUND. APPROVAL OF PROPOSALS 6 THROUGH 8 AND 10
THROUGH 14 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING
VOTING SECURITIES" OF THE APPROPRIATE FUNDS. UNDER THE INVESTMENT COMPANY
ACT OF 1940 (THE 1940 ACT), THE VOTE OF A "MAJORITY OF THE OUTSTANDING
VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR
MORE OF THE VOTING SECURITIES PRESENT AT THE MEETING OR REPRESENTED BY
PROXY IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES
ARE PRESENT OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF THE OUTSTANDING
VOTING SECURITIES. BROKER NON-VOTES ARE NOT CONSIDERED "PRESENT" FOR THIS
PURPOSE.
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the trust.
Pursuant to the provisions of the Declaration of Trust of Fidelity Advisor
Series VII, the Trustees have determined that the number of Trustees shall
be fixed at twelve. It is intended that the enclosed proxy card will be
voted for the election as Trustees of the twelve nominees listed below,
unless such authority has been withheld in the proxy card.
Except for Robert M. Gates , William O. McCoy, and Robert C.
Pozen all nominees named below are currently Trustees of Fidelity
Advisor Series VII and have served in that capacity continuously since
originally elected or appointed. Ralph F. Cox, Phyllis Burke Davis, and
Marvin L. Mann were selected by the trust's Nominating and Administration
Committee (see page ) and were appointed to the Board in November
1991, December 1992, and October 1993, respectively. None of the nominees
is related to one another. Those nominees indicated by an asterisk (*) are
"interested persons" of the trust by virtue of, among other things, their
affiliation with either the trust, the funds' investment adviser (FMR, or
the Adviser), or the funds' distribution agent, FDC. The business address
of each nominee who is an "interested person" is 82 Devonshire Street,
Boston, Massachusetts 02109, and the business address of all other nominees
is Fidelity Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235.
Except for Robert M. Gates , William O. McCoy, and Robert C.
Pozen, each of the nominees is currently a Trustee or General Partner,
as the case may be, of 62 registered investment companies (trusts or
partnerships) advised by FMR. Mr. Gates and Mr. McCoy are currently
Trustees or General Partners, as the case may be, of 48 registered
investment companies (trusts or partnerships) advised by FMR.
Effective August 1, 1997, Mr. Pozen will be a Trustee or General Partner,
as the case may be of 48 registered investment companies (trusts or
partnerships) advised by FMR.
In the election of Trustees, those twelve nominees receiving the highest
number of votes cast at the Meeting, providing a quorum is present, shall
be elected.
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Nominee Principal Occupation** Year of
(Age) Election or
Appointmen
t
<S> <C> <C>
Ralph F. Cox Management consultant (1994). 1991
(65) Prior to February 1994, he was
President of Greenhill Petroleum
Corporation (petroleum
exploration and production). Until
March 1990, Mr. Cox was
President and Chief Operating
Officer of Union Pacific
Resources Company (exploration
and production). He is a Director
of Sanifill Corporation
(non-hazardous waste, 1993),
CH2M Hill Companies
(engineering), Rio Grande, Inc.
(oil and gas production), and
Daniel Industries (petroleum
measurement equipment
manufacturer). In addition, he is a
member of advisory boards of
Texas A&M University and the
University of Texas at Austin.
Phyllis Burke Davis Prior to her retirement in 1992
(65) September 1991, Mrs. Davis
was the Senior Vice President of
Corporate Affairs of Avon
Products, Inc. She is currently a
Director of BellSouth
Corporation
(telecommunications), Eaton
Corporation (manufacturing,
1991), and the TJX Companies,
Inc. (retail stores), and
previously served as a Director
of Hallmark Cards, Inc.
(1985-1991) and Nabisco
Brands, Inc. In addition, she is a
member of the President's
Advisory Council of The
University of Vermont School of
Business Administration.
Robert M. Gates Consultant, author, and lecturer --
(53) (1993). Mr. Gates was Director
of the Central Intelligence
Agency (CIA) from 1991-1993.
From 1989 to 1991, Mr. Gates
served as Assistant to the
President of the United States
and Deputy National Security
Advisor.
Mr. Gates is currently a Trustee
for the Forum For International
Policy, a Board Member for the
Virginia Neurological Institute,
and a Senior Advisor of the
Harvard Journal of World Affairs.
In addition, Mr. Gates also
serves as a member of the
corporate board for Lucas Varity
PLC (automotive components
and diesel engines), Charles
Stark Draper Laboratory
(non-profit), NACCO Industries,
Inc. (mining and manufacturing),
and TRW Inc. (original
equipment and replacement
products).
*Edward C. Johnson President, is Chairman, Chief 1968
3d Executive Officer and a Director
(67) 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., Fidelity
Management & Research (U.K.)
Inc., and Fidelity Management &
Research (Far East) Inc.
E. Bradley Jones Prior to his retirement in 1984, 1990
(69) Mr. Jones was Chairman and
Chief Executive Officer of LTV
Steel Company. He is a Director
of TRW Inc. (original equipment
and replacement products),
Consolidated Rail Corporation,
Birmingham Steel Corporation,
and RPM, Inc. (manufacturer of
chemical products), and he
previously served as a Director
of NACCO Industries, Inc.
(mining and manufacturing,
1985-1995) , Hyster-Yale
Materials Handling, Inc.
(1985-1995 ) and
Cleveland-Cliffs Inc. (mining),
and as a Trustee of First Union
Real Estate Investments. In
addition, he serves as a Trustee
of the Cleveland Clinic
Foundation, where he has also
been a member of the Executive
Committee as well as Chairman
of the Board and President, a
Trustee and member of the
Executive Committee of
University School (Cleveland),
and a Trustee of Cleveland
Clinic Florida.
Donald J. Kirk Executive-in-Residence (1995) 1987
(64) at Columbia University Graduate
School of Business and a
financial consultant. From 1987
to January 1995,
Mr. Kirk was a Professor at
Columbia University Graduate
School of Business. Prior to
1987, he was Chairman of the
Financial Accounting Standards
Board. Mr. Kirk is a Director of
General Re Corporation
(reinsurance), and he previously
served as a Director of Valuation
Research Corp. (appraisals and
valuations, 1993-1995). In
addition, he serves as Chairman
of the Board of Directors of the
National Arts Stabilization Fund,
Chairman of the Board of
Trustees of the Greenwich
Hospital Association, a Member
of the Public Oversight Board of
the American Institute of
Certified Public Accountants'
SEC Practice Section (1995),
and as a Public Governor of the
National Association of
Securities Dealers, Inc. (1996).
*Peter S. Lynch Vice Chairman and Director of 1990
(54) FMR (1992). Prior to May 31,
1990, he was a Director of FMR
and Executive Vice President of
FMR (a position he held until
March 31, 1991); Vice President
of Fidelity Magellan Fund and
FMR Growth Group Leader; and
Managing Director of FMR Corp.
Mr. Lynch was also Vice
President of Fidelity Investments
Corporate Services (1991-1992).
He is a Director of W.R. Grace &
Co. (chemicals) 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.
William O. McCoy Vice President of Finance for the --
(63) University of North Carolina
(16-school system, 1995). Prior to
his retirement in December 1994,
Mr. McCoy was Vice Chairman of
the Board of BellSouth
Corporation (telecommunica tions,
1984) and President of BellSouth
Enterprises (1986). He is currently
a Director of Liberty Corporation
(holding compan y, 1984), Weeks
Corporation of Atlanta (real
estate, 1994), Carolina Power
and Light Company (electric utility,
1996), and the Kenan Transport
Co. (1996). Previously, he was a
Director of First American
Corporation (bank holding
company, 1979-1996). In addition,
Mr. McCoy serves as a member
of the Board of Visitors for the
University of North Carolina at
Chapel Hill (1994) and for the
Kenan - Flager Business School
(University of North Carolina at
Chapel Hil l, 1988 ).
Gerald C. McDonough Chairman of G.M. Management 1989
(68) 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
Brush-Wellman Inc. (metal
refining), York International
Corp. (air conditioning and
refrigeration), Commercial
Intertech Corp. (hydraulic
systems, building systems, and
metal products, 1992), CUNO,
Inc. (liquid and gas filtration
products, 1996), and Associated
Estates Realty Corporation (a
real estate investment trust,
1993).
Mr. McDonough served as a
Director of ACME-Cleveland
Corp. (metal working,
telecommunications, and
electronic products) from
1987-1996.
Marvin L. Mann Chairman of the Board, 1993
(64) 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 of 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.
*Robert C. Pozen Senior Vice President (effective --
(51) August 1, 1997), President and
a Director of FMR; and
President and a Director of FMR
Texas Inc. (1997), Fidelity
Management & Research (U.K.)
Inc. (1997), and Fidelity
Management & Research (Far
East) Inc. (1997). Previously, Mr.
Pozen served as General
Counsel, Managing Director, and
Senior Vice President of FMR
Corp.
Thomas R. Williams President of The Wales Group, 1989
(6 9 ) 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), Georgia Power
Company (electric utility), Gerber
Alley & Associates, Inc.
(computer software), National Life
Insurance Company of Vermont,
American Software, Inc., and
AppleSouth, Inc. (restaurants,
1992).
</TABLE>
_______________
** Except as otherwise indicated, each individual has held the office shown
or other offices in the same company for the last five years.
As of May 31 , 1997, the nominees and officers of the trust owned,
in the aggregate, less than 1% of the funds' outstanding shares.
If elected, the Trustees will hold office without limit in time except
that (a) any Trustee may resign; (b) any Trustee may be removed by written
instrument, signed by at least two-thirds of the number of Trustees prior
to such removal; (c) any Trustee who requests to be retired or who has
become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees; and (d) a Trustee
may be removed at any Special Meeting of shareholders by a two-thirds vote
of the outstanding voting securities of the trust. In case a vacancy shall
for any reason exist, the remaining Trustees will fill such vacancy by
appointing another Trustee, so long as, immediately after such appointment,
at least two-thirds of the Trustees have been elected by shareholders. If,
at any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly call
a shareholders' meeting for the purpose of electing a Board of Trustees.
Otherwise, there will normally be no meeting of shareholders for the
purpose of electing Trustees.
The trust's Board, which is currently composed of three interested and
seven non-interested Trustees, met eleven times during the twelve months
ended October 31, 1996. It is expected that the Trustees will meet at least
ten times a year at regularly scheduled meetings.
The trust's Audit Committee is composed entirely of Trustees who are not
interested persons of the trust, FMR or its affiliates and normally meets
four times a year, or as required, prior to meetings of the Board of
Trustees. Currently, Mr. Kirk (Chairman) and Mrs. Davis are members of the
committee. If elected, it is anticipated that Mr. McCoy and Mr. Gates
will be members of the committee. The committee oversees and monitors
the trust's internal control structure, its auditing function and its
financial reporting process, including the resolution of material reporting
issues. The committee recommends to the Board of Trustees the appointment
of auditors for the trust. It reviews audit plans, fees and other material
arrangements in respect of the engagement of auditors, including non-audit
services to be performed. It reviews the qualifications of key personnel
involved in the foregoing activities. The committee plays an oversight role
in respect of the trust's investment compliance procedures and the code of
ethics. During the twelve months ended October 31, 1996, the committee held
four meetings.
The trust's Nominating and Administration Committee is currently
composed of Messrs. McDonough (Chairman), Jones, and Williams. The
committee members confer periodically and hold meetings as required. The
committee makes nominations for independent Trustees, and for membership on
committees. The committee periodically reviews procedures and policies of
the Board of Trustees and committees. It acts as the administrative
committee under the Retirement Plan for non-interested Trustees who retired
prior to December 30, 1996. It monitors the performance of legal counsel
employed by the trust and the independent Trustees. The committee in the
first instance monitors compliance with, and acts as the administrator of,
the provisions of the code of ethics applicable to the independent
Trustees. During the twelve months ended October 31, 1996, the committee
held four meetings. The Nominating and Administration Committee will
consider nominees recommended by shareholders. Recommendations should be
submitted to the committee in care of the Secretary of the Trust. The trust
does not have a compensation committee; such matters are considered by the
Nominating and Administration Committee.
The following table sets forth information describing the compensation of
each Trustee or Member of the Advisory Board of each fund for his or her
services as trustee for the fiscal year ended October 31, 1996 or the
calendar year ended December 31, 1996, as applicable .
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AGGREGATE J. Gary Ralph Phyllis Richard J. Edward C. E. Bradley
COMPENSATION Burkhead(double dagger) F. Cox Burke Flynn(double dagger)(double dagger) Johnson Jones
FROM A FUNDA Davis 3d(double dagger)
Consumer
Industries* $ 0 $ 7 $ 7 $ 0 $ 0 $ 7
Cyclical
Industries* 0 7 7 0 0 7
Financial
Services* 0 9 9 0 0 9
Health Care* 0 16 16 0 0 16
Overseas**,B 0 322 310 394 0 313
Technology* 0 16 16 1 0 16
Utilities
Growth* 0 12 12 0 0 12
TOTAL 0 137,70 134,700 168,000 0 134,700
COMPENSATION 0
FROM THE FUND
COMPLEX+,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AGGREGATE Donald Peter S. William Gerald Edward Marvin L. Thomas
COMPENSATION J. Kirk Lynch(double dagger) O. C. H. Mann R.
FROM A FUNDA McCoy McDono Malone Williams
(double
dagger)
(double
dagger)
(double
dagger) ugh (double dagger)(double dagger)
Consumer
Industries* $ 7 $ 0 $ 0 $ 8 $ 0 $ 7 $ 7
Cyclical
Industries* 7 0 0 8 0 7 7
Financial
Services* 9 0 0 11 0 9 9
Health
Care* 16 0 0 20 0 16 16
Overseas**,B 316 0 156 314 315 315 317
Technology* 16 0 0 20 1 16 16
Utilities
Growth* 12 0 0 15 0 12 12
TOTAL 136,200 0 85,333 136,20 136,20 134,70 136,20
COMPENSATION 0 0 0 0
FROM THE FUND
COMPLEX+,A
</TABLE>
* Estimated for the fiscal year ending July 31, 1997.
** Fiscal year ended October 31, 1996.
(double dagger) Interested Trustees of each fund are compensated by FMR.
(double dagger)(double dagger) Richard J. Flynn and Edward H. Malone served
on the Board of Trustees through December 31, 1996.
(double dagger)(double dagger)(double dagger) During the period from May 1,
1996 through December 31, 1996, William O. McCoy served as a Member of the
Advisory Board of the trust.
J. Gary Burkhead serves on the Board of Trustees through August 1,
1997 and, effective August 1, 1997, will serve as a Member of the Advisory
Board of the trust.
+ Information is for the calendar year ended December 31, 1996 for 235
funds in the complex.
A Compensation figures include cash, and may include amounts
required to be deferred, a pro rata portion of benefits accrued
under the retirement program for the period ended December 30, 1996 and
required to be deferred, and amounts deferred at the election of Trustees.
B The following amounts are required to be deferred by each non-interested
Trustee, most of which is subject to vesting: Ralph F. Cox, $ 13 ,
Phyllis Burke Davis, $ 13 , Richard J. Flynn, $ 0 , E. Bradley
Jones, $ 13 , Donald J. Kirk, $ 13 , William O. McCoy, $0, Gerald
C. McDonough, $ 13 , Edward H. Malone, $ 13 , Marvin L. Mann,
$ 13 , and Thomas R. Williams, $ 13 .
Under a retirement program adopted in July 1988 and modified in November
1995 and November 1996, each non-interested Trustee who retired before
December 30, 1996 may receive payments from a Fidelity fund during his or
her lifetime based on his or her basic trustee fees and length of service.
The obligation of a fund to make such payments is neither secured nor
funded. A Trustee became eligible to participate in the program at the end
of the calendar year in which he or she reached age 72, provided that, at
the time of retirement, he or she had served as a Fidelity fund Trustee for
at least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must defer
receipt of a portion of, and may elect to defer receipt of an additional
portion of, their annual fees. Amounts deferred under the Plan are treated
as though equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity Funds including funds in each major investment
discipline and representing a majority of Fidelity assets under management
(the Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance of the
Reference Funds. Deferral of fees in accordance with the Plan will have a
negligible effect on a fund's assets, liabilities, and net income per
share, and will not obligate a fund to retain the services of any Trustee
or to pay any particular level of compensation to the Trustee. The funds
may invest in the Reference Funds under the Plan without shareholder
approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In connection
with the termination of the retirement program, each then - existing
non-interested Trustee received a credit to his or her Plan account equal
to the present value of the estimated benefits that would have been payable
under the retirement program. The amounts credited to the non-interested
Trustees' Plan accounts are subject to vesting and are treated as though
equivalent dollar amounts had been invested in shares of the the Reference
Funds. The amounts ultimately received by the Trustees in connection with
the credits to their Plan accounts will be directly linked to the
investment performance of the Reference Funds . The termination of the
retirement program and related crediting of estimated benefits to the
Trustees' Plan accounts did not result in a material cost to the funds.
As of May 31, 1997, the Trustees and officers of each fund owned, in
the aggregate, less than 1% of the funds' outstanding shares.
2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AND PRICE WATERHOUSE
LLP AS INDEPENDENT ACCOUNTANTS OF THE TRUST.
By a vote of the non-interested Trustees, the firms of Coopers & Lybrand
L.L.P. and Price Waterhouse LLP have been selected as independent
accountants for the trust to sign or certify any financial statements of
the trust required by any law or regulation to be certified by an
independent accountant and filed with the Securities and Exchange
Commission (SEC) or any state. Coopers & Lybrand L.L.P. has been selected
to serve as the independent accountant for Consumer Industries Fund,
Cyclical Industries Fund, Financial Services Fund, Health Care Fund,
Technology Fund, and Utilities Growth Fund and Price Waterhouse LLP has
been selected to serve as the independent accountant for Overseas Fund.
Pursuant to the 1940 Act, such selection requires the ratification of
shareholders. In addition, as required by the 1940 Act, the vote of the
Trustees is subject to the right of the trust, by vote of a majority of its
outstanding voting securities at any meeting called for the purpose of
voting on such action, to terminate such employment without penalty.
Coopers & Lybrand L.L.P. and Price Waterhouse LLP have advised the trust
that it has no direct or material indirect ownership interest in the trust.
The independent accountants examine annual financial statements for the
funds and provide other audit and tax-related services. In recommending the
selection of the trust's accountants, the Audit Committee reviewed the
nature and scope of the services to be provided (including non-audit
services) and whether the performance of such services would affect the
accountants' independence. Representatives of Coopers & Lybrand L.L.P. and
Price Waterhouse LLP are not expected to be present at the Meeting, but
have been given the opportunity to make a statement if they so desire and
will be available should any matter arise requiring their presence.
3. TO AMEND THE DECLARATION OF TRUST TO PROVIDE DOLLAR-BASED VOTING RIGHTS
FOR SHAREHOLDERS OF THE TRUST.
The Board of Trustees has approved, and recommends that shareholders of
the trust approve, a proposal to amend Article VIII, Section 1 of the
Declaration of Trust. The amendment would provide voting rights based on a
shareholder's total dollar interest in a fund (dollar-based voting), rather
than on the number of shares owned, for all shareholder votes for a fund.
As a result, voting power would be allocated in proportion to the value of
each shareholder's investment.
BACKGROUND. Overseas Fund, Consumer Industries Fund, Cyclical Industries
Fund, Financial Services Fund, Health Care Fund, Technology Fund, and
Utilities Growth Fund are funds of Fidelity Advisor Series VII, an open-end
management investment company organized as a Massachusetts business trust.
Currently, there are seven funds in the trust. Shareholders of each class
vote separately on matters concerning only that class. Shareholders of each
fund vote separately on matters concerning only that fund and vote on a
trust-wide basis on matters that affect the trust as a whole, such as
electing trustees or amending the Declaration of Trust. Currently, under
the Declaration of Trust, each share is entitled to one vote, regardless of
the relative value of the shares of each fund in the trust.
The original intent of the one-share, one-vote provision was to provide
equitable voting rights to all shareholders as required by the 1940 Act. In
the case where a trust has several series or funds, such as Fidelity
Advisor Series VII, voting rights may have become disproportionate since
the net asset value per share (NAV) of the separate funds generally diverge
over time. In the case where a fund has more than one class, voting rights
may have become disproportionate because the NAV of the separate classes of
a fund may also diverge over time. The Staff of the Securities and Exchange
Commission (SEC) has issued a "no-action" letter permitting a trust to seek
shareholder approval of a dollar-based voting system. The proposed
amendment will comply with the conditions stated in the no-action letter.
REASON FOR PROPOSAL. If approved, the amendment would provide a more
equitable distribution of voting rights for certain votes than the
one-share, one-vote system currently in effect. The voting power of each
shareholder would be commensurate with the value of the shareholder's
dollar investment rather than with the number of shares held.
Under the current voting provisions, an investment in a fund with a lower
NAV may have significantly greater voting power than the same dollar amount
invested in a fund with a higher NAV. The table below shows a hypothetical
example of this.
Fund Net Asset Value $1,000
investment in
terms of
number shares
A $ 10.00 100.000
B $ 7.57 132.100
C $ 10.93 91.491
D $ 1.00 1,000.00
For example, Fund D shareholders would have ten times the voting power of
Fund A shareholders, because a $1,000 investment in Fund D would buy ten
times as many shares as a $1,000 investment in Fund A. Accordingly, a
one-share, one-vote system may provide certain shareholders with a
disproportionate ability to affect the vote relative to shareholders of
other funds in the trust. If dollar-based voting had been in effect, each
shareholder would have had 1,000 voting shares. Their voting power would be
proportionate to their economic interest, which FMR believes is a more
equitable result, and which is the result with respect to a typical
corporation where each voting share generally has an equal market price.
On matters requiring trust-wide votes where all funds are required to
vote, shareholders who own shares with a lower NAV than other funds in the
trust would be giving other shareholders in the trust more voting "power"
than they currently have. Similarly, on matters affecting a fund as a
whole, where each class of the fund is required to vote separately on an
issue, shareholders who own shares of a class with a lower NAV than other
classes in the funds would be giving the shareholders of the other classes
more voting "power" than they currently have. On matters affecting only one
fund, only shareholders of that fund vote on the issue and on matters
affecting only one class, only shareholders of that class vote on the
issue. In these instances, under both the current Declaration of Trust and
an amended Declaration of Trust, all shareholders of the fund or class
would have the same voting rights, since the NAV is the same for all shares
in a single fund or class.
AMENDMENT TO THE DECLARATION OF TRUST. Article VIII, Section 1 sets forth
the method of calculating voting rights for all shareholder votes for the
trust. If approved, Article VIII, Section 1 will be amended as
follows (material to be added is underlined and material to be deleted is
[bracketed]):
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote... On any matter
submitted to a vote of the Shareholders, all Shares shall be voted by
individual Series, except (i) when required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual Series; and (ii) when the
Trustees have determined that the matter affects only the interests of one
or more Series, then only the Shareholders of such Series shall be entitled
to vote thereon. [Each whole Share shall be entitled to one vote as
to any matter on which it is entitled to vote, and each fractional
Share shall be entitled to a proportionate fractional vote.] ((A
Shareholder of each Series shall be entitled to one vote for each dollar of
net asset value (number of Shares owned times net asset value per share) of
such Series, on any matter on which such Shareholder is entitled to vote
and each fractional dollar amount shall be entitled to a proportionate
fractional vote.)) There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take
any action required or permitted by law, this Declaration of Trust or any
Bylaws of Trust to be taken by Shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the trust and its shareholders. The Trustees recommend voting FOR
the proposal. The amendment will become effective upon shareholder
approval. If the proposal is not approved by the shareholders of trust,
Article VIII, Section 1 of the Declaration of Trust will remain unchanged.
4. TO AMEND THE DECLARATION OF TRUST REGARDING SHAREHOLDER NOTIFICATION OF
APPOINTMENT OF TRUSTEES.
The trust's Declaration of Trust provides that in the case of a vacancy on
the Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion, see fit, consistent with the
limitations of the 1940 Act. Section 16 of the 1940 Act states that a
vacancy may be filled by the Trustees, if after filling the vacancy, at
least two-thirds of the Trustees then holding office were elected by the
holders of the outstanding voting securities of the trust. It also states
that if at any time less than 50% of the Trustees were elected by
shareholders, a shareholder meeting must be called within 60 days for the
purposes of electing Trustees to fill the existing vacancies.
The Declaration of Trust currently requires that within three months of a
Trustee appointment, notification of such be mailed to each shareholder of
the trust. Trustees may appoint a Trustee in anticipation of a current
Trustee's retirement or resignation, or in the event of an increase in the
number of Trustees. The current Declaration of Trust also requires
shareholder notification within three months of such an appointment.
The Trustees recommend that shareholders of the trust vote to eliminate
the notification requirement from the trust's Declaration of Trust. The
language to be deleted from the Declaration of Trust is [bracketed].
ARTICLE IV
THE TRUSTEES
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, or for any other reason,
exist, the remaining Trustees shall fill such vacancy by appointing such
other person as they in their discretion shall see fit consistent with the
limitations under the Investment Company Act of 1940. Such appointment
shall be evidenced by a written instrument signed by a majority of the
Trustees in office or by recording in the records of the Trust, whereupon
the appointment shall take effect. [Within three months of such appointment
the Trustees shall cause notice of such appointment to be mailed to each
Shareholder at his address as recorded on the books of the trust.] An
appointment of a Trustee may be made by the Trustees then in office [and
notice thereof mailed to Shareholders as aforesaid] in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number
of Trustees effective at a later date, provided that said appointment shall
become effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted this trust, the trust estate shall vest in
the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder.
The power of appointment is subject to the provisions of Section 16 (a) of
the 1940 Act.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification to
all shareholders of a trust would be costly to the funds of the trust. If
the proposal is approved, shareholders will be notified of Trustee
appointments in the next financial report for the fund. Other than
eliminating the notification requirement, this proposal does not amend any
other aspect of Trustee resignation or appointment.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the trust and its shareholders. The Trustees recommend voting FOR
the proposal. The amendment will become effective upon shareholder
approval. If the proposal is not approved by the shareholders of trust,
Article IV, Section 4 of the Declaration of Trust will remain unchanged.
5. TO AMEND THE DECLARATION OF TRUST TO PROVIDE EACH FUND WITH THE ABILITY
TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY.
The Board of Trustees has approved, and recommends that shareholders of
the trust approve, a proposal to amend Article V, Section 1 of the
Declaration of Trust to clarify that the Trustees may authorize the
investment of all of a fund's assets in another open-end investment
company ("Master Feeder Fund Structure"). The purpose of a Master
Feeder Fund Structure is to achieve operational efficiencies by
consolidating portfolio management while maintaining different distribution
and servicing structures. In order to implement a Master Feeder Fund
Structure, both the Declaration of Trust and the funds' policies must
permit the structure. Currently, the Declaration of Trust and the funds'
policies do not allow for such investments. Proposal 6 on page
seeks the approval of each fund's shareholders to adopt a fundamental
investment policy to permit investment in another open-end investment
company. This proposal, which amends the Declaration of Trust, clarifies
the Board's ability to implement the Master Feeder Fund Structure if a
fund's policies permit it.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single pooled investment, or "master" fund. For
example, an institutional equity fund with a high initial minimum
investment amount for large investors might pool its investments with an
equity fund with low minimums designed for retail investors. Th e
structure in this example allows several Feeder Funds with
substantially the same objective but different distribution and servicing
features to combine their investments and manage them as one Master Fund
instead of managing them separately. The Feeder Funds combine their
investments by investing all of their assets in one Master Fund. (Each
Feeder Fund invested in a single Master Fund retains its own
characteristics, but is able to achieve operational efficiencies by
investing together with the other Feeder Funds in the Master Feeder Fund
Structure.) The current Declaration of Trust does not specifically provide
the Trustees the ability to authorize the Master Feeder Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees has determined that a fund
should invest in a Master Fund, the Trustees believe it could be in the
best interest of each fund to adopt such a structure at a future date. If
this proposal is approved, the Declaration of Trust amendment would provide
the Trustees with the power to authorize a fund to invest all of its assets
in a single open-end investment company. The Trustees will authorize such a
transaction only if a Master Feeder Fund Structure is permitted under the
fund's investment policies (see Proposal 6 ), if they determine that
a Master Feeder Fund Structure is in the best interest of a fund, and if,
upon advice of counsel, they determine that the investment will not have
material adverse tax consequences to each fund or its shareholders. The
Trustees will specifically consider the impact, if any, on fees paid by the
fund as a result of adopting a Master Feeder Fund Structure. Although the
current Declaration of Trust does not contain any explicit prohibition
against implementing a Master Feeder Fund Structure, the specific authority
is being sought in the event the Trustees deem it appropriate to adopt a
Master Feeder Fund Structure in the future.
AMENDMENT TO THE DECLARATION OF TRUST. If the proposal is approved,
Article V, Section 1 of the Declaration of Trust will be amended as
follows: (material to be added is ((underlined ))) :
"Subject to any applicable limitation in the Declaration of Trust or the
Bylaws of the Trust, the Trustees shall have the power and authority:
(((t) Notwithstanding any other provision hereof, to invest all of the
assets of any series in a single open-end investment company, including
investment by means of transfer of such assets in exchange for an interest
or interests in such investment company;"))
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the trust and its shareholders. The Trustees recommend voting FOR
the proposal. The amendment will become effective upon shareholder
approval. If the proposal is not approved by the shareholders of trust,
Article V, Section 1 of the Declaration of Trust will remain
unchanged.
6. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND TO
PERMIT EACH FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END
INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND
POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
each fund approve, the adoption of a new fundamental investment policy that
would permit each fund to invest all of its assets in another open-end
investment company with substantially the same investment objective and
policies ("Master Feeder Fund Structure"). The purpose of the Master Feeder
Fund Structure would be to achieve operational efficiencies by
consolidating portfolio management while maintaining different distribution
and servicing structures.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single "master" fund. In order to implement a
Master Feeder Fund Structure, an amendment to the Declaration of Trust is
proposed, as is the adoption of a new fundamental investment policy.
Proposal 5, proposes to amend the Declaration of Trust to allow the
Trustees to authorize the conversion to a Master Feeder Fund Structure when
permitted by each fund's policies. This proposal would add a fundamental
policy for each fund that permits a Master Feeder Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take advantage of potential
efficiencies. While neither the Board nor FMR has determined that each fund
should invest in a Master Fund, the Trustees believe it could be in the
best interests of each fund to adopt such a structure at a future date.
At present, certain of each fund's fundamental investment policies and
limitations would prevent each fund from investing all of its assets in
another investment company, and would require a vote of shareholders before
such a structure could be adopted. To avoid the costs associated with a
subsequent shareholder meeting, the Trustees recommend that shareholders
vote to permit each fund's assets to be invested in a single Master Fund,
without a further vote of shareholders. The Trustees will authorize such an
investment only if they determine that action to be in the best interests
of each fund and its shareholders and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to each fund. Approval of Proposal 5 provides the Trustees
with explicit authority to approve a Master Feeder Fund Structure. If
shareholders approve this proposal, certain fundamental and non-fundamental
policies and limitations of each fund that currently prohibit investment in
shares of one investment company would not apply to permit the investment
in a Master Fund managed by FMR or its affiliates or successor. These
policies include Overseas Fund's limitations on investing more than 5% of
total assets in a single issuer or more than 25% of assets in a single
industry, purchasing the securities of other investment companies, and
purchasing more than 10% of the outstanding securities of a single issuer,
and for each fund, its policy on underwriting securities.
DISCUSSION. FMR may manage a number of mutual funds with similar
investment objectives, policies, and limitations but with different
features and services (Comparable Funds). Were these Comparable Funds to
pool their assets, operational efficiencies could be achieved, offering the
opportunity to reduce costs. Similarly, FMR anticipates that a Master
Feeder Fund Structure would facilitate the introduction of new Fidelity
mutual funds, increasing the investment options available to shareholders.
Each fund's method of operation and shareholder services would not be
materially affected by its investment in a Master Fund, except that the
assets of each fund would be managed as part of a larger pool. Were each
fund to invest all of its assets in a Master Fund, it would hold only a
single investment security, and the Master Fund would directly invest in
individual securities pursuant to its investment objective. The Master Fund
would be managed by FMR or an affiliate, such as FMR Texas, Inc. in the
case of a money market fund. The Trustees would retain the right to
withdraw each fund's investments from a Master Fund at any time and would
do so if the Master Fund's investment objective and policies were no longer
appropriate for each fund. Each fund would then resume investing directly
in individual securities as it does currently. Whenever a Feeder Fund is
asked to vote at a shareholder meeting of the Master Fund, the Feeder Fund
will hold a meeting of its shareholders if required by applicable law or
the Feeder Fund's policies to vote on the matters to be considered at the
Master Fund shareholder meeting. The fund will cast its votes at the Master
Fund meeting in the same proportion as the fund's shareholders voted at
their meeting.
At present, the Trustees have not considered any specific proposal to
authorize pooling of assets. The Trustees will authorize investing each
fund's assets in a Master Fund only if they determine that pooling is in
the best interests of each fund and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to each fund or its shareholders. In determining whether to
invest in a Master Fund, the Trustees will consider, among other things,
the opportunity to reduce costs and to achieve operational efficiencies.
The Trustees will not authorize investment in a Master Fund if doing so
would materially increase costs (including fees) to shareholders.
FMR may benefit from the use of a Master Feeder Fund Structure if overall
assets under management are increased (since FMR's fees are based on
assets). Also, FMR's expenses of providing investment and other services to
each fund may be reduced. If a fund's investment in a Master Fund were to
reduce FMR's expenses materially, the Trustees would consider whether a
reduction in FMR's management fee would be appropriate if and when a Master
Feeder Fund Structure is implemented.
PROPOSED FUNDAMENTAL POLICY. To allow each fund to invest in a Master Fund
at a future date, the Trustees recommend that each fund adopt the following
fundamental policy:
"The fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company managed by Fidelity Management & Research
Company or an affiliate or successor with substantially the same
fundamental investment objective, policies, and limitations as the fund."
If the proposal is adopted, the Trustees intend to adopt a non-fundamental
investment limitation for each fund which states:
"The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company managed by
Fidelity Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit each fund and its shareholders. The Trustees recommend voting FOR
the proposal. Upon shareholder approval, the changes will become effective
when the disclosure is revised to reflect the change . If the
proposal is not approved by the shareholders of a fund, that fund's current
fundamental investment policies will remain unchanged with respect to
potential investment in Master Funds.
7. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR OVERSEAS FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has approved,
and recommends that shareholders of the fund approve, a proposal to adopt
an amended management contract with FMR (the Amended Contract). The Amended
Contract modifies several aspects of the management fee that FMR receives
from the fund for managing its investments and business affairs.
CURRENT MANAGEMENT FEE. The management fee is calculated and paid monthly,
and is normally expressed as an annual percentage of the fund's average net
assets. The fee has two components: a Basic Fee and a Performance
Adjustment. The Basic Fee is an annual percentage of the fund's average net
assets for the current month. The Basic Fee rate is the sum of a Group Fee
rate, which declines as FMR's fund assets under management increase, and a
fixed individual fund fee rate of 0.45%. The Basic Fee rate for the fund's
fiscal year ended October 31, 1996 (not including the fee amendments
discussed below) was 0.7630%.
The Performance Adjustment is a positive or negative dollar amount based
on the fund's performance and assets for the most recent 36 months. If the
fund outperforms the Morgan Stanley Capital International Europe,
Australasia, Far East Index (the Index) over 36 months, FMR receives a
positive Performance Adjustment, and if the fund underperforms the Index,
the management fee is reduced by a negative Performance Adjustment. The
Performance Adjustment is an annual percentage of the fund's average net
assets over the 36-month performance period. The Performance Adjustment
rate is 0.02% for each percentage point of outperformance or
underperformance, subject to a maximum of 0.20% if the fund outperforms or
underperforms the Index by more than ten percentage points.
The fund currently has four separate classes of shares, each with
different expenses and different performance. Although the Present Contract
does not specify how the performance of the various classes should be taken
into account, FMR has voluntarily used the return of the class with the
worst performance when comparing the fund and the Index. Performance of the
fund and the Index are rounded to the nearest whole percentage point for
purposes of the calculation. Under the present contract, the Performance
Adjustment for the fund's fiscal year ended October 31, 1996 equaled
0.0207% of the fund's average net assets for the year.
PROPOSED MANAGEMENT FEE AMENDMENTS. The Amended Contract would (1) reduce
the Group Fee rate further if FMR's assets under management remain over
$210 billion, (2) modify the Performance Adjustment calculation to round
the performance of the fund and the Index to the nearest 0.01%, rather than
the nearest 1.00%, and (3) specify that, in calculating the Performance
Adjustment, the fund's performance would equal the asset-weighted average
return of all classes. The impact of these changes is summarized briefly in
the following paragraphs, and the changes are discussed in detail in the
remainder of the proposal.
IMPACT OF GROUP FEE RATE REDUCTION. At FMR's current level of assets under
management ($ 482 billion as of May 1997), the changes to the Group
Fee rate reduce the management fee. FMR has voluntarily implemented the
Group Fee reductions pending shareholder approval, and the Fund has paid
lower management fees as a result. For the fund's fiscal year ended October
31, 1996, the management fee using the proposed Group Fee reductions
(including the Performance Adjustment) was 0.7347% of the Fund's average
net assets. The Group Fee reductions lowered the management fee rate by
0.0076% of the fund's average net assets for the year compared to the rate
FMR was entitled to receive under the Present Contract (0.7423%).
IMPACT OF PERFORMANCE ADJUSTMENT CHANGES. During fiscal 1996, the 36-month
return of all classes relative to the Index (as proposed to be calculated)
averaged approximately 0.83 percentage points better than the return of the
worst-performing class on average. The changes to the Performance
Adjustment would have increased the management fee rate by 0.0095% of the
fund's average net assets for the year.
COMBINED EFFECT OF FEE CHANGES. In the 1996 fiscal year, the Group Fee
reductions would have mostly offset the changes to the Performance
Adjustment , resulting in a 0.0019% increase in the total management
fee. The future impact will depend on many different factors, and may
represent an increase or decrease from the management fee under the Present
Contract. The Group Fee rate reductions will either reduce the management
fee or leave it unchanged, depending on the level of FMR's assets under
management. Calculating performance to the nearest 0.01% may increase or
decrease the Performance Adjustment, depending on whether performance would
have been rounded up or down. Basing fund performance on the return of all
classes rather than the worst-performing class will either increase the
management fee or leave it unchanged, depending on the relative performance
and assets of each class of the fund.
PRESENT AND AMENDED CONTRACTS. FMR is the fund's investment adviser
pursuant to a management contract dated January 1, 1993, which was approved
by shareholders on December 1, 1992. (For information on FMR, see the
section entitled "Activities and Management of FMR," on page .) A copy of
the Amended Contract, marked to indicate the proposed amendments, is
supplied as Exhibit 1 on page . Except for the modifications discussed
above, the Amended Contract is substantially identical to the fund's
Present Contract with FMR. (For a detailed discussion of the fund's Present
Contract, refer to the section entitled "Present Management Contract," on
page .) If approved by shareholders, the Amended Contract will take effect
on the first day of the first month following approval and will remain in
effect through July 31, 1998 and thereafter, but only as long as its
continuance is approved at least annually by (i) the vote, cast in person
at a meeting called for the purpose, of a majority of the Independent
Trustees and (ii) the vote of either a majority of the Trustees or a
majority of the outstanding shares of the fund. If the Amended Contract is
not approved, the Present Contract will continue in effect through July 31,
1998, and thereafter only as long as its continuance is approved at least
annually as above.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on the
aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets increase, the
Group Fee rate declines. The Amended Contract would not change the Group
Fee rate if group assets are $210 billion or less. Above $210 billion in
group assets, the Group Fee rate declines under both contracts, but under
the Amended Contract, it declines faster.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets. The
rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets increase.
The Amended Contract would add ten new, lower breakpoints applicable when
group assets are above $210 billion. (For an explanation of how the Group
Fee Rate is used to calculate the management fee see the section entitled
"Present Management Contract" on page .)
GROUP FEE RATE BREAKPOINT S
Average Group Present Group Amended
Assets Contract Assets Contract
($ billions) ($ billions)
Over 174 .3000% 174-210 .3000%
210-246 .2950%
246-282 .2900%
282-318 .2850%
318-354 .2800%
354-390 .2750%
390-426 .2700%
426-462 .2650%
462-498 .2600%
498-534 .2550%
Over 534 .2500%
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are combined to
arrive at the Group Fee rate, see "Present Management Contract" on page .)
EFFECTIVE GROUP FEE RATES
Group Present Amended
Assets Contract* Contract
($ billions)
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
* Does not reflect voluntary adoption of extended group fee rate schedules
by FMR on November 1, 1993, August 1, 1994, and January 1, 1996.
FMR voluntarily adopted various additional Group Fee breakpoints for group
assets over $210 billion in 1993, 1994 and 1996. Although the new fee
breakpoints have not been added to the management contract pending
shareholder approval, FMR has voluntarily based its management fee on the
Group Fee schedule contained in the Amended Contract since January 1, 1996.
Group assets for May 1997 were approximately $ 482 billion.
MODIFICATIONS TO PERFORMANCE ADJUSTMENT - ROUNDING METHOD. The
annual Performance Adjustment rate equals 0.02% for each percentage point
by which the fund outperforms or underperforms the Index over a 36-month
performance period. Under the Present Contract, the investment performance
of both the fund and the Index are rounded to the nearest full percentage
point (for example, 15.5123% is rounded to 16%.) Rounding to full
percentage points results in the Performance Adjustment rate being applied
in 0.02% increments. In comparison, under the Amended Contract, the
investment performance of both the fund and Index are rounded to the
nearest 0.01% (using the prior example, 15.5123% is rounded to 15.51%)
prior to calculating the difference in investment performance. The more
precise rounding method results in a more accurate measure of the
difference in investment performance and allows for the Performance
Adjustment to be applied in 0.0002% increments. This will produce more
precise performance comparisons and, therefore, reduce the chances of minor
changes in performance resulting in significant changes to the Performance
Adjustment, and ultimately the fund's management fee.
MODIFICATIONS TO PERFORMANCE ADJUSTMENT - WEIGHTED AVERAGE CLASS
PERFORMANCE. The Performance Adjustment is based on a comparison of the
performance of the fund (excluding sales charges, but including other
expenses) to the performance of the Index. Because each class of the fund
has different expenses, and therefore different performance, it is
necessary to choose how the different classes will be taken into account
when calculating the performance of the fund as a whole.
When the Present Contract was adopted in 1992, the fund had one class of
shares: Class T. The contract did not contemplate the introduction of
additional classes, and does not specifically require that their
performance be taken into account. However, as additional classes have been
added to the fund, FMR voluntarily has based the fund's investment
performance on the return of the class with the lowest performance, taking
into account the return of Class A, Class B, and the Institutional Class,
as applicable, in addition to Class T shares.
Class A, Class B, and Class T shares all pay distribution costs in the
form of sales charges and distribution fees. Although sales charges are
excluded from the performance calculation, distribution fees are included
and tend to lower performance. Class B shares generally pay higher
distribution fees than Class A and T shares. As a result, Class B shares
have tended to have the lowest performance for purposes of the performance
calculation (even though they may outperform other classes after sales
charges) since their introduction in 1995, and have generally been used to
represent the investment performance of the fund as a whole. Class B
shares, however, represented less than 5% of the fund's assets as of the
end of October 1996. In effect, therefore, the current Performance
Adjustment calculation omits the performance of over 95% of the fund.
Under the Amended Contract, the performance of the fund would be
represented by the average performance of all classes of the fund, weighted
according to their average assets for each month. For example, if Class B
shares represented 15% of the fund's assets, Class B's performance would
represent 15% of the fund's performance. FMR believes this is a fairer
means of calculating the performance of the fund and will avoid distortions
that currently may arise from differing class-level expenses.
A performance adjustment is meant to unite the interests of the investment
adviser and the shareholders in achieving performance superior to the
Index. Regardless of the number of classes of shares of a fund, the
investment adviser is managing a single portfolio and is providing the same
investment management services to each class; thus, in FMR's view,
calculation of the performance fee should be based on the investment
performance of the fund using the asset-weighted performance of all classes
(rather than the investment performance of a single class), reflecting the
dollar-weighted average expenses paid by shareholders .
The Performance Adjustment is calculated monthly, based on the relative
performance of the fund and the Index for the latest 36 months. For the 12
monthly Performance Adjustment calculations during 1996, the asset-weighted
average performance of all classes relative to the Index (including the
more precise rounding method discussed above) was approximately 0.83
percentage points better than the return of the worst-performing class on
average. FMR would have been entitled to a higher Performance Adjustment
rate (or a smaller negative Performance Adjustment rate) of approximately
0.0167% under the Amended Contract. The Performance Adjustment rate is
multiplied by the fund's average net assets for the 36-month performance
period, not by the fund's current assets, to determine the dollar amount of
the Performance Adjustment. Because the current assets of the fund during
1996 were higher than their average over the preceding two years
(reflecting growth in the fund's size), the 0.0167% increase in the
Performance Adjustment rate would have represented a management fee
increase of 0.0095% of average assets for 1996. Most of this increase would
have been offset by the 0.0076% management fee reduction resulting from the
changes to the Group Fee.
Although the combined effect of the fee changes is impossible to
predict, the changes to the Performance Adjustment may have a greater
impact in the future than in the 1996 fiscal year. Class B shares bear
distribution and service fees that are currently approximately 0.50% higher
(as an annual percent of net assets) than the average for the other classes
of the fund. If Class B shares return 0.50% per year less than the asset
weighted average of all classes of the fund (or approximately 1.50% less
over a 36-month performance period), the Performance Adjustment rate
calculated based on the asset-weighted performance of all classes of the
fund could be approximately 0.03% higher than a rate based on the
performance of Class B alone. As noted above, however, FMR is not obligated
to base the fund's performance on the worst-performing class under the
Present Contract but has done so voluntarily in the absence of specific
guidance under the contract's terms.
COMPARISON OF MANAGEMENT FEES. The following table compares the fund's
management fee for the 1996 fiscal year under the terms of the Present
Contract (not including FMR's voluntary implementation of the Group Fee
reductions) to the management fee the fund would have incurred if the
Amended Contract had been in effect. Management fees are expressed in
dollars and as percentages of the fund's average net assets for the year.
Present Contract Amended Contract Difference
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
$ % $ % $ %
Basic Fee 7,111,484 0.7630 7,041,036 0.7554 (70,448) (0.0076
)
Performan (193,260) (0.0207 (104,517) (0.0112 88,743 0.0095
ce ) )
Adjustment
Total 6,918,224 0.7423 6,936,519 0.7442 18,295 0.0019
</TABLE>
If the Amended Contract is approved, FMR will calculate the performance
adjustment using asset-weighted average performance for the entire 36-month
performance period beginning with the first full month following
shareholder approval.
The following tables provide data concerning each class' management fees
and expenses as a percentage of average net assets for the fiscal year
ended October 31, 1996 under the Present Contract (not including FMR's
voluntary implementation of Group Fee reductions) and if the Amended
Contract had been in effect during the same period.
The following figures are based on historical expenses adjusted to reflect
current fees of Class A, Class B, Class T, and Institutional Class shares
of the fund and are calculated as a percentage of average net assets of
each class.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
CLASS A:
Present Amended Contract
Contract
Management Fee 0.74% 0.74%
12b-1 Fee 0.25% 0.25%
Other Expenses 0.51% [A] 0.51% [A]
Total Fund Operating Expenses* 1.50% 1.50%
CLASS B:
Present Amended Contract
Contract
Management Fee 0.74% 0.74%
12b-1 Fee 1.00% 1.00%
Other Expenses 0.6 3 % 0.6 3 %
Total Fund Operating Expenses* 2. 37 % 2. 37 %
CLASS T:
Present Amended Contract
Contract
Management Fee 0.74% 0.74%
12b-1 Fee 0.50% 0.50%
Other Expenses 0. 37 % 0. 37 %
Total Fund Operating Expenses* 1.6 1 % 1.6 1 %
INSTITUTIONAL CLASS:
Present Amended Contract
Contract
Management Fee 0.74% 0.74%
12b-1 Fee None None
Other Expenses 0.7 0 % 0.7 0 %
Total Fund Operating Expenses* 1. 44 % 1. 44 %
[A] Based on estimated expenses for the first year.
* Effective August 30, 1996, October 30, 1995, January 1, 1996, and October
30, 1995, FMR voluntarily agreed to limit the total expenses of each class
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) to the following annual percentages: Class A, 2.00%; Class B,
2.75%; Class T, 2.25%; and Institutional Class, 1.75%, respectively.
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. The fund has entered into arrangements with its
custodian and transfer agent whereby interest earned on uninvested cash
balances is used to reduce custodian and transfer agent expenses. Including
these reductions, the total operating expenses presented in the table would
have been 1.50% for Class A, 2. 37 % for Class B, 1.6 0 % for
Class T, and 1.4 3 % for Institutional Class under the Present
Contract and 1.50% for Class A, 2. 37 % for Class B, 1.6 0 % for
Class T, and 1. 43 % for Institutional Class under the Amended
Contract.
EXAMPLE: The following illustrates the expenses, including the maximum
front-end sales charge or contingent deferred sales charge, as applicable,
on a $1,000 investment under the fees and expenses stated above, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
CLASS A:
1 Year 3 Years 5 Years 10 Years
Present Contract $67 $97 $130 $222
Amended Contract $67 $97 $130 $222
CLASS B:
1 Year[A] 3 Years[A] 5 Years[A] 10
Years[B]
Present Contract $7 4 $10 4 $1 47 $2 39
Amended Contract $7 4 $10 4 $1 47 $2 39
[A] Reflects deduction of applicable CDSC.
[B] Reflects conversion of Class B shares to Class A shares after seven
years.
CLASS T:
1 Year 3 Years 5 Years 10 Years
Present Contract $51 $8 4 $12 0 $2 19
Amended Contract $51 $8 4 $12 0 $2 19
INSTITUTIONAL CLASS:
1 Year 3 Years 5 Years 10 Years
Present Contract $15 $4 6 $ 79 $17 2
Amended Contract $15 $4 6 $ 79 $17 2
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of the
fund. The example above should not be considered a representation of past
or future expenses of the fund. Actual expenses may vary from year to year
and may be higher or lower than those shown above.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve as
Trustees are referred to herein as the "Fidelity funds." The Board of
Trustees meets eleven times a year. The Board of Trustees, including the
Independent Trustees, believes that matters bearing on the appropriateness
of the fund's management fees are considered at most, if not all, of their
meetings. While the full Board of Trustees or the Independent Trustees, as
appropriate, act on all major matters, a significant portion of the
activities of the Board of Trustees (including certain of those described
herein) are conducted through committees. The Independent Trustees meet
frequently in executive session and are advised by independent legal
counsel selected by the Independent Trustees.
The proposal to present the Amended Contract to shareholders was approved
by the Board of Trustees of the fund, including all of the Independent
Trustees, on December 19, 1996. The Board of Trustees considered and
approved the modifications to the Group Fee Rate schedule during the
two-month periods from November to December 1995, June to July 1994, and
September to October 1993, and the modifications to the Performance
Adjustment calculation during the period s from June to July 1995 and
November 1996. The Board of Trustees received materials relating to the
Amended Contract in advance of the meetings at which the Amended Contract
was considered, and had the opportunity to ask questions and request
further information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with their
meetings Trustees receive materials specifically relating to the Amended
Contract. These materials include: (i) information on the investment
performance of the fund, a peer group of funds and an appropriate index or
combination of indices, (ii) sales and redemption data in respect of the
fund, (iii) the economic outlook and the general investment outlook in the
markets in which the fund invests, and (iv) notable changes in the fund's
investments. The Board of Trustees and the Independent Trustees also
consider periodically other material facts such as (1) FMR's results and
financial condition, (2) arrangements in respect of the distribution of the
fund's shares, (3) the procedures employed to determine the value of the
fund's assets, (4) the allocation of the fund's brokerage, if any,
including allocations to brokers affiliated with FMR and the use of "soft"
commission dollars to pay fund expenses and to pay for research and
execution services, (5) FMR's management of the relationships with the
fund's custodian and subcustodians, (6) the resources devoted to and the
record of compliance with the fund's investment policies and restrictions
and with policies on personal securities transactions, and (7) the nature,
cost and quality of non-investment management services provided by FMR and
its affiliates.
In response to questions raised by the Independent Trustees, additional
information was furnished by FMR including, among other items, information
on and analysis of (a) the overall organization of FMR, (b) the impact of
performance adjustments on management fees, (c) the choice of performance
indices and benchmarks, (d) the composition of peer groups of funds, (e)
transfer agency and bookkeeping fees paid to affiliates of FMR, (f)
investment performance, (g) investment management staffing, (h) the
potential for achieving further economies of scale, (i) operating expenses
paid to third parties, and (j) the information furnished to investors,
including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as all-important or
controlling, and the following summary does not detail all of the matters
considered. Matters considered by the Board of Trustees and the Independent
Trustees in connection with their approval of the Amended Contract include
the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within its
investment objective and its record of compliance with its investment
restrictions. They also reviewed monthly the fund's investment performance
as well as the performance of a peer group of mutual funds, and the
performance of an appropriate index or combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees annually review the background of the fund's portfolio manager,
and the fund's investment objective and discipline. The Independent
Trustees have also had discussions with senior management of FMR
responsible for investment operations, and the senior management of
Fidelity's equity group. Among other things they considered the size,
education and experience of FMR's investment staff, its use of technology,
and FMR's approach to recruiting, training and retaining portfolio managers
and other research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent of
administrative and shareholder services performed by FMR and affiliated
companies, both under the Amended Contract and under separate agreements
covering transfer agency functions and pricing, bookkeeping and securities
lending services, if any. The Board of Trustees and the Independent
Trustees have also considered the nature and extent of FMR's supervision of
third party service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees considered
the fund's expense ratio and expense ratios of a peer group of funds. They
also considered the amount and nature of fees paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of the
Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent Trustees
have concluded that the cost allocation methodology employed by FMR has a
reasonable basis and is appropriate in light of all of the circumstances.
They considered the profits realized by FMR in connection with the
operation of the fund and whether the amount of profit is a fair
entrepreneurial profit for the management of the fund. They also considered
the profits realized from non-fund businesses which may benefit from or be
related to the fund's business. The Board of Trustees and the Independent
Trustees also considered FMR's profit margins in comparison with available
industry data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent Trustees
considered whether there have been economies of scale in respect of the
management of the Fidelity funds, whether the Fidelity funds (including the
fund) have appropriately benefitted from any economies of scale, and
whether there is potential for realization of any further economies of
scale. The Board of Trustees and the Independent Trustees have concluded
that FMR's mutual fund business presents some limited opportunities to
realize economies of scale and that these economies are being shared
between fund shareholders and FMR in an appropriate manner. The Independent
Trustees have also concluded that the existing Group Fee structure should
be continued but determined that it would be appropriate to extend the
Group Fee structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent Trustees
also considered the character and amount of fees paid by the fund and the
fund's shareholders for services provided by FMR and its affiliates,
including fees for services like transfer agency, fund accounting and
direct shareholder services. They also considered the allocation of fund
brokerage to brokers affiliated with FMR and the receipt of sales loads and
payments under Rule 12b-1 plans in respect of certain of the Fidelity
funds. The Board of Trustees and the Independent Trustees also considered
the revenues and profitability of FMR businesses other than its mutual fund
business, including FMR's retail brokerage, correspondent brokerage,
capital markets, trust, investment advisory, pension record keeping, credit
card, insurance, publishing, real estate, international research and
investment funds, and others. The Board of Trustees and the Independent
Trustees considered the intangible benefits that accrue to FMR and its
affiliates by virtue of their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the Independent
Trustees considered the benefit to shareholders of investing in a fund that
is part of a large family of funds offering a variety of investment
disciplines and providing for a large variety of fund and shareholder
services.
CONCLUSION. Based on their evaluation of all material factors and assisted
by the advice of independent counsel, the Trustees concluded (i) that the
existing management fee structure is fair and reasonable and (ii) that the
proposed modifications to the management fee rates, specifically the
extension of the Group Fee Rate schedule and the modifications to the
performance adjustment calculation, are in the best interest of the fund's
shareholders. The Board of Trustees, including the Independent Trustees,
voted to approve the submission of the Amended Contract to shareholders of
the fund and recommends that shareholders of the fund vote FOR the Amended
Contract. If approved by shareholders, the Amended Contract will take
effect on the first day of the first month following
approval .
8. TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH FIDELITY INVESTMENTS
JAPAN LIMITED FOR OVERSEAS FUND.
In conjunction with its portfolio management responsibilities on behalf of
Overseas Fund, FMR has entered into sub-advisory agreements with affiliates
whose offices are geographically dispersed around the world. To strengthen
these relationships, the Board of Trustees proposes that shareholders of
the fund approve a sub-advisory agreement (the Proposed Agreement) between
FIJ and FMR on behalf of the fund. The Proposed Agreement would allow FMR
not only to receive investment advice and research services from FIJ, but
also would permit FMR to grant FIJ investment management authority if FMR
believes it would be beneficial to the fund and its shareholders. BECAUSE
FMR WOULD PAY ALL OF FIJ'S FEES, THE PROPOSED AGREEMENT WOULD NOT AFFECT
THE FEES PAID BY THE FUND TO FMR. In addition, the Proposed Agreement
includes a discussion of FIJ's ability to use brokers and dealers to
execute portfolio transactions, consistent with the authority granted FMR
under the Management Contract.
On December 19, 1996, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of the fund pursuant to a unanimous vote of both
the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. FMR provided substantial information to the
Trustees to assist them in their deliberations. The Trustees determined
that allowing FMR to receive investment advice and research services from
FIJ as well as to grant investment management authority to FIJ would
provide FMR increased flexibility in the assignment of portfolio managers
and give the fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that the fund and its shareholders may
benefit from giving FMR, through FIJ, the ability to execute portfolio
transactions from points in Japan that are physically closer to foreign
issuers and the primary markets in which their securities are traded.
Increasing FMR's proximity to foreign markets should enable the fund to
participate more readily in full trading sessions on foreign exchanges, and
to react more quickly to changing market conditions. A copy of the Proposed
Agreement is attached to this proxy statement as Exhibit 2.
FIJ, established in 1986 with its principal office in Tokyo, Japan is a
wholly-owned subsidiary of Fidelity International Limited (FIL) , an
affiliate of FMR organized under the laws of Bermuda. In 1994, FIJ
registered as an investment advisor with the SEC in order to provide
investment advisory services to FMR with respect to foreign securities,
primarily Japanese securities. This research complements other research on
foreign securities produced by FMR's U.S.-based research analysts and
portfolio managers, obtained from other FMR subsidiaries or affiliates with
whom FMR has entered into sub-advisory agreements, or obtained from
broker-dealers or other sources.
FIJ may also provide investment advisory and management services to FMR
with respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FIJ's only client
other than FMR is FIL. FIL 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, President
and a Trustee of the trust, is Chairman and a Director of FIJ, Chairman,
and a Director of FIL, and a principal stockholder of both FIL and FMR. For
more information on FIJ, see the section entitled "Activities and
Management of FIIA, FIIAL U.K., and FIJ" on page .
Under the Proposed Agreement, FIJ could act as an investment consultant to
FMR and could supply FMR with investment research information and portfolio
management advice as FMR reasonably requests on behalf of the fund. FIJ
would provide investment advice and research services with respect to
issuers located outside of the United States focusing primarily on
companies based in the Far East. Under the Proposed Agreement with FIJ,
FMR, NOT THE FUND, would pay FIJ 30% of FMR's monthly management fee with
respect to the average market value of investments held by the fund for
which FIJ shall have provided investment advice.
Under the Proposed Agreement, FMR could also grant investment management
authority with respect to all or a portion of the fund's assets to FIJ. If
FIJ were to exercise investment management authority on behalf of the fund,
it would be required, subject to the supervision of FMR, to direct the
investments of the fund in accordance with the fund's investment objective,
policies, and limitations as provided in the fund's prospectus or other
governing instruments and such other limitations as the fund may impose by
notice in writing to FMR or FIJ. If FMR grants investment management
authority to FIJ with respect to all or a portion of the fund's assets, FIJ
would be authorized to buy or sell stocks, bonds, and other securities for
the fund subject to the overall supervision of FMR and the Board of
Trustees. In addition, the Proposed Agreement would authorize FMR to
delegate other investment management services to FIJ, including, but not
limited to, currency management services (including buying and selling
currency options and entering into currency forward and futures contracts
on behalf of the fund), other transactions in futures contracts and
options, and borrowing or lending portfolio securities. If any of these
investment management services were delegated, FIJ would continue to be
subject to the control and direction of FMR and the Board of Trustees and
to be bound by the investment objective, policies, and limitations of the
fund.
To the extent that FMR granted investment management authority to FIJ, FMR
would pay FIJ 50% of its monthly management fee with respect to the average
net assets managed on a discretionary basis by FIJ for investment
management services.
If approved by shareholders, the Proposed Agreement would take effect on
October 1, 1997 (or, if later, the first day of the month following
approval) and would continue in force until July 31, 1998 and from year to
year thereafter, but only as long as its continuance was approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of those Trustees who are not "interested persons"
of the trust or FMR and (ii) the vote of either a majority of the Trustees
or by the vote of a majority of the outstanding shares of the fund.
The Proposed Agreement could be transferred to a successor of FIJ without
resulting in its termination and without shareholder approval, as long as
the transfer did not constitute an assignment under applicable securities
laws and regulations. The Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and the Proposed
Agreement would terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit Overseas Fund and its shareholders. The Trustees recommend voting
FOR the proposal. If approved by shareholders, the Proposed Agreement
will take effect on the first day of the first month following approval.
If the Proposed Agreement is not approved, FMR will continue to manage
the fund under its Management Contract with the flexibility to use
sub - advisors, excluding FIJ, as previously approved.
9. TO AMEND THE CLASS T DISTRIBUTION AND SERVICE PLAN FOR OVERSEAS FUND.
The Board of Trustees has approved, and recommends that Class T
shareholders approve, an amended Distribution and Service Plan for Class T
shares (the Amended Class T Plan). Rule 12b-1 (the Rule) under the
Investment Company Act of 1940 (the 1940 Act) provides that in order for a
mutual fund to act as a distributor of its shares, a written plan
"describing all material aspects of the proposed financing of distribution"
must be adopted by the fund.
A copy of the Amended Class T Plan is attached to this Proxy Statement as
Exhibit 3.
THE CURRENT CLASS T PLAN. The current Class T Plan (the Current Class T
Plan) was adopted on April 30, 1990. Under the Current Class T Plan, Class
T of Overseas Fund may pay Fidelity Distributors Corporation (FDC) a fee at
an annual rate of up to 0.65% of its average daily net assets. The
determination of daily net assets is made at the close of business each day
throughout the month, but the net assets for purposes of calculating the
fee exclude assets attributable to shares purchased more than 144 months
(12 years) prior to such date. The Trustees have approved a distribution
fee for Class T of Overseas Fund at an annual rate of 0.50% of its average
net assets. For the fiscal year ended October 31, 1996, Class T of Overseas
Fund paid $4,750,000 in distribution fees to FDC, which amounted to
0.51 % of its average net assets. FDC may pay all or a portion of
such fees to securities dealers or other investment professionals as
distribution or service fees. To the extent the fee is not paid to
investment professionals, FDC may use the fees for its expenses incurred in
the distribution of Class T shares. For the fiscal year ended October 31,
1996, FDC paid, on behalf of Class T shares of Overseas Fund,
approximately $ 273,383 in distribution fees to National
Financial Services Corporation (NFSC), an affiliate of FMR Corp. NFSC
passed 100% of these fees to investment professionals. FDC and NFSC are
both subsidiaries of FMR Corp. Members of Mr. Edward C. Johnson 3d's family
are the predominant owners of a class of shares of common stock,
representing approximately 49% of the voting power of FMR Corp., and,
therefore, under the 1940 Act may be deemed to form a controlling group
with respect to FMR Corp.
The Current Class T Plan also provides that to the extent that the
fund's payment of management fees to FMR might be considered to constitute
"indirect" financing of activities" primarily intended to result in the
sale of shares," such payment is expressly authorized.
Although the Current Class T Plan specifies that FMR and FDC may engage in
various distribution activities, it does not require them to perform any
specific type of distribution activity or to incur any specific level of
expense for such activities. FDC may retain any amounts received under the
Plan in excess of its expenditures.
THE AMENDED CLASS T PLAN. The Amended Class T Plan is identical to the
Current Class T Plan, except that shares held more than 144 months would no
longer be excluded when calculating the amount of the distribution fee.
When the Fidelity Advisor funds were first introduced in the mid-1980's,
the National Association of Securities Dealers, Inc. (NASD) Conduct Rules
set a limit on the amount of front-end sales charges which a fund could
impose. However, no similar limit existed for 12b-1 fees. The 144-month
limitation was an effort by FDC and the Board of Trustees to protect
shareholders against payment on a given amount of assets over an indefinite
period of time. The 144-month period was intended to result in a limit on
total distribution charges (front-end sales charges plus 12b-1 fees)
comparable to the front-end sales charge limit then imposed by the NASD.
In July 1993, the NASD amended its Conduct Rules to establish a combined
limit on mutual fund sales charges and 12b-1 fees. Like the 144-month
limitation, the NASD Rule restricts a mutual fund's total payment of 12b-1
fees. Under the NASD Rule, a mutual fund is subject to a limit on aggregate
payments of 7.25% of total new gross sales (6.25% if a service fee is also
imposed), plus interest. When the limit is reached, no further sales
charges may be paid by the mutual fund to the distributor, and no further
payments under the 12b-1 plan can be made, until the mutual fund has
further gross sales that result in an increased limit.
The NASD Rule has become the industry standard for restricting
distribution charges. Regardless of whether the proposal is approved, each
class is, and will continue to be, subject to the NASD Rule. The NASD Rule
addresses concerns similar to those that the 144-month limitation was
intended to address. However, the NASD Rule and the 144-month limitation
address these concerns in different ways. For example, using reasonable
sales, redemption and performance assumptions, there is a considerable
likelihood that many mutual funds may never reach the limit imposed by the
NASD Rule, because the limit is constantly increased by additional gross
sales. To the extent that this is true, if Class T of Overseas Fund
contains assets older than 144 months, it will pay more in 12b-1 fees if
the proposal is approved than it would pay under the Current Class T Plan.
If approved by shareholders, the Amended Class T Plan will continue in
effect as long as its continuance is specifically approved at least
annually by a majority of the Board of Trustees, including a majority of
the Trustees who are not "interested persons" of the trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreement related to the Plan (the non-interested Trustees), cast in person
at a meeting called for the purpose of voting on the Plan.
TRUSTEE CONSIDERATION. In determining to recommend the adoption of the
Amended Class T Plan, the Trustees considered a variety of factors and were
advised by counsel who are not counsel to FMR or FDC. Implementation of the
Amended Class T Plan should assist in attracting investment professionals
for the sale of shares and thus increase the fund's asset base, which in
turn may prove beneficial to the fund and its shareholders by spreading
fixed costs over a larger asset base and making additional monies available
for investing. Positive cash flow affords portfolio management greater
ability to diversify investments and minimizes the need to sell securities
to meet redemptions. In addition, since each class is dependent primarily
on investment professionals for sales of its shares, the ongoing payment to
investment professionals who have sold shares (by reallowance of the
distribution fee) should provide incentives to offer better and continuous
services to current shareholders. Investment professionals also allow
investors access to investment alternatives to which they might otherwise
not have been exposed.
The Board recognizes that a higher level of fund assets benefits FMR by
increasing its management fee revenues. The Board believes that revenues
received by FMR contribute to its continuing ability to attract and retain
a high caliber of investment and other personnel and to develop and
implement new systems for providing services and information to
shareholders. The Board considers this to be an important benefit to the
fund.
CONCLUSION. The Board of Trustees recommends that Class T shareholders of
Overseas Fund vote FOR approval of the amendment to the Class T
Distribution and Service Plan. If Class T shareholders approve the Amended
Class T Plan, it will be effective the first day of the month following
shareholder approval. If the Amended Class T Plan is not approved by Class
T shareholders, the Current Class T Plan will remain in effect unchanged
for shares purchased into Class T.
10. TO APPROVE AN AGREEMENT AND PLAN PROVIDING FOR THE REORGANIZATION OF
OVERSEAS FUND FROM A SEPARATE SERIES OF ONE MASSACHUSETTS BUSINESS TRUST TO
ANOTHER.
The Board of Trustees has approved an Agreement and Plan of Reorganization
(the Plan of Reorganization) in the form attached to this Proxy Statement
as Exhibit 4. The Plan of Reorganization provides for a reorganization of
Overseas Fund (the Fund) from a separate series of Fidelity Advisor Series
VII (Advisor VII), a Massachusetts business trust, to a newly-established,
separate series of Fidelity Advisor Series VIII (the Trust), also a
Massachusetts business trust (the Reorganization). THE PROPOSED CHANGE WILL
HAVE NO MATERIAL EFFECT ON SHAREHOLDERS OR THE MANAGEMENT OF THE FUND.
The investment objective, policies, and limitations of the Fund will not
change except as approved by shareholders and as described in this proxy
statement. A separate series of the Trust will carry on the business of the
Fund following the Reorganization (the Series). The Series, which has not
yet commenced business operations, will have an investment objective,
policies, and limitations identical to those of the Fund (except as they
may be modified pursuant to a vote of the shareholders as proposed in this
proxy statement). Since both Advisor VII and the Trust are Massachusetts
business trusts, organized under substantially similar Declarations of
Trust, the rights of the security holders of the Fund under state law and
the governing documents are expected to remain unchanged after the
Reorganization (except for a possible change with regard to shareholder
voting rights as described below), nor will the Reorganization affect the
operation of the Fund in a material manner. The same individuals serve as
Trustees of both trusts except that Robert M. Gates and William O. McCoy
are not Trustees of Advisor VII. Both trusts are authorized to issue an
unlimited number of shares of beneficial interest, and each Declaration of
Trust permits the Trustees to create one or more additional series or
funds. Shareholder voting rights for the Fund are currently based on the
number of shares owned (share-based voting), while shareholder voting
rights for the Series will be based on total dollar interest in the Series
(dollar-based voting). If proposal 3 (see page ) is approved by the
shareholders, however, shareholder voting rights in the Fund would also be
dollar-based. While the differences between the shareholder voting rights
would have no bearing on matters affecting only one fund in a trust (unless
the fund had several classes of shares), on matters requiring trust-wide
votes where all funds in a trust are required to vote (or where more than
one class of a fund vote together), dollar-based voting provides
shareholders voting power that is proportionate to their economic interest
whereas share-based voting may provide shareholders who own shares with a
lower net asset value than other funds in the trust with a disproportionate
ability to affect the vote relative to shareholders of the other funds in
the trust. Similarly, on matters affecting a fund as a whole, where each
class of the fund is required to vote separately on an issue, shareholders
who own shares of a class with a lower NAV than other classes in the fund
would be giving the shareholders of the other classes more voting "power"
than they currently have. On matters affecting only one class, only
shareholders of that class vote on the issue. In this instance, all
shareholders of the class would have the same voting rights, since the NAV
is the same for all shares in a single class. After the Reorganization, the
voting rights of Fund shareholders will change to reflect those of the
Series. For more information regarding voting rights of shareholders of the
Fund, refer to the section of the Fund's Statement of Additional
Information called "Description of the Trust." The Trust's fiscal year end
is December 31, which is different than that of Advisor VII. The Trustees
may change the fiscal year end of the Trust at their discretion in the
future.
FMR, the Fund's investment adviser, will be responsible for the investment
management of the Series, subject to the supervision of the Board of
Trustees, under a management contract identical to the contract in effect
between FMR and the Fund immediately prior to the Closing Date, defined
below, (including as it may be modified pursuant to a vote of shareholders
of the Fund as proposed in this proxy statement) (the Present Management
Contract) . Similarly, FMR U.K., FMR Far East, FIIA, and FIIAL U.K.,
the Fund's sub-advisers, will have primary responsibility for providing
investment advice and research services outside the United States or
investment management authority under Sub-Advisory Agreements substantially
identical to the agreements in effect between FMR U.K., FMR Far East, FIIA,
and FIIAL U.K., and FMR immediately prior to the Closing Date (including as
they may be modified pursuant to a vote of shareholders of the Fund as
proposed in this Proxy Statement) (the Present Sub-Advisory Agreements).
The Fund's distribution agent, FDC, will distribute shares of the Series
under a General Distribution Agreement identical to the contract currently
in effect between FDC and the Fund.
REASON FOR THE PROPOSED REORGANIZATION. The Fund is presently organized as
a series of Advisor VII, which has seven series of shares or funds. The
Board of Trustees unanimously recommend conversion of the Fund to a
separate series of the Trust (i.e., into the Series) which will succeed to
the business of the Fund. Moving the Fund from Advisor VII to the Trust
will consolidate and streamline the production and mailing of certain
financial reports and legal documents. THE PROPOSED CHANGE WILL HAVE NO
MATERIAL EFFECT ON SHAREHOLDERS OR THE MANAGEMENT OF THE FUND.
The proposed reorganization will facilitate combining all Advisor
international funds into one Prospectus, and permit mailing of the Annual
Reports for these funds at the same time the Prospectus is mailed. This
should result in cost savings to the funds. In addition, a combined
prospectus will enhance the discussion of the Fund by presenting it in the
context of a full spectrum of international equity funds.
The proposal to present the Plan of Reorganization to shareholders was
approved by the Board of Trustees of Advisor VII, including all of the
Trustees who are not interested persons of FMR, on December 19, 1996. The
Board of Trustees recommends that Fund shareholders vote FOR the approval
of the Plan of Reorganization described below. Such a vote encompasses
approval of the conversion of the Fund to a separate series of the Trust;
temporary waiver of certain investment limitations of the Fund to permit
the Reorganization (see "Temporary Waiver of Investment Restrictions" on
page ); and authorization of Advisor VII, as sole shareholder of the
Series, to approve (i) a Management Contract for the Series between the
Trust and FMR, (ii) the Sub-Advisory Agreements between FMR and FMR U.K.,
FMR Far East, FIJ, FIIA, and FIIAL U.K., with respect to the Series and
(iii) the Distribution and Service Plans for Class A, Class T, Class B, and
Institutional Class shares under Rule 12b-1, substantially identical to the
contracts or Plans, as the case may be, in effect with the Fund or class
immediately prior to the closing date (including as the Management
Contract, Sub-Advisory Agreements or the Distribution and Service Plans may
be modified pursuant to a vote of shareholders of the fund or class, as the
case may be, as proposed in this Proxy Statement). If shareholders of the
Fund do not approve the Plan of Reorganization, the Fund will continue to
operate as a series of Advisor VII.
SUMMARY OF THE PLAN OF REORGANIZATION. The following discussion summarizes
the important terms of the Plan of Reorganization. This summary is
qualified in its entirety by reference to the Plan of Reorganization
itself, which is attached as Exhibit 4 to this Proxy Statement.
On the Closing Date of the Reorganization, the Fund will transfer all of
its assets to the Series, a series of shares of the Trust established for
the purpose of effecting the Reorganization, in exchange for the assumption
by the Series of all of the liabilities of the Fund and the issuance of
shares of beneficial interest in the Series (Trust Series Shares) equal to
the number of Fund shares outstanding on the Closing Date. Immediately
thereafter, the Fund will distribute one Trust Series Share for each Fund
share (the Fund Shares) held by the shareholder on the Closing Date to each
Fund shareholder, in liquidation of such Fund Shares. Immediately after
this distribution of the Trust Series Shares, the Fund will be terminated
and, as soon as practicable thereafter, will be wound up and liquidated.
UPON COMPLETION OF THE REORGANIZATION, EACH FUND SHAREHOLDER WILL BE THE
OWNER OF FULL AND FRACTIONAL TRUST SERIES SHARES EQUAL IN NUMBER,
DENOMINATION, AND AGGREGATE NET ASSET VALUE TO HIS OR HER FUND SHARES.
The Plan of Reorganization authorizes Advisor VII as the then sole initial
shareholder of the Series to approve (i) a Management Contract with FMR for
the Series (the New Management Contract), (ii) the Sub-Advisory Agreements
between FMR and FMR U.K., FMR Far East, FIJ, FIIA, and FIIAL U.K. with
respect to the Series (the New Sub-Advisory Agreements), and (iii) the
Distribution and Service Plans for Class A, Class T, Class B, and
Institutional Class shares (the New Plans) under Rule 12b-1 with respect to
the Series, identical to the contracts or plans, as the case may be, in
effect with the Fund or class immediately prior to the Closing Date
(including as the Management Contract, Sub-Advisory Agreements, and the
Distribution and Service Plans may be modified pursuant to a vote of
shareholders of the Fund or class, as the case may be, as proposed in this
Proxy Statement). If shareholders of the Fund do not approve the Plan of
Reorganization, the Fund will continue to operate as a series of Advisor
VII.
The Trust's Board of Trustees will hold office without limit in time
except that (a) any Trustee may resign; (b) any Trustee may be removed by
written instrument signed by at least two-thirds of the number of Trustees
prior to removal; (c) any Trustee who requests to be retired by written
instrument signed by a majority of the other Trustees or who is unable to
serve due to physical or mental incapacity by reason of disease or
otherwise, death, or for any other reason, may be retired; and (d) a
Trustee may be removed at any Special Meeting of the shareholders by a vote
of two-thirds of the outstanding shares of the Trust. In case a vacancy
shall for any reason exist, the remaining Trustees will fill such vacancy
by appointing another Trustee, so long as, immediately after such
appointment, at least two-thirds of the Trustees have been elected by
shareholders. If, at any time, less than a majority of the Trustees holding
office has been elected by shareholders, the Trustees then in office will
promptly call a shareholders' meeting for the purpose of electing a Board
of Trustees. Otherwise, there will normally be no meeting of shareholders
for the purpose of electing Trustees.
The New Management Contract, the New Sub-Advisory Agreements, and the New
Plans will take effect on the Closing Date. The New Management Contract,
the New Sub-Advisory Agreements, and the New Plans will continue in force
until July 31, 1998. Each agreement will continue in force thereafter from
year to year so long as its continuance is approved at least annually (i)
by the vote of a majority of the Trustees who are not "interested persons"
of the Trust, FMR, FMR U.K., FMR Far East, FIJ, FIIA, and FIIAL U.K. cast
in person at a meeting called for the purpose of voting on such approval,
and (ii) by vote of a majority of the Trustees or by the vote of a majority
of the outstanding shares of the Series. The New Plan will continue in
effect only if approved annually by a vote of the Trustees and of those
Trustees who are not interested persons, cast in person at a meeting called
for that purpose. The New Management Contract and New Sub-Advisory
Agreements will be terminable without penalty on sixty days' written notice
either by the Trust, FMR, FMR U.K., FMR Far East, FIIA, FIIAL U.K. as the
case may be, and will terminate automatically in the event of its
assignment. The New Plans will be terminable at any time without penalty by
a vote of a majority of the Independent Trustees or by a majority of the
outstanding voting shares of the applicable class.
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Reorganization will become effective at the close of
business on October 31, 1997 (the Closing Date). However, the
Reorganization may become effective at such other date as the parties may
agree in writing.
The obligations of Advisor Series VII and the Trust under the Plan of
Reorganization are subject to various conditions as stated therein.
Notwithstanding the approval of the Plan of Reorganization by Fund
shareholders, the Plan of Reorganization may be terminated or amended at
any time prior to the Reorganization by action of the Trustees to provide
against unforeseen events, if (1) there is a material breach by the other
party of any representation, warranty, or agreement contained in the Plan
of Reorganization to be performed at or prior to the Closing Date or (2) it
reasonably appears that a party will not or cannot meet a condition of the
Plan of Reorganization. Either trust may at any time waive compliance with
any of the covenants and conditions contained in, or may amend, the Plan of
Reorganization, provided that such waiver or amendment does not materially
adversely affect the interests of Fund shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS AND PLANS. The Trust's transfer
agent will establish an account for the Series' shareholders containing the
appropriate number and denominations of Trust Series Shares to be received
by each holder of Fund Shares under the Plan of Reorganization. Such
accounts will be identical in all material respects to the accounts
currently maintained by the Fund's transfer agent for the Fund's
shareholders. Fund shareholders who are receiving payment under a
withdrawal plan with respect to Fund Shares will retain the same rights and
privileges as to Trust Series Shares under the Plan of Reorganization.
Similarly, no further action will be necessary in order to continue any
automatic investment plan or retirement plan currently maintained by a Fund
shareholder with respect to Fund Shares.
EXPENSES. The Fund and the Series shall each be responsible for all of
their respective expenses of the Reorganization, estimated at $ 8,000
in the aggregate.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS. Certain fundamental
investment restrictions of the Fund, which prohibit the Fund from acquiring
more than a stated percentage of ownership of another company, might be
construed as restricting the Fund's ability to carry out the
Reorganization. By approving the Plan of Reorganization, Fund shareholders
will be agreeing to waive, only for the purpose of the Reorganization,
those fundamental investment restrictions that could prohibit or otherwise
impede the transaction.
TAX CONSEQUENCES OF THE REORGANIZATION. Each trust has received an opinion
from their counsel, Kirkpatrick & Lockhart LLP, that the Reorganization
will constitute a tax-free reorganization within the meaning of Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended. Accordingly,
no gain or loss will be recognized for federal income tax purposes by the
Fund, the Series, or the Fund's shareholders upon (1) the transfer of the
Fund's assets in exchange solely for the Trust Series Shares and the
assumption by the Trust on behalf of the Series of the Fund's liabilities
or (2) the distribution of Trust Series Shares to the Fund's shareholders
in liquidation of their Fund Shares. The opinion further provides, among
other things, that (a) the basis for federal income tax purposes of the
Trust Series Shares to be received by each Fund shareholder will be the
same as that of his or her Fund Shares immediately prior to the
Reorganization; and (b) each Fund shareholder's holding period for his or
her Trust Series Shares will include the Fund shareholder's holding period
for his or her Fund Shares, provided that said Fund Shares were held as
capital assets on the date of the exchange.
CONCLUSION. The Board of Trustees has concluded that the proposed Plan of
Reorganization to convert the Fund into a separate series of a
Massachusetts business trust is in the best interest of the Fund's
shareholders. The Trustees recommend that the Fund's shareholders vote FOR
the approval of the Plan of Reorganization as described above. Such a vote
encompasses approval of the reorganization of the Fund to a separate series
of a Massachusetts business trust; temporary waiver of certain investment
limitations of the Fund to permit the Reorganization (see "Temporary Waiver
of Investment Restrictions" on page ); authorization of Advisor Series VII,
as sole shareholder of the Series, to approve (i) a Management Contract for
the Series between the Trust and FMR, (ii) Sub-Advisory Agreements for the
Series between FMR and FMR U.K., FMR Far East, FIJ, FIIA, and FIIAL U.K.,
and (iii) Distribution and Service Plans for Class A, Class B, Class T, and
Institutional Class shares, under Rule 12b-1, substantially identical to
the contracts or plans, as the case may be, in effect with the Fund or
class immediately prior to the Closing Date (including as the Management
Contract, Sub-Advisory Agreements or Distribution and Service Plans may be
modified pursuant to a vote of shareholders of the Fund as proposed in this
Proxy Statement). If approved, the Plan of Reorganization will take effect
on the Closing Date. If the Plan of Reorganization is not approved, the
Fund will continue to operate as a fund of Advisor VII.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 1 1 through 1 4 is to revise
several of Overseas Fund's investment limitations to conform to limitations
which are standard for similar types of funds managed by FMR. The Board of
Trustees asked FMR to analyze the various fundamental and non-fundamental
investment limitations of the Fidelity funds, and, where practical and
appropriate to a fund's investment objective and policies, propose to
shareholders adoption of standard fundamental limitations and elimination
of certain other fundamental limitations. Generally, when fundamental
limitations are eliminated, Fidelity's standard non-fundamental limitations
replace them. By making these limitations non-fundamental, the Board of
Trustees may amend a limitation as they deem appropriate, without seeking
shareholder approval. The Board of Trustees would amend the limitations to
respond, for instance, to developments in the marketplace, or changes in
federal or state law. The costs of shareholder meetings called for these
purposes are generally borne by a fund and its shareholders.
It is not anticipated that these proposals will substantially affect the
way the fund is currently managed. However, FMR is presenting them to you
for your approval because FMR believes that increased standardization will
help to promote operational efficiencies and facilitate monitoring of
compliance with fundamental and non-fundamental investment limitations.
Although adoption of a new or revised limitation is not likely to have any
impact on the current investment techniques employed by the fund, it will
contribute to the overall objectives of standardization.
11. TO AMEND OVERSEAS FUND'S FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING DIVERSIFICATION TO EXCLUDE SECURITIES OF OTHER INVESTMENT
COMPANIES FROM THE LIMITATION.
Overseas Fund's current fundamental investment limitation concerning
diversification is as follows:
"The fund may not, with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States, 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."
The Trustees recommend that shareholders of Overseas Fund vote to replace
the fund's current fundamental investment limitation with the following
amended fundamental investment limitation governing diversification:
"The fund may not with respect to 75% of the fund's total assets, purchase
the securities of any issuer (other than securities issued or guaranteed by
the U.S. Government or any of its agencies or instrumentalities,(( or
securities of other investment companies))) if, as a result, (a) more than
5% of the fund's total assets would be invested in the securities of that
issuer, or (b) the fund would hold more than 10% of the outstanding voting
securities of that issuer."
The text recommended would make one substantive change to the fund's
diversification limitation. Addition of the text would permit the fund to
invest without limitation in the securities of other investment companies.
Pursuant to an exemptive order granted by the SEC, the fund may invest up
to 25% of total assets in non-publicly offered money market or short-term
bond funds (the Central Funds) managed by FMR or an affiliate of FMR. The
Central Funds do not currently pay investment advisory, management, or
transfer agent fees, but do pay minimal fees for services, such as
custodian, auditor, and Independent Trustees fees. FMR anticipates that the
Central Funds will benefit the fund by enhancing the efficiency of cash
management for the Fidelity funds and by providing increased short-term
investment opportunities. If the proposal is approved, the Central Funds
are expected to serve as a principal option for cash investment for the
fund.
If this proposal is approved, the amended fundamental diversification
limitation cannot be further amended without the approval of the
shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund and its shareholders. The Trustees
recommend voting FOR the proposal. Upon shareholder approval, the changes
will become effective when the disclosure is revised to reflect the
changes. If the proposal is not approved by the shareholders of the fund,
the fund's current fundamental diversification limitation will remain
unchanged.
12. TO AMEND OVERSEAS FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
BORROWING.
The fund's current fundamental investment limitation concerning borrowing
states:
"The fund may not borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of the value of its total assets (including
the amount borrowed), less liabilities (other than borrowings). Any
borrowings that come to exceed 33 1/3% of the fund's total assets by reason
of a decline in net assets will be reduced within three days (exclusive of
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation."
The Trustees recommend that shareholders of Overseas Fund vote to replace
the fund's current fundamental investment limitation with the following
amended fundamental investment limitation governing borrowing:
"The fund may not borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation."
The primary purpose of the proposal is to revise the fund's fundamental
borrowing limitation to conform to a limitation that is expected to become
standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page .) If the proposal is approved, the amended
fundamental borrowing limitation cannot be changed without the approval of
shareholders.
Adoption of the proposed fundamental limitation concerning borrowing is
not expected to affect the way in which the fund is managed, the investment
performance of the fund, or the securities or instruments in which the the
fund invests. However, the proposed fundamental limitation would clarify
one point. Under the proposed limitation, the fund must reduce borrowings
that come to exceed 33 1/3% of its total assets for any reason, while under
the current limitation, the fund must reduce borrowings that come to exceed
33 1/3% of total assets only when there is a decline in net assets.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the fund and its shareholders. The Trustees recommend voting FOR
the proposal. Upon shareholder approval, the changes will become
effective when the disclosure is revised to reflect the
change s . If the proposal is not approved by the shareholders of the
fund, the fund's current limitation will remain unchanged.
13. TO AMEND OVERSEAS FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
THE UNDERWRITING OF SECURITIES .
The fund's current fundamental investment limitation concerning
underwriting states:
"The fund may not 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."
The trustees recommend that shareholders of the fund vote to replace this
limitation with the following fundamental limitation governing
underwriting:
"The fund may not underwrite securities issued by others, except to the
extent that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted securities."
The primary purpose of the proposed amendment is to clarify the fund's
fundamental policy with respect to underwriting. The proposal also serves
to conform the fund's fundamental investment limitation concerning
underwriting to a limitation which is expected to become standard for all
funds managed by FMR. (See "Adoption of Standardized Investment
Limitations" on page .) If the proposal is approved, the new limitation may
not be changed without the approval of shareholders.
Adoption of the proposed limitation concerning underwriting is not
expected to affect the way in which the fund is managed, the investment
performance of the fund, or the securities or instruments in which the fund
invests.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the fund and its shareholders. The Trustees recommend voting FOR
the proposal. Upon shareholder approval, the changes will become
effective when the disclosure is revised to reflect the
change s . If the proposal is not approved by the shareholders of the
fund, the fund's current limitation will remain unchanged.
14. TO AMEND OVERSEAS FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
THE CONCENTRATION OF ITS INVESTMENTS IN A SINGLE INDUSTRY.
The fund's current fundamental investment limitation concerning the
concentration of its investments within a single industry states:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United States,
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."
The Trustees recommend that shareholders of the fund vote to replace this
fundamental investment limitation with the following amended fundamental
investment limitation governing concentration:
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities) if, as a result, more than 25% of the fund's
total assets would be invested in the securities of companies whose
principal business activities are in the same industry."
The primary purpose of the proposal is to revise the fund's fundamental
concentration limitation to conform to a limitation which is expected to
become standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) If the proposal is
approved, the new fundamental concentration limitation could not be changed
without the approval of shareholders.
Adoption of the proposed amended limitation on concentration is not
expected to affect the way the fund is managed, the investment performance
of the fund, or the securities or instruments in which the fund invests.
The proposed amended limitation is not substantially different from the
current policy and is not likely to have any impact on the investment
techniques employed by the fund.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the fund and its shareholders. The Trustees recommend voting FOR
the proposal. Upon shareholder approval, the changes will become effective
when the disclosure is revised to reflect the change s . If the
proposal is not approved by the shareholders of the fund, the fund's
current limitation will remain unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the
contrary will be voted on such matters in accordance with the judgment of
the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to a
number of investment companies. Information concerning the advisory fees,
net assets, and total expenses of funds with investment objectives similar
to Overseas Fund and advised by FMR is contained in the Table of Average
Net Assets and Expense Ratios in Exhibit 5 beginning on page .
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks, including
the custodian banks for certain of the funds advised by FMR. Those
transactions that have occurred to date have included mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board;
Robert C. Pozen, President; and Peter S. Lynch, Vice Chairman. With
the exception of Robert C. Pozen , who is proposed for election as a
Trustee, each of the Directors is also a Trustee of the trust.
Edward C. Johnson 3d, J. Gary Burkhead, John H. Costello,
Arthur S. Loring, Robert H. Morrison, Richard A. Silver, Robert
C. Pozen (effective August 1, 1997) , Leonard M. Rush, William J. Hayes,
and Richard Mace, Jr. are currently officers of the trust and officers or
employees of FMR or FMR Corp. With the exception of Mr. Costello and Mr.
Silver, all of these persons hold or have options to acquire stock of
FMR Corp. The principal business address of each of the Directors of FMR is
82 Devonshire Street, Boston, Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore, under
the 1940 Act may be deemed to form a controlling group with respect to FMR
Corp.
During the period November 1, 199 5 through May 3 1 , 1997, no
transactions were entered into by the Trustees and nominees as Trustee of
the trust involving more than 1% of the voting common, non-voting common
and equivalent stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed in
1986 to provide research and investment advice with respect to companies
based outside the United States for certain funds for which FMR acts as
investment adviser. FMR may also grant the sub-advisers investment
management authority as well as authority to buy and sell securities for
certain of the funds for which it acts as investment adviser, if FMR
believes it would be beneficial to a fund.
Funds with investment objectives similar to Overseas Fund managed by FMR
with respect to which FMR currently has sub-advisory agreements with either
FMR U.K. or FMR Far East, and the net assets of each of these funds, are
indicated in the Table of Average Net Assets and Expense Ratios in Exhibit
5 beginning on page .
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen , President. Mr. Johnson 3d also is
President and a Trustee of the trust and other funds advised by FMR;
Chairman and a Director of FMR Texas Inc. (FMR Texas); Chairman, Chief
Executive Officer, President, and a Director of FMR Corp., Chairman of the
Board and of the Executive Committee of FMR, and a Director of FMR. In
addition, Mr. Pozen is Senior Vice President (effective August 1,
1997) and is proposed for election as a Trustee of the trust ;
Director of FMR; and President and Director of FMR Texas. Mr. Pozen
has been appointed as a Trustee of certain other funds advised by FMR,
effective August 1, 1997. Each of the Directors is a stockholder of FMR
Corp. The principal business address of the Directors is 82 Devonshire
Street, Boston, Massachusetts 02109.
ACTIVITIES AND MANAGEMENT OF FIIA, FIIAL U.K., AND FIJ
FMR, on behalf of Overseas Fund, has entered into a sub-advisory agreement
with FIIA, a wholly owned subsidiaries of Fidelity International Limited
(FIL). FIIA in turn has entered into a sub-advisory agreement with its U.K.
subsidiary, FIIAL U.K.
The sub-advisers provide research and investment recommendations with
respect to companies based outside of the United States. FIJ focuses on
companies primarily based in Japan and other parts of Asia. FIIA focuses
primarily on companies based in Hong Kong, Australia, New Zealand, and
Southeast Asia (other than Japan). FIIAL U.K. focuses primarily on
companies based in the U.K. and Europe. Open-end funds with investment
objectives similar to Overseas Fund managed by FMR with respect to which
FMR currently has sub-advisory agreements, and the net assets of each of
these funds, are indicated in the Table of Average Net Assets and Expense
Ratios in Exhibit 5 beginning on page .
The Directors of FIJ are Billy Wilder, President, Simon Fraser,
Simon Haslam, Edward C. Johnson 3d, Nobuhide Kamiyama, Noboru Kawai,
Yasuo Kuramoto, Lawrence Repeta, and Hiroshi Yamashita. With the
exception of Mr. Edward C. Johnson 3d, the principal business address of
each of the Directors is Shiroyama JT Mori Bldg. , 4-3-1 Toranomon,
Minato-ku, Tokyo 105, Japan. The principal business address of Mr. Edward
C. Johnson 3d is 82 Devonshire Street, Boston, Massachusetts 02109.
The Directors of FIIA are David J. Saul, President, Anthony J.
Bolton, Charles T. Collis, William R. Ebsworth, Brett P.
Goodin, Simon Haslam , K.C. Lee, and Peter Phillips . The
principal business address of each of the Directors is Pembroke Hall, 42
Crow Lane, Pembroke HM19, Bermuda.
The Directors of FIIAL U.K. are Anthony Bolton, Pamela Edwards, Simon
Haslam, and Sally Walden. The principal business address of each of the
Directors is 26 Lovat Lane, London, England EC3R 8LL.
FIIA also is the investment adviser of Fidelity Advisor Emerging Asia
Fund, Inc. and Fidelity Advisor Korea Fund, Inc., closed-end investment
companies with net assets of approximately $ 128,181,000 and
$ 53,808,000 , respectively, as of May 31 , 1997. As
compensation for its services to each closed-end fund, FIIA receives 60% of
the management fee paid by that fund to FMR. The Emerging Asia Fund
management fee has two components, a basic fee and a performance
adjustment. The basic fee is payable monthly at an annual rate equal to
1.00% of the Emerging Asia Fund's average daily net assets. The performance
adjustment may increase or decrease the basic fee by up to 0.25% annually,
based on the Emerging Asia Fund's performance (over a rolling performance
period of up to 36 months) as compared to the Morgan Stanley Capital
International All Country Asia ex-Japan Free Index. The Korea Fund
management fee is payable monthly at an annual rate equal to 1.00% of Korea
Fund's average daily net assets. At FIIA's request, FIJ may provide
sub-advisory services with respect to either fund's investments. As
compensation for these services, FIJ would receive 50% of the fee paid to
FIIA by that fund in respect of the assets of the fund managed by FIJ on a
discretionary basis and 30% of the fee paid to FIIA in respect of the
assets of that fund managed by FIJ on a non-discretionary basis.
PRESENT MANAGEMENT CONTRACT FOR OVERSEAS FUND
Overseas 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 each
fund with all necessary office facilities and personnel for servicing each
fund's investments, compensates all officers of each fund and all Trustees
who are "interested persons" of the trust or of FMR, and all personnel of
each fund or FMR performing services relating to research, statistical, and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of 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
laws; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Trustees. Services provided by affiliates of FMR will continue under
the proposed management contract described in proposal 7 .
In addition to the management fee payable to FMR, the fund pays transfer
agent fees to Fidelity Investments Institutional Operations Company, Inc.
(FIIOC) for Class A, Class B, Class T, and Institutional Class, and pricing
and bookkeeping fees to Fidelity Service Company, Inc. (FSC), affiliates of
FMR. Until January 1, 1997, such fees were paid to State Street Bank and
Trust Company ("State Street") for Class T shares. Although the fund's
current management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices and reports to shareholders, the trust, on behalf of
the fund has entered into a revised transfer agent agreement with FIIOC,
pursuant to which FIIOC bears the costs of providing these services to
existing shareholders of the applicable classes. Other expenses paid by the
fund include interest, taxes, brokerage commissions, and the fund's
proportionate share of insurance premiums and Investment Company Institute
dues. The fund is also liable for such non-recurring expenses as may arise,
including costs of any litigation to which each fund may be a party, and
any obligation it may have to indemnify its officers and Trustees with
respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including
reimbursement for out-of-pocket expenses, paid to FIIOC , State
Street, and FSC by the fund for fiscal 1996 amounted to $ 53,000 ,
$ 2,253,000 , and $524,000, respectively.
The fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the NASD. The
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of the
fund, which are continuously offered. Promotional and administrative
expenses in connection with the offer and sale of shares are paid by FMR.
Sales charge revenue paid to, and retained by, FDC for fiscal 1996 amounted
to $12,000 and $1,000 for Class A, and $2,313,00 and $375,000, for Class
T, respectively.
FDC collected deferred sales charge revenue on Class B shares during
fiscal 1996 of $24,000 for Overseas Fund. When shares subject to a deferred
sales charge are sold, FDC pays commissions from its own resources to
dealers through which the sales are made. In addition, FDC received
$4,869,000 from the fund and retained $287,000 pursuant to Distribution and
Service Plans under Rule 12b-1 in fiscal 1996.
FMR is the fund's manager pursuant to a management contract dated January
1, 1993, which was approved by shareholders on December 1, 1992, at which
time a proposed reduction in the Group Fee rate was approved.
COMPUTING THE BASIC FEE. The fund's basic fee rate is composed of two
elements: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of
the registered investment companies with which FMR has management
contracts.
OVERSEAS FUND. The following group fee rate schedule is contained
in the current management contract for Overseas Fund:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE
RATES
Average Group Annualized Group Net Effective
Assets Rate Assets Annual
Fee Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3227
42 - 48 .3350 275 .3207
48 - 66 .3250 300 .3190
66 - 84 .3200 325 .3175
84 - 102 .3150 350 .3162
102 - 138 .3100 375 .3152
138 - 174 .3050 400 .3142
Over 174 .3000 425 .3134
450 .3126
475 .3120
500 .3114
525 .3108
550 .3103
The additional breakpoints shown below for average group assets in excess
of $228 billion were voluntarily adopted by FMR on November 1, 1993.
GROUP FEE RATE SCHEDULE
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group assets
in excess of $210 billion and under $390 billion as shown in the schedule
below, pending shareholder approval of a new management contract reflecting
the revised schedule. The revised group fee rate schedule provides for
lower management fee rates as FMR's assets under management increase. The
revised group fee rate schedule was identical to the above schedule for
average group assets under $210 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the revised
schedule for average group assets in excess of $390 billion, pending
shareholder approval of a new management contract reflecting the revised
schedule and additional breakpoints. The revised group fee rate schedule
and its extensions provide for lower management fee rates as FMR's assets
under management increase. For average group assets in excess of $210
billion, the revised group fee rate schedule with additional breakpoints
voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE
RATES
Average Group Annualized Group Net Effective
Assets Rate Assets Annual
Fee Rate
174 - $210 .3000% $ 150 billion .3371%
billion
210 - 246 .2950 175 .3325
246 - 282 .2900 200 .3284
282 - 318 .2850 225 .3249
318 - 354 .2800 250 .3219
354 - 390 .2750 275 .3190
390 - 426 .2700 300 .3163
426 - 462 .2650 325 .3137
462 - 498 .2600 350 .3113
498 - 534 .2550 375 .3090
Over 534 .2500 400 .3067
425 .3046
450 .3024
475 .3003
500 .2982
525 .2962
550 .2942
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedules shown above on the left for each fund. The
schedules above on the right for each fund show the effective annual group
fee rate at various asset levels, which is the result of cumulatively
applying the annualized rates on the left. For example, the effective
annual fee rate at $435 billion of group net assets - the
approximate level for October 1996 - was 0.3037%, which is the
weighted average of the respective fee rates for each level of group net
assets up to $435 billion.
Based on the average group net assets of the funds advised by FMR for
October 1996, the annual basic fee rate would be calculated as follows:
Group Fee Individual Fund Basic
Rate Fee Rate Fee Rate
Overseas Fund 0.3037% + 0.45% = 0.7537%
One-twelfth of this annual basic fee or management fee rate is applied to
each fund's net assets averaged for the month, giving a dollar amount which
is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Overseas Fund is
subject to upward or downward adjustment, depending upon whether, and to
what extent, the fund's investment performance for the performance period
exceeds, or is exceeded by, the record of the Morgan Stanley Capital
International Europe, Australasia, Far East Index (the Index) over the same
period. Starting with the twelfth month, the performance adjustment takes
effect. Each month subsequent to the twelfth month, a new month is added to
the performance period until the performance period equals 36 months.
Thereafter, the performance period consists of the current month plus the
previous 35 months. Each percentage point of difference, calculated to the
nearest 1.0% (up to a maximum difference of +/-10.00 ) is multiplied by a
performance adjustment rate of 0.02%. Thus, the maximum annualized
adjustment rate is +/-0.20%. The fund is comprised of four classes of
shares: Class A shares, Class B shares, Class T shares, and Institutional
shares. Investment performance is measured separately for each class, and
the least of the four results obtained is currently used in calculating the
performance adjustment to the management fee paid by the fund. This
performance comparison is made at the end of each month. One twelfth (1/12)
of this rate is then applied to the fund's average net assets for the
entire performance period, giving a dollar amount which will be added to
(or subtracted from) the basic fee.
The fund's performance is calculated based on change in net asset value.
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 net asset value as of the record date for payment. The
record of the Index is based on change in value and is adjusted for any
cash distributions from the companies whose securities compose the Index.
Because the adjustment to the basic fee is based on the fund's performance
compared to the investment record of the 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 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 fiscal 1996, for its services as investment adviser to the fund,
FMR received fees (including the amount of any performance adjustment and
including the group fee breakpoints voluntarily adopted by FMR) of
$ 6,353,206 . This fee, which included both the basic fee and the
performance adjustment, was equivalent to 0.68% of the average net assets
of the fund. For the fiscal year ended October 31, 1996, the downward
performance adjustments amounted to $687,829 for the fund.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase the fund's total returns and repayment of the
reimbursement by each fund will lower its total returns.
During the period ended October 31, 1996, FMR voluntarily agreed, subject
to revision or termination, to reimburse certain transfer agent,
distribution and registration expenses for Class A shares of the fund. This
reimbursement amounted to $4,000, which was equivalent to 0.0004 % of
average net assets of the fund.
SUB-ADVISORY AGREEMENTS
On behalf of Overseas Fund, FMR has 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 FIIAL U.K. Pursuant to the sub-advisory
agreements, FMR may receive investment advice and research services outside
the United States from the sub-advisers. On behalf of the fund, FMR may
also grant the sub-advisers investment management authority as well as the
authority to buy and sell securities if FMR believes it would be beneficial
to the funds. Overseas Fund's sub-advisory agreements, dated January 1,
1993, were approved by shareholders on December 1, 1992.
Currently, FMR U.K., FMR Far East, FIIA, and FIIAL U.K. each focus on
issuers in countries other than the United States such as those in Europe,
Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly owned
subsidiaries of FMR. 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 throughout
the world. Edward C. 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. FIIA was organized in Bermuda
in 1983. FIIAL U.K. was organized in the United Kingdom in 1984, and is a
wholly owned subsidiary of Fidelity International Management Holdings
Limited, an indirect wholly owned subsidiary of FIL.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR Far
East, and FIIA. FIIA, in turn, pays the fees of FIIAL U.K. For providing
non-discretionary investment advice and research services the sub-advisers
are compensated as follows:
(medium solid 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.
(medium solid bullet) FMR pays FIIA fees equal to 30% of FMR's monthly
management fee with respect to the average net assets held by the fund for
which the sub-adviser has provided FMR with investment advice and research
services.
(medium solid 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.
On behalf of the fund for providing discretionary investment management
and executing portfolio transactions, the sub-advisers are compensated as
follows:
(medium solid bullet) FMR pays FMR U.K., FMR Far East, and FIIA a fee
equal to 50% of its monthly management fee (including any performance
adjustment) with respect to the fund's average net assets managed by the
sub-adviser on a discretionary basis.
(medium solid bullet) FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL
U.K.'s costs incurred in connection with providing discretionary investment
management services.
For providing investment advice and research services, on behalf of the
fund, the fees paid to the sub-advisers for the fiscal year ended 1996 were
as follows:
FMR U.K. FMR FIIA FIIAL U.K.
Far East
Overseas Fund $ 541,988 $ 550,513 $ 0 $ 0
For providing discretionary investment management and executing portfolio
transactions on behalf of Overseas Fund , there were no fees
paid to the sub-advisors for fiscal 1996 .
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of Overseas F und by FMR pursuant to authority contained in
the fund's management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (FBS), indirect
subsidiaries of FMR Corp., if the commissions are fair, reasonable, and
comparable to commissions charged by non-affiliated, qualified brokerage
firms for similar services.
The brokerage commissions incurred by the fund for fiscal 1996 are
listed in the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fund Total To NFSC % of
To FBS % of
Amount Commissio Commissio
Paid ns
ns
Paid to Paid to
NFSC FBS
Overse $ 2,828,41 $ 15,499 0.55% $ 169,534 5.99%
as Fund 6
</TABLE>
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of
the Trust, 82 Devonshire Street, Boston, Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Investments Institutional
Operations Company, Inc., 82 Devonshire Street, Boston, Massachusetts
02109 , whether other persons are beneficial owners of shares for which
proxies are being solicited and, if so, the number of copies of the Proxy
Statement and Annual Reports you wish to receive in order to supply copies
to the beneficial owners of the respective shares.
EXHIBIT 1
(( UNDERLINED )) DISCLOSURE WILL BE ADDED;
[BRACKETED] DISCLOSURE WILL BE DELETED.
FORM OF
MANAGEMENT CONTRACT
BETWEEN
[FIDELITY SECURITIES TRUST:]
(( FIDELITY ADVISOR SERIES VII :))
FIDELITY ADVISOR OVERSEAS [PORTFOLIO] (( FUND ))
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[ MODIFICATION ] (( AMENDMENT )) made this [1st day of
January, 1993] (( day of , 1997 )) , by and between [Fidelity
Securities Trust] (( Fidelity Advisor Series VII )) , a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Fund"), on behalf of
Fidelity Advisor Overseas [Portfolio] (( Fund )) (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser"), (( as
set forth in its entirety below )).
Required authorization and approval by shareholders and Trustees having
been obtained, [Fidelity Securities Trust] (( the Fund )) , on
behalf of the Portfolio, and [Fidelity Management & Research Company]
(( the Adviser )) hereby consent, pursuant to Paragraph 6 of
the existing Management Contract dated April 20, 1990, (( as amended
on January 1, 1993, )) to a modification of said Contract in
the manner set [ forth ] below. The [modifications]
(( Management Contract , as amended,)) shall, [take effect upon
the execution of this modification of the Management Contract]
(( when executed )) by duly authorized officers of the Fund and
[the] Adviser, (( take effect on _____________ or the first day of
the month following approval. ))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund (( 's )) Board of Trustees, direct the investments
of the Portfolio in accordance with the investment objective, policies and
limitations as provided in the Portfolio's Prospectus or other governing
instruments, as amended from time to time, the Investment Company Act of
1940 and rules thereunder, as amended from time to time (the "1940 Act"),
and such other limitations as the Portfolio may impose by notice in writing
to the Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the [Portfolio's]
(( Fund's )) existence and its records; (vi) during such times
as shares are publicly offered, maintaining the registration and
qualification of the Portfolio's shares under federal and state law; and
(vii) investigating the development of and developing and implementing, if
appropriate, management and shareholder services designed to enhance the
value or convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser[, at its own expense,] shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a [basic fee] (( Basic
Fee )) and a [performance adjustment] (( Performance
Adjustment. )) [to the basic fee based upon the investment
performance of the Portfolio in relation to the Morgan Stanley Capital
International Europe, Australia, Far East Index.] (( The Performance
Adjustment is added to or subtracted from the Basic Fee depending on
whether the Portfolio experienced better or worse performance than the
Morgan Stanley Capital International Europe, Australasia, Far East Index
(the "Index"). The Performance Adjustment is not cumulative. An increased
fee will result even though the performance of the Portfolio over some
period of time shorter than the performance period has been behind that of
the Index, and, conversely, a reduction in the fee will be ma d e for
a month even though the performance of the Portfolio over some period of
time shorter than the performance period has been ahead of that of the
Index. The Basic Fee and the Performance Adjustment will be computed
as follows: ))
(a) Basic Fee Rate: (( The annual Basic Fee Rate shall be the sum
of the Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows: ))
[The basic fee rate shall be composed of two elements.]
(i) Group Fee Rate. The Group [fee rate] (( Fee Rate ))
shall be based upon the monthly average of the net assets of the registered
investment companies having (( Advisory and Service or ))
Management Contracts with the Adviser (computed in the manner set forth in
the [charter of each investment company] (( fund's Declaration of
Trust or other organizational document )) d etermined as of the close
of business on each business day throughout the month. The Group [fee rate]
(( Fee Rate )) shall be determined on a cumulative basis
pursuant to the following schedule:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(Average Net Assets) (Annualized Fee Rate (for each level)
$ 0 - 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
[over 174] [.3000]
(( 174 )) - (( 210 )) (( .3000 ))
(( 210 )) - (( 246 )) (( .2950 ))
(( 246 )) - (( 282 )) (( .2900 ))
(( 282 )) - (( 318 )) (( .2850 ))
(( 318 )) - (( 354 )) (( .2800 ))
(( 354 )) - (( 390 )) (( .2750 ))
(( 390 )) - (( 426 )) (( .2700 ))
(( 426 )) - (( 462 )) (( .2650 ))
(( 462 )) - (( 498 )) (( .2600 ))
(( 498 )) - (( 534 )) (( .2550 ))
(( Over )) (( 534 )) (( .2500 ))
</TABLE>
(ii) Individual Fund Fee Rate. The individual fund fee rate shall be
.45%.
[The sum of the Group fee rate, calculated as described above to the
nearest millionth, and the Individual Fund fee rate shall constitute the
annual basic fee rate.]
(b) Basic Fee. One-twelfth of the [annual fee rate] ((Basic Fee
Rate)) shall be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration of
Trust or other organizational document) determined as of the close of
business on each business day throughout the month. (( The resulting
dollar amount comprises the Basic Fee. ))
[The basic fee will be subject to upward or downward adjustments on the
basis of the Portfolio's investment performance as follows:]
(c) Performance Adjustment Rate: The Performance Adjustment [rate] Rate
is 0.02% for each percentage point (( (the performance of the
Portfolio and the Index each being calculated to the nearest
0.01 % ) )) [rounded to the nearer point (the higher point if
exactly one-half point)] that the Portfolio's investment performance for
the performance period was better or worse than the record of the Index as
then constituted. The maximum Performance Adjustment rate is 0.20%.
[An adjustment to the monthly basic fee will be made by applying a
performance adjustment rate to the average net assets of the Portfolio over
the performance period. The resulting dollar figure will be added or
subtracted from the basic fee depending on whether the Portfolio
experienced better or worse performance than the performance Index.]
The performance period will commence with the first day of the first full
month [of operations] following (( the Portfolio's commencement of
operations )) [the effective date of the Portfolio's registration
statement]. During the first eleven months of the [operation of the
contract] (( performance period for the Portfolio, )) there
will be no performance adjustment. Starting with the twelfth month [of
operation the performance adjustment will take effect] (( of the
performance period, the performance adjustment will take effect. Following
the twelfth month a new month will be added to the performance period until
the performance period equals 36 months. Thereafter the performance period
will consist of the current month plus the previous 35 months. ))
[Following the twelfth month a new month will be added to the performance
period until the performance period equals 36 months. Thereafter the
performance period will consist of the current month plus the previous 35
months.]
(( The Portfolio's investment performance for the period shall be
the cumulative monthly asset-weighted investment performance of all classes
of shares of the Portfolio over the performance period. The asset-weighted
investment performance for the Portfolio for a given month will be
calculated by multiplying the investment performance of each class for
th e month by its average net assets (determined as of the close of
business on each business day of the month), adding the results together
and dividing the sum by the aggregate net assets of all classes of the
Portfolio for that month. Any class that does not complete a full month of
operations in a given month will be excluded from the calculation of the
Portfolio's investment performance for that month, and its assets will be
excluded from the aggregate net assets of the Portfolio in determining the
Portfolio's investment performance for that month. ))
The [Portfolio's] investment performance (( of each class ))
will be measured by comparing (i) the opening net asset value of one share
of the [Portfolio] (( class )) on the first business day of the
[performance period] (( month )) with (ii) the closing net
asset value of one share of the [Portfolio] (( class )) as of
the last business day of such [period ] (( month )) . In
computing the investment performance [of the Portfolio] (( of each
class )) and the investment record of the Index, distributions of
realized capital gains, the value of capital gains taxes per share paid or
[taxable on undistributed realized long-term capital gains, the value of
capital gains taxes per share paid or ] payable on
undistributed realized long-term capital gains accumulated to the end of
such period and dividends paid out of investment income on the part of the
Portfolio, and all cash distributions of the [companies whose stocks
comprise] (( securities included in the [index]
(( Index )) , will be treated as reinvested in accordance with
Rule 205-1 or any other applicable rules under the Investment Advisers Act
of 1940, as the same from time to time may be amended. (( Although
the investment performance of the Portfolio for the performance period
shall be rounded to the nearest 0.01%, this shall not prevent the monthly
investment performance of the classes or of the Portfolio from being
rounded to a greater number of decimal places. ))
[The adjustment to the basic fee will not be cumulative. A increased fee
will result even though the performance of the Portfolio over some period
of time shorter than the performance period has been behind that of the
Index, and, conversely, a negative fee rate will apply for a month even
though the performance of the Portfolio over some period of time shorter
than the performance period has been ahead of that of the Index.]
(( (d) Performance Adjustment. One-twelfth of the annual
Performance Adjustment Rate will be applied to the average of the net
assets of the Portfolio (computed in the manner set forth in the
Fund's Declaration of Trust or other organizational document) determined as
of the the close of business on each business day throughout the month and
the performance period. ))
(( (e) )) In [the] case of termination of this Contract
during any month, the fee for that month shall be reduced proportionately
on the basis of the number of business days during which it is in effect
for that month. The [basic fee rate] (( Basic Fee Rate )) will
be computed on the basis of and applied to net assets averaged over that
month ending on the last business day on which this Contract is in effect.
The amount of [the performance adjustment] (( this Performance
Adjustment )) to the [basic fee] (( Basic Fee )) will be
computed on the basis of and applied to net assets averaged over the
36-month period ending on the last business day on which this Contract is
in effect[. Provided] (( provided )) that if this Contract has
been in effect less than 36 months, the computation will be made on the
basis of the period of time during which it has been in effect.
4. It is understood that the Portfolio will pay all its expenses [other
than those expressly stated to be payable by the Adviser hereunder,] which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the [Fund] (( Fund's ))
Trustees other than those who are "interested persons" of the Fund or the
Adviser; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Fund and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefor;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security (( or
other investment instrument ))
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31,
[1993] ((1 998 )) and indefinitely thereafter, but only so long
as the continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority of
the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
(( or other organizational document )) and agrees that the
obligations assumed by the Fund pursuant to this Contract shall be limited
in all cases to the Portfolio and its assets, and the Adviser shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such obligations
from the Trustees or any individual Trustee. The Adviser understands that
the rights and obligations of any Portfolio under the Declaration of Trust
(( or other organizational document )) are separate and
distinct from those of any and all other Portfolios.
(( 8 . This agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof. ))
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[FIDELITY SECURITIES TRUST]
(( FIDELITY ADVISOR SERIES VII ))
On Behalf Of Fidelity Advisor Overseas [Portfolio] (( FUND ))
[signature lines omitted]
FIDELITY MANAGEMENT & RESEARCH COMPANY
[signature lines omitted]
EXHIBIT 2
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INVESTMENTS JAPAN LIMITED
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY ADVISOR SERIES VII ON BEHALF OF
FIDELITY ADVISOR OVERSEAS FUND
AGREEMENT made this ___ day of ____, 199_, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Investments Japan Limited, a Japanese company with
principal offices at Shiroyama JT Mori Bldg . , 4- 3-1
Toranomon , Minato-ku, Tokyo 105, Japan (hereinafter called the
"Sub-Advisor"); and Fidelity Advisor Series VII, a Massachusetts business
trust which may issue one or more series of shares of beneficial interest
(hereinafter called the "Trust") on behalf of Fidelity Advisor Overseas
Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect to
the economies of various countries, and securities of issuers located in
such countries, and providing investment advisory services in connection
therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. (( Duties: )) The Advisor may, in its discretion, appoint
the Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be advised
or managed by the Sub-Advisor shall be as agreed upon from time to time by
the Advisor and the Sub-Advisor. The Sub-Advisor shall pay the salaries and
fees of all personnel of the Sub-Advisor performing services for the
Portfolio relating to research, statistical and investment activities.
(a) (( INVESTMENT ADVICE: )) If and to the extent requested
by the Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information, research
reports and investment recommendations as the Advisor may reasonably
require. Such information may include written and oral reports and
analyses.
(b) (( INVESTMENT MANAGEMENT: )) If and to the extent
requested by the Advisor, the Sub-Advisor shall, subject to the supervision
of the Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 (the"1940
Act") and rules thereunder, as amended from time to time, and such other
limitations as the Trust or Advisor may impose with respect to the
Portfolio by notice to the Sub-Advisor. With respect to the portion of the
investments of the Portfolio under its management, the Sub-Advisor is
authorized to make investment decisions on behalf of the Portfolio with
regard to any stock, bond, other security or investment instrument, and to
place orders for the purchase and sale of such securities through such
broker-dealers as the Sub-Advisor may select. The Sub-Advisor may also be
authorized, but only to the extent such duties are delegated in writing by
the Advisor, to provide additional investment management services to the
Portfolio, including but not limited to services such as managing foreign
currency investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) (( SUBSIDIARIES AND AFFILIATES: )) The Sub-Advisor may
perform any or all of the services contemplated by this Agreement directly
or through such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of such
services through such subsidiaries or other affiliated persons shall have
been approved by the Trust to the extent required pursuant to the 1940 Act
and rules thereunder.
2. (( Information to be Provided to the Trust and the
Advisor: )) The Sub-Advisor shall furnish such reports, evaluations,
information or analyses to the Trust and the Advisor as the Trust's Board
of Trustees or the Advisor may reasonably request from time to time, or as
the Sub-Advisor may deem to be desirable.
3. (( Brokerage: )) In connection with the services provided
under subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek
to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of the
Trust shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
4. (( Compensation: )) The Advisor shall compensate the
Sub-Advisor on the following basis for the services to be furnished
hereunder.
(a) (( INVESTMENT ADVISORY FEE: )) For services provided
under subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee
shall be equal to: (i) 30% of the monthly management fee rate (including
performance adjustments, if any) that the Portfolio is obligated to pay the
Advisor under its Management Contract with the Advisor, multiplied by (ii)
the fraction equal to the net assets of the Portfolio as to which the
Sub-Advisor shall have provided investment advice divided by the net assets
of the Portfolio for that month. The Sub-Advisory Fee shall not be reduced
to reflect expense reimbursements or fee waivers by the Advisor, if any, in
effect from time to time.
(b) (( INVESTMENT MANAGEMENT FEE: )) For services provided
under subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The Investment
Management Fee shall be equal to: (i) 50% of the monthly management fee
rate (including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by: (ii) the fraction equal to the net assets of the
Portfolio as to which the Sub-Advisor shall have provided investment
management services divided by the net assets of the Portfolio for that
month. If in any fiscal year the aggregate expenses of the Portfolio exceed
any applicable expense limitation imposed by any state or federal
securities laws or regulations, and the Advisor waives all or a portion of
its management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) (( PROVISION OF MULTIPLE SERVICES: )) If the Sub-Advisor
shall have provided both investment advisory services under subparagraph
(a) and investment management services under subparagraph (b) of paragraph
1 for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such investments
shall be calculated exclusively under subparagraph (b) of this paragraph 4.
5. (( Expenses: )) It is understood that the Portfolio will
pay all of its expenses other than those expressly stated to be payable by
the Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions and
other costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefor;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. (( Interested Persons: )) It is understood that Trustees,
officers, and shareholders of the Trust are or may be or become interested
in the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the Sub-Advisor
are or may be or become similarly interested in the Trust, and that the
Advisor or the Sub-Advisor may be or become interested in the Trust as a
shareholder or otherwise.
7. (( Services to Other Companies or Accounts: )) The services
of the Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. (( Standard of Care: )) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Sub-Advisor, the
Sub-Advisor shall not be subject to liability to the Advisor, the Trust or
to any shareholder of the Portfolio for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. (( Duration and Termination of Agreement; Amendments: ))
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1998 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. (( Limitation of Liability: )) The Sub-Advisor is hereby
expressly put on notice of the limitation of shareholder liability as set
forth in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. (( Governing Law: )) This Agreement shall be governed by,
and construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
[signature lines omitted]
FIDELITY MANAGEMENT & RESEARCH COMPANY
[signature lines omitted]
FIDELITY ADVISOR SERIES VII
on behalf of Fidelity Advisor Overseas Fund
[signature lines omitted]
EXHIBIT 3
(( UNDERLINED )) DISCLOSURE WILL BE ADDED;
[BRACKETED] DISCLOSURE WILL BE DELETED.
FORM OF
DISTRIBUTION AND SERVICE PLAN
(( FIDELITY ADVISOR OVERSEAS FUND
CLASS T SHARES ))
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")] (( Class T shares of Fidelity Advisor Overseas Fund
("Class T") a class of shares of Fidelity Advisor Overseas Fund (the
"Fund" ))) , a portfolio of [Plymouth Securities Trust (the "Fund")]
(( Fidelity Advisor Series VII (the "Trust" )) .
2. The [Fund] (( Trust )) has entered into a General
Distribution Agreement on behalf of the [Portfolio] (( Fund ))
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]
(( Fund'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] (( Fund ))
and reports to recipients other than (( the )) existing
shareholders of the [Portfolio] (( Fund )) ; (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 [provide] (( provided ))
and the expenses incurred by the Distributor pursuant to the General
Distribution Agreement (( and paragraph 2 hereof, all with respect to
Class T shares, Class T )) [the Portfolio] shall pay to the
Distributor a fee at the annual rate of 0.65% ( (( or such lesser
amount as the Trustees may, from time to time, determine) )) of [its]
(( the )) average daily net assets (( of Class T ))
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] (( Fund's )) then current
Prospectus for the determination of the net asset value of the
[Portfolio's] (( Fund's Class T )) 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] (( this )) Plan to compensate securities
dealers or other persons who have engaged in the sale of (( Class
T )) 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] (( Fund )) 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]
(( Fund )) 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]
(( make payment to )) the Distributor (( with respect to
any )) [for] expenses incurred in connection with the distribution of
(( Class T )) Shares, including the activities referred to in
paragraph [ s ] 2 [and 3 hereof]. To the extent that the payment
of management fees by the [Portfolio] (( Fund )) to the Adviser
should be deemed to be indirect financing of any activity primarily
intended to result in the sale of (( Class T )) 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)
(( of Class T )) , this Plan having been approved by a vote of a
majority of the Trustees of the [Fund] (( Trust )) , including a
majority of Trustees who are not "interested persons" of the [Fund]
(( Trust )) (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] April 30, 1998, 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]
(( Trust )) , 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] (( Fund )) thereunder
shall be effective only upon approval by a vote of a majority of the
outstanding voting securities of [the Portfolio] (( Class T, in the
case of this Plan, or upon approval by a vote of a majority of the
outstanding voting securities of the Fund, in the case of the Management
Contract,)) 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]
(( Class T. ))
8. During the existence of this Plan, the [Fund] (( Trust ))
shall require the Adviser and/or the Distributor to provide the [Fund]
(( Trust )) , 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] (( Class T ))
(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] (( Class T Shares. ))
10. Consistent with the limitation of shareholder liability as set forth
in the [Fund's] (( Trust's )) Declaration of Trust, [any]
obligation assumed by [ the Portfolio] (( Class T ))
pursuant to this Plan and any agreement related to this Plan shall be
limited in all cases to [the Portfolio] (( Class T )) and its
assets and shall not constitute an obligation of any shareholder of the
[Fund] (( Trust )) or of any other class [or series of shares]
of the Fund, (( series of the Trust or class of such series. ))
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.
EXHIBIT 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as of
the 19th day of December 1996, by and between Fidelity Advisor Overseas
Fund (the Fund), a separate series of Fidelity Advisor Series VII (Advisor
Series VII) and Fidelity Advisor Series VIII (the Trust), each a business
trust duly formed under the laws of the Commonwealth of Massachusetts.
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended (the Code). The reorganization will
comprise: (a) the transfer of all of the assets of the Fund to a series of
the Trust (the Series) solely in exchange for shares of beneficial interest
in the Series (the Trust Series Shares) and the assumption by the Series of
the Fund's liabilities; and (b) the constructive distribution of such Trust
Series Shares by the Fund to its shareholders (Fund Shareholder) in
complete liquidation and termination of the Fund in exchange for all of the
Fund's outstanding shares (Fund Shares). The Fund shall receive shares of
the Series equal to the number of Fund Shares on the Closing Date (as
defined below). Immediately thereafter, the Fund shall then distribute to
each Fund Shareholder one Trust Series Share for each Fund Share held by
the shareholder on the Closing Date. The foregoing transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Advisor Series VII on behalf of the Fund represents and warrants as
follows:
(a) The Fund is a series of Advisor Series VII, a business trust duly
formed, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry out its business as now being conducted and to carry out this
Agreement;
(b) The Fund is duly registered as an open-end management investment
company under the Investment Company Act of 1940 (the 1940 Act), as
amended, or is a series of a registrant and such registration is in full
force and effect;
(c) The Fund is not in, and the execution, delivery and performance of
this Agreement will not result in, violation of any provision of the
Amended and Restated Declaration of Trust or the Fund's Bylaws, or, to the
Fund's knowledge, of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Fund is a party or by which the Fund is
bound or result in the acceleration of any obligation or the imposition of
any penalty under any agreement, judgment or decree to which the Fund is a
party or is bound;
(d) The Fund has no material contracts or other commitments (other than
this Agreement) that will not be terminated without liability to the Fund
on or prior to the Closing Date;
(e) To the Fund's knowledge, no material legal, administrative, or other
proceeding or investigation of, or before, any court or governmental body
presently is pending or threatened against the Fund or any of its
properties or assets which assert liability on the part of the Fund, except
as previously disclosed in writing to the Trust. The Fund knows of no facts
that might form the basis for the institution of such proceedings;
(f) The Fund has filed or will file all federal and state tax returns
which, to the knowledge of the Fund's officers, are required to be filed by
the Fund and has paid or will pay all federal and state taxes shown to be
due on said returns or provision shall have been made for the payment
thereof, and, to the best of the Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to
such returns;
(g) All of the issued and outstanding shares of the Fund are, and at the
Closing Date will be, duly and validly issued and outstanding and fully
paid and nonassessable as a matter of Massachusetts/Delaware law (except as
disclosed in the Fund's Statement of Additional Information), and have been
offered for sale in conformity with all applicable federal securities laws.
All of the issued and outstanding shares of the Fund will, at the Closing
Date, be held by the persons and in the amounts as certified in accordance
with the provisions of this Agreement;
(h) The information to be furnished by the Fund for use in applications
for orders, registration statements, proxy materials and other documents
which may be necessary in connection with the transactions contemplated
hereby shall be accurate and complete and shall comply in all material
respects with federal securities and other laws and regulations thereunder
applicable thereto;
(i) At both the Valuation Time (as defined in Section 4) and the Closing
Date (as defined in Section 6), the Fund will have the full right, power,
and authority to sell, assign, transfer, and deliver its portfolio
securities and any other assets of the Fund to be transferred to the Series
pursuant to this Agreement. At the Closing Date, subject only to the
delivery of the Fund's portfolio securities and any such other assets as
contemplated by this Agreement, the Series will acquire the Fund's
portfolio securities and any such other assets subject to no encumbrances,
liens, or security interests (except for those that may arise in the
ordinary course and are disclosed to the Series) and without any
restrictions upon the transfer thereof;
(j) The execution, delivery, and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of the Fund, and this Agreement constitutes a valid and
binding obligation of the Fund enforceable in accordance with its terms,
subject to shareholder approval;
(k) To the best of the knowledge of the Fund's management, there is no
plan or intention by the Fund's shareholders to sell, exchange or otherwise
dispose of any of the Trust Series Shares to be received in the
Reorganization;
(l) The Fund shares are widely held and may be purchased and redeemed upon
request;
(m) No consideration other than Trust Series Shares will be issued in
exchange for the Fund Shares in the Reorganization;
(n) Immediately following consummation of the Reorganization, the Fund
Shareholders will own all of the Trust Series Shares and will own such
shares solely by reason of their ownership of the Fund Shares immediately
prior to the Reorganization;
(o) Immediately following the consummation of the Reorganization, the
Trust will hold on behalf of the Series the same assets and be subject to
the same liabilities that the Fund held or was subject to immediately prior
thereto, except for assets used to pay expenses incurred in connection with
the Reorganization. Assets used to pay expenses and all distributions
(except for distributions and redemptions arising in the ordinary course of
the Fund's business as an open-end investment company) made by the Fund
immediately preceding the Reorganization will, in the aggregate, constitute
less than 1% of the net assets of the Fund;
(p) At the time of the Reorganization, the Fund will not have outstanding
any warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in the Fund;
(q) There is no intercompany indebtedness between the Series and the Fund
that was issued, acquired or that will be settled at a discount;
(r) The Fund's liabilities to be assumed by the Series in the
Reorganization were incurred by the Fund in the ordinary course of its
business and are associated with the assets to be transferred;
(s) The Fund's shareholders each will pay their own expenses, if any,
incurred in connection with the Reorganization;
(t) The fair market value of the Fund's assets to be transferred by the
Fund to the Series will equal or exceed the Fund's liabilities to be
assumed by the Series plus the liabilities to which the transferred assets
are subject;
(u) The Fund is a regulated investment company as defined in Section 851
of the Internal Revenue Code of 1986, as amended;
(v) At the time of the Reorganization, the Fund is not under the
jurisdiction of a court in a proceeding under Title 11 of the United States
Code or similar case within the meaning of Section 368(a)(3)(A) of the
Code;
(w) To the Fund's knowledge, no consent, approval, authorization, or order
of any court or governmental authority is required for the consummation by
the Fund of the transactions contemplated by this Agreement, except such as
have been obtained under the Securities Act of 1933 (the 1933 Act), the
Securities Exchange Act of 1934 (the 1934 Act), and the 1940 Act;
( x ) The Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
statement of assets and liabilities as of October 31, 1996 and those
incurred in the ordinary course of the Fund's business as an investment
company since October 31, 1996; and
( y ) The Fund will be liquidated immediately after the
Reorganization.
2. REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants as follows:
(a) The Trust is a business trust duly formed, validly existing, and in
good standing under the laws of the Commonwealth of Massachusetts. It has
all necessary federal, state, and local authorizations to carry out its
business as now being conducted and to carry out this Agreement;
(b) The Trust is duly registered as an open-end management investment
company under the 1940 Act, and the Series is a duly established and
designated series of the Trust;
(c) The Trust is not in, and the execution, delivery and performance of
this Agreement will not result in, violation of any provision of the
Amended and Restated Declaration of Trust or the Trust's Bylaws, or, to the
Trust's knowledge, of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Trust is a party or by which the Trust is
bound or result in the acceleration of any obligation or the imposition of
any penalty under any agreement, judgment or decree to which the Trust is a
party or is bound;
(d) To the Trust's knowledge, no material legal, administrative, or other
proceeding or investigation of, or before, any court or governmental body
presently is pending or threatened against the Trust or any of its
properties or assets which assert liability on the part of the Trust,
except as previously disclosed in writing to the Trust. The Trust knows of
no facts that might form the basis for the institution of such proceedings;
(e) The Trust intends for the Series to be a regulated investment company,
under Section 851 of the Code;
(f) Prior to the Closing Date, there shall be no issued and outstanding
Trust Series Shares or any other securities issued by the Series (except
for the one share that may be issued to FMR); Trust Series Shares issued in
connection with the transactions contemplated herein will be, duly and
validly issued and outstanding, fully paid and non-assessable under
Massachusetts law on the Closing Date;
(g) The execution, delivery, and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of the Trust, and, upon its proper execution, this
Agreement will constitute a valid and binding obligation of the Trust
enforceable against the Series in accordance with its terms;
(h) The Trust Series Shares at the Closing will have been duly authorized
and, when so issued and delivered, will be duly and validly issued shares
of the Series, fully paid and non-assessable under Massachusetts law except
that under Massachusetts law, shareholders of a Massachusetts business
trust, under certain circumstances, may be held personally liable for
obligations of the Trust;
(i) The fair market value of the Trust Series Shares to be received by the
Fund Shareholders will be equal to the fair market value of their Fund
Shares constructively surrendered in exchange therefor;
(j) The Trust has no plan or intention on behalf of the Series to issue
additional Trust Series Shares following the Reorganization except for
issuance of shares arising in the ordinary course of the business of the
Series as the series of an open-end investment company;
(k) The Trust has no plan or intention to reacquire the Trust Series
Shares issued to the Fund Shareholders pursuant to the Reorganization other
than through redemptions arising in the ordinary course of the business of
the Series as a series of an open-end investment company;
(l) Following the Reorganization, the Trust, on behalf of the Series, will
continue the Fund's historic business;
(m) The Trust has no plan or intention to sell or otherwise dispose of any
of the Fund's assets to be acquired by the Series in the Reorganization,
except for dispositions made in the ordinary course of its business and
dispositions necessary to maintain the status of the Series as a regulated
investment company under Section 851 of the Code;
(n) The information to be furnished by the Trust with respect to the
Series for use in applications for orders, registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and shall
comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(o) The Trust, on behalf of the Series, shall use all reasonable efforts
to obtain the approvals and authorizations required by the 1933 Act and the
1940 Act as it may deem appropriate in order to operate after the Closing
Date; and
(p) To the Trust's knowledge, no consent, approval, authorization, or
order of any court or governmental authority is required for the
consummation by the Series of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933 Act, the 1934
Act, and the 1940 Act.
3. REORGANIZATION
(a) Subject to the requisite approval of the shareholders of the Fund and
to the other terms and conditions contained herein, the Fund agrees to
assign, convey, transfer, and deliver to the Series established by the
Trust solely for the purpose of acquiring all of the assets of the Fund,
which Series has not issued any Trust Series Shares (except for one share
that may be issued to FMR) or commenced operations, on the Closing Date all
of the assets of the Fund of any kind and nature existing on the Closing
Date. The Series agrees in exchange therefor (1) to assume all of the
Fund's liabilities existing on or after the Closing Date, whether or not
determinable on the Closing Date, and (2) to issue and deliver to the Fund
the number of full and fractional Trust Series Shares equal to the value
and number of full and fractional shares of the Fund outstanding at the
time of the closing, as described in paragraph 6, on the Closing Date
provided for in Section 6(a).
(b) The assets of the Fund to be acquired by the Series and allocated
thereto shall include, without limitation, all cash, cash equivalents,
securities, receivables (including interest or dividends receivables),
claims, choses in action, and other property owned by the Fund, and any
deferred or prepaid expenses shown as an asset on the books of the Fund on
the Closing Date. The Fund will pay or cause to be paid to the Series any
dividend or interest payments received by it on or after the Closing Date
with respect to the assets transferred to the Series hereunder, and the
Series will retain any dividend or interest payments received by it after
the Valuation Time (as defined in Section 4) with respect to the assets
transferred hereunder without regard to the payment date thereof.
(c) Immediately upon delivery to the Fund of the Trust Series Shares, the
individual Trustees of Advisor Series VII or any officer duly authorized by
them, on the Advisor Series VII's behalf as the then sole shareholder of
the Series or class, as appropriate, shall (1) approve (i) a Management
Contract between the Trust on behalf of the Series and FMR, (ii)
Sub-Advisory Agreements between FMR and Fidelity Management & Research
(U.K.) Inc., Fidelity Management & Research (Far East) Inc., Fidelity
International Investment Advisors, Fidelity International Investment
Advisors (U.K.) Limited, and Fidelity Investments Japan L imite d,
(iii) a Distribution and Service Plan on behalf of each class of the Series
under Rule 12b-1 under the 1940 Act between the Trust on behalf of the
Series and Fidelity Distributors Corporation (FDC) substantively identical
to the plan and contracts currently in effect with respect to each such
class of the Fund, except as to the parties to such plan or contract, (iv)
the independent accountants who currently serve in that capacity for the
Fund, and (v) the adoption of revised fundamental policies described in
Proposals 1 1 through 14 of the Proxy Statement.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), the Fund will
constructively distribute the Trust Series Shares pro rata in proportion to
their respective shares of beneficial interest in the Fund to Fund
Shareholders of record determined as of the Valuation Time on the Closing
Date in accordance with the Fund's Amended and Restated Declaration of
Trust, in liquidation of such Fund. Such distribution will be accomplished
by the Fund's transfer agent opening accounts on the share records of the
Series in the names of such Fund Shareholders and transferring the Trust
Series Shares thereto. Each Fund Shareholder's account shall be credited
with the respective pro rata number of full and fractional (rounded to the
third decimal place) Trust Series Shares due that shareholder. All
outstanding Fund Shares, including any represented by certificates, shall
simultaneously be canceled on the Fund's share transfer records. The Series
shall not issue certificates representing Trust Series Shares in connection
with such distribution.
(e) Immediately after the distribution of the Trust Series Shares as set
forth in Section 3(d), the Fund shall be liquidated and terminated and any
such further actions shall be taken in connection therewith as required by
applicable law.
(f) Any transfer taxes payable upon issuance of Trust Series Shares in a
name other than that of the registered holder on the Fund's books of the
Fund Shares constructively exchanged for the Trust Series Shares shall be
paid by the person to whom such Trust Series Shares are to be issued, as a
condition of such transfer.
(g) Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the date on which it is
liquidated.
4. VALUATION
(a) The valuation time shall be 4:00 p.m. Eastern time on the Closing Date
(the Valuation Time).
(b) The value of the Fund's net assets to be acquired by the Series
hereunder shall be the net asset value computed as of the Valuation Time,
using the valuation procedures set forth in the Fund's then current
Prospectus and Statement of Additional Information.
(c) The number, value, and denomination of full and fractional Trust
Series Shares to be issued in exchange for the Fund's net assets shall be
equal to the number, value, and denomination of full and fractional Fund
Shares outstanding on the Closing Date.
(d) All computations pursuant to this Section shall be made by FIIOC, a
division of FMR Corp., in accordance with its regular practice as pricing
agent for the Fund.
5. FEES; EXPENSES
(a) The Trust and the Fund each represent that there is no person who
dealt with it who by reason of such dealings is entitled to any broker's or
finder's fees or commissions arising out of the transactions contemplated
hereby.
(b) The Fund shall be responsible for all expenses, fees and other
charges, subject to FMR's voluntary expense limitation (2.5% of average net
assets), if applicable, whether or not the transactions contemplated hereby
are consummated. Such expenses shall include, without limitation: (i)
expenses incurred in connection with the entering into and the carrying out
of the provisions of this Agreement; (ii) expenses associated with the
preparation and filing of the Registration Statement under the 1933 Act
covering the Trust Series Shares to be issued pursuant to the provisions of
this Agreement; (iii) registration or qualification fees and expenses of
preparing and filing such forms as are necessary under applicable state
securities laws to qualify the Trust Series Shares to be issued in
connection herewith in each state in which the Fund shareholders are
resident as of the date of the mailing of the Proxy Statement to such
shareholders; (iv) postage; (v) printing; (vi) accounting fees; (vii) legal
fees; and (viii) solicitation costs of the transactions.
6. CLOSING DATE
(a) The transfer of the Fund's assets in exchange for the assumption by
the Series of the Fund's liabilities and the issuance of Trust Series
Shares, as described above, together with related acts necessary to
consummate the same, (the Closing), unless otherwise provided herein, shall
occur at the principal office of the Advisor Series VII and the Trust, 82
Devonshire Street, Boston, Massachusetts, on October 31, 1997 , or at
such other place or date as the parties may agree in writing (the Closing
Date). All acts taking place at the Closing shall be deemed to take place
simultaneously as of the Valuation Time or at such other time and/or place
as the parties may agree.
(b) In the event that, on the Closing Date: (i) any of the markets for
securities held by the Fund are closed to trading, or (ii) trading thereon
is restricted, or (iii) trading or reporting of trading on said markets or
elsewhere is disrupted, all so that accurate appraisal of the total net
asset value of the Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when such trading
shall have been fully resumed and reporting shall have been restored, or
such other date as the parties may agree.
(c) The Fund shall deliver at the Closing a certificate of an authorized
officer stating that it has notified The Chase Manhattan Bank, as custodian
for the Fund, of the Fund's reorganization to a series of the Trust.
(d) Fidelity Investments Institutional Operations Company, as transfer
agent for the Fund, shall deliver at the Closing a certificate as to the
conversion on its books and records of each Fund Shareholder account to an
account as a holder of Trust Series Shares. The Trust shall issue and
deliver a confirmation to the Fund evidencing the Trust Series Shares to be
credited on the Closing Date or provide evidence satisfactory to the Fund
that such Trust Series Shares have been credited to the Fund's account on
the books of the Trust. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, stock certificates, receipts
or other documents as such other party or its counsel may reasonably
request.
7. SHAREHOLDER MEETING AND TERMINATION OF THE FUND
(a) The Fund agrees to call a meeting of its shareholders (the
Shareholder's Meeting) to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions
contemplated hereby.
(b) The Fund agrees that as soon as reasonably practicable after
distribution of the Trust Series Shares, the Fund shall be liquidated and
terminated as a series of Advisor Series VII pursuant to its Amended and
Restated Declaration of Trust, any further actions shall be taken in
connection therewith as required by applicable law, and on and after the
Closing Date the Fund shall not conduct any business except in connection
with its liquidation and termination.
8. CONDITIONS TO OBLIGATIONS OF THE TRUST
The obligations of the Trust hereunder shall be subject to the following
conditions:
(a) That the Fund furnishes to the Trust a statement, dated as of the
Closing Date, signed by an officer of Advisor Series VII, certifying that
as of the Valuation Time and the Closing Date all representations and
warranties of the Fund made in this Agreement are true and correct in all
material respects and that the Fund has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied
at or prior to such dates;
(b) That the Fund furnishes the Trust with copies of the resolutions,
certified by an officer of Advisor Series VII, evidencing the adoption of
this Agreement and the approval of the transactions contemplated herein by
the requisite vote of the holders of the outstanding shares of beneficial
interest of the Fund;
(c) That the Fund shall deliver to the Trust at the Closing a statement of
its assets and liabilities, together with a certificate as to the aggregate
asset value of the Fund's portfolio securities, all as of the Valuation
Time, certified on the Fund's behalf by its Treasurer or Assistant
Treasurer;
(d) That the Fund's custodian shall deliver to the Trust a certificate
identifying the assets of the Fund held by such custodian as of the
Valuation Time on the Closing Date and stating that at the Valuation Time:
(i) the assets held by the custodian will be transferred to the Series;
(ii) the Fund's assets have been duly endorsed in proper form for transfer
in such condition as to constitute good delivery thereof; and (iii) to the
best of the custodian's knowledge, all necessary taxes in conjunction with
the delivery of the assets, including all applicable federal and state
stock transfer stamps, if any, have been paid or provision for payment has
been made;
(e) That the Fund's transfer agent shall deliver to the Trust at the
Closing a certificate setting forth the number of shares of the Fund
outstanding as of the Valuation Time and the name and address of each
holder of record of any such shares and the number of shares held of record
by each such shareholder;
(f) That the Fund calls a Shareholder's Meeting to consider and act upon
this Agreement and to take all other action necessary to obtain approval of
the transactions contemplated hereby;
(g) That the Fund delivers to the Trust a certificate of an officer of
Advisor Series VII, dated the Closing Date, that there has been no material
adverse change in the Fund's financial position since October 31, 1996,
other than changes in the market value of its portfolio securities, or
changes due to net redemptions of its shares, dividends paid, or losses
from operations; and
(h) That all of the issued and outstanding shares of beneficial interest
of the Fund shall have been offered for sale and sold in conformity with
all applicable state securities laws and, to the extent that any audit of
the records of the Fund or its transfer agent by the Trust or its agents
shall have revealed otherwise, the Fund shall have taken all actions that
in the opinion of the Trust are necessary to remedy any prior failure on
the part of the Fund to have offered for sale and sold such shares in
conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF THE FUND
The obligations of the Fund hereunder shall be subject to the following
conditions:
(a) That the Trust shall have executed and delivered to the Fund an
Assumption of Liabilities, certified by an officer of the Trust, dated as
of the Closing Date pursuant to which Trust on behalf of the Series will
assume all of the liabilities of the Fund existing at the Valuation Time in
connection with the transactions contemplated by this Agreement;
(b) That the Trust furnishes to the Fund a statement, dated as of the
Closing Date, signed by an officer of Trust, certifying that as of the
Valuation Time and the Closing Date all representations and warranties of
the Series made in this Agreement are true and correct in all material
respects, and the Trust has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
such dates; and
(c) That the Fund shall have received an opinion of Kirkpatrick & Lockhart
LLP, counsel to the Fund and the Trust, to the effect that the Trust Series
Shares are duly authorized and upon delivery to the Fund as provided in
this Agreement will be validly issued and will be fully paid and
nonassessable under Massachusetts law.
10. CONDITIONS TO OBLIGATIONS OF THE FUND AND THE TRUST
The obligations of the Fund and the Trust hereunder shall be subject to
the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of the
holders of the outstanding shares of beneficial interest of the Fund;
(b) That all consents of other parties and all other consents, orders, and
permits of federal, state, and local regulatory authorities (including
those of the Commission and of state blue sky and securities authorities,
including "no action" positions of such federal or state authorities)
deemed necessary by the Trust or the Fund to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order, or permit
would not involve a risk of a material adverse effect on the assets or
properties of the Trust or the Fund, provided that either party hereto may
for itself waive any of such conditions;
(c) That all proceedings taken by either the Fund or the Series in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance to
it and its counsel, Kirkpatrick & Lockhart LLP;
(d) That the Trust shall have taken all necessary action so that the
Series shall be a series of a registered open-end investment company under
the 1940 Act immediately after the closing.
(e) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement;
(f) That the Trust and the Fund shall have received an opinion of
Kirkpatrick & Lockhart LLP satisfactory to the Trust and the Fund that for
federal income tax purposes:
(i) The Reorganization will be a reorganization under Section
368(a)(1)(F) of the Code, and the Fund and the Series will each be parties
to the Reorganization under section 368(b) of the Code;
(ii) No gain or loss will be recognized by the Fund upon the transfer of
all of its assets to the Series in exchange solely for the Trust Series
Shares and the assumption of the Fund's liabilities followed by the
distribution of those the Trust Series Shares to the shareholders of the
Fund in liquidation of the Fund;
(iii) No gain or loss will be recognized by the Series on the receipt of
the Fund's assets in exchange solely for the the Trust Series Shares and
the assumption of the Fund's liabilities;
(iv) The basis of the Fund's assets in the hands of the Series will be
the same as the basis of such assets in the Fund's hands immediately prior
to the Reorganization;
(v) The Series' holding period in the assets to be received from the Fund
will include the Fund's holding period in such assets;
(vi) A Fund Shareholder will recognize no gain or loss on the exchange of
his or her shares of beneficial interest in the Fund for the Trust Series
Shares in the Reorganization;
(vii) A Fund Shareholder's basis in the the Trust Series Shares to be
received by him or her will be the same as his or her basis in the Fund
Shares exchanged therefor;
(viii) A Fund Shareholder's holding period for his or her Trust Series
Shares will include the holding period of the Fund Shares exchanged,
provided that those Fund Shares were held as capital assets on the date of
the Reorganization.
Notwithstanding anything herein to the contrary, neither the Fund nor the
Trust may waive the conditions set forth in this subsection 10(f).
11. COVENANTS OF THE FUND AND THE TRUST
(a) The Fund covenants to operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that such
ordinary course of business will include the payment of customary dividends
and distributions.
(b) The Fund covenants that the Trust Series Shares are not being acquired
for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
(c) The Fund covenants that it will assist the Trust in obtaining such
information as the Trust reasonably requests concerning the beneficial
ownership of Fund Shares.
(d) The Fund covenants that its liquidation and termination will be
effected in the manner provided in its Amended and Restated Declaration of
Trust in accordance with applicable law and, after the Closing Date, the
Fund will not conduct any business except in connection with its
liquidation and termination.
12. TERMINATION; WAIVER
(a) The Trust and the Fund may terminate this Agreement by mutual
agreement. In addition, either the Trust or the Fund may at its option
terminate this Agreement at or prior to the Closing Date because:
(i) Of a material breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to the Closing Date;
or
(ii) A condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears that it
will not or cannot be met.
(b) In the event of any such termination, there shall be no liability for
damages on the part of the Trust or the Fund, or their respective Trustees
or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter, may
not be changed except by a letter of agreement signed by each party hereto
and shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of the Series or the Fund;
provided, however, that following the shareholders' meeting called by the
Fund pursuant to Section 7 of this Agreement, no such amendment may have
the effect of changing the provisions for determining the number of the
Series Shares to be received by the Fund shareholders under this Agreement
to the detriment of such shareholders without their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on the
interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the Agreement,
or in any document delivered pursuant hereto or in connection herewith,
shall survive the consummation of the transactions contemplated hereunder.
14. DECLARATIONS OF TRUST
Copies of the Declaration of Trust of the Trust and Advisor Series VII, as
restated and amended, is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust and Advisor
Series VII as trustees and not individually and that the obligations of the
Fund and the Series under this instrument are not binding upon any of such
Fund's or Trust's Trustees, officers, or shareholders individually but are
binding only upon the assets and property of such Fund or Series. The Fund
and the Trust each agrees that its obligations hereunder apply only to such
Fund and the Series, respectively, and not to its shareholders individually
or to the Trustees of such Fund or Series.
15. ASSIGNMENT
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
of any rights or obligations hereunder shall be made by any party without
the written consent of the other party. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give any person, firm,
or corporation other than the parties hereto and their respective
successors and assigns any rights or remedies under or by reason of this
Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer.
FIDELITY ADVISOR SERIES VII:
FIDELITY ADVISOR OVERSEAS FUND
[signature lines omitted]
FIDELITY ADVISOR SERIES VIII:
FIDELITY ADVISOR OVERSEAS FUND
[signature lines omitted]
EXHIBIT 5
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS (A)
<TABLE>
<CAPTION>
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
<S> <C> <C> <C> <C>
GROWTH
Fidelity Fifty ((pound)) 6/30/96 $ 161.3 0.62%
Blue Chip Growth ((pound)) 7/31/96 7,778.6 0.67
Low-Priced Stock ((pound)) 7/31/96 3,539.3 0.77
OTC Portfolio ((pound)) 7/31/96 2,450.5 0.53
Export and Multinational Fund 8/31/96 345.0 0.61
((pound))
Advisor Korea Fund, Inc. ((oval)) 9/30/96 53.7 1.00
Destiny I ((pound)) 9/30/96 4,319.1 0.62
Destiny II ((pound)) 9/30/96 2,293.1 0.73
Advisor Emerging Asia Fund, 10/31/96 131.8 1.02
Inc. ((oval))
Advisor Natural Resources ((pound))
Class A 10/31/96** 0.9 0.72
Class T 10/31/96 441.6 0.72
Class B 10/31/96 16.6 0.72
Institutional Class 10/31/96 6.2 0.72
Advisor Growth Opportunities:
((pound))
Class A 10/31/96** 4.2 0.61
Class T 10/31/96 12,224.7 0.61
Class B ((hollow diamond)) 10/31/97** 33.0 0.61
Institutional Class 10/31/96 193.0 0.61
Advisor Overseas: ((sigma))
Class A 10/31/96** 0.3 0.68
Class T 10/31/96 913.4 0.68
Class B 10/31/96 12.0 0.68
Institutional Class 10/31/96 6.6 0.68
Canada ((sigma)) 10/31/96 145.6 0.45
Capital Appreciation ((pound)) 10/31/96 1,656.1 0.54
Disciplined Equity ((pound)) 10/31/96 2,168.3 0.54
Diversified International ((sigma)) 10/31/96 478.6 0.85
Emerging Markets ((sigma)) 10/31/96 1,329.4 0.76
Europe ((sigma)) 10/31/96 558.5 0.84
Europe Capital Appreciation ((sigma)) 10/31/96 167.9 0.80
France ((sigma)) 10/31/96** 5.5 0.75(dagger)
Germany ((sigma)) 10/31/96** 5.5 0.75(dagger)
Hong Kong and China ((Rex-all)) 10/31/96** 58.8 0.75(dagger)
International Value ((Rex-all)) 10/31/96 217.4 0.79
Japan ((Rex-all)) 10/31/96 374.5 0.68
Japan Small Companies ((Rex-all)) 10/31/96** $ 105.3 0.75(dagger)%
Latin America ((sigma)) 10/31/96 605.9 0.76
Nordic ((sigma)) 10/31/96** 9.6 0.75(dagger)
Overseas ((sigma)) 10/31/96 2,773.5 0.76
Pacific Basin ((Rex-all)) 10/31/96 605.8 0.75
Southeast Asia ((Rex-all)) 10/31/96 848.8 0.65
Stock Selector ((pound)) 10/31/96 1,447.9 0.58
Technoquant Growth 10/31/97** 51.3 0.61(dagger)
United Kingdom ((sigma)) 10/31/96** 2.1 0.75(dagger)
Value ((pound)) 10/31/96 6,357.2 0.65
Worldwide ((sigma)) 10/31/96 762.4 0.76
Advisor Equity Growth: ((pound))
Class A 11/30/96** 2.0 0.61
Class T 11/30/96 2,784.5 0.61
Class B ((hollow diamond)) 11/30/97** 9.7 0.61
Institutional Class 11/30/96 1,022.8 0.61
Advisor Large Cap: ((pound))
Class A 11/30/96** 0.3 0.60(dagger)
Class T 11/30/96** 12.6 0.60(dagger)
Class B 11/30/96** 3.7 0.60(dagger)
Institutional Class 11/30/96** 4.9 0.60(dagger)
Advisor Mid Cap: ((pound))
Class A 11/30/96** 0.7 0.60(dagger)
Class T 11/30/96** 116.9 0.60(dagger)
Class B 11/30/96** 17.5 0.60(dagger)
Institutional Class 11/30/96** 2.5 0.60(dagger)
Advisor TechnoQuant Growth:
((pound))
Class A 11/30/97** 2.8 0.60(dagger)
Class T 11/30/97** 7.1 0.60(dagger)
Class B 11/30/97** 3.0 0.60(dagger)
Institutional Class 11/30/97** 1.0 0.60(dagger)
Emerging Growth ((pound)) 11/30/96 1,608.1 0.77
Growth Company ((pound)) 11/30/96 7,918.8 0.62
New Millennium ((pound)) 11/30/96 960.0 0.73
Retirement Growth ((pound)) 11/30/96 4,142.2 0.50
Advisor Strategic Opportunities:
((pound))
Class A 12/31/96** $ 0.4 0.48%
Class T 12/31/96 603.6 0.48
Class B 12/31/96 99.5 0.48
Institutional Class 12/31/96 32.0 0.48
Initial Class 12/31/96 21.7 0.48
Congress Street 12/31/96 86.2 0.45
Contrafund ((pound)) 12/31/96 19,417.4 0.57
Exchange 12/31/96 246.2 0.54
Trend ((pound)) 12/31/96 1,293.3 0.42
Variable Insurance Products:
Growth ((pound)) 12/31/96 5,245.2 0.61
Overseas Portfolio ((sigma)) 12/31/96 1,544.2 0.76
Variable Insurance Products II:
Contrafund ((pound)) 12/31/96 1,576.1 0.61
Variable Insurance Products III:
Growth Opportunities ((pound)) 12/31/96 277.4 0.61
Overseas Fund ((sigma)) 12/31/96 33.3 0.70*
Select Portfolios:
Air Transportation ((pound)) 2/28/97 89.4 0.60
American Gold 2/28/97 414.0 0.60
Automotive ((pound)) 2/28/97 120.2 0.60
Biotechnology ((pound)) 2/28/97 715.3 0.60
Brokerage and Investment 2/28/97 72.5 0.62
Management ((pound))
Chemicals ((pound)) 2/28/97 123.5 0.60
Computers ((pound)) 2/28/97 546.6 0.61
Construction and Housing ((pound)) 2/28/97 68.0 0.60
Consumer Industries ((pound)) 2/28/97 25.6 0.60
Cyclical I ndustries ((pound)) 2/28/98** 1.7 0.60(dagger)
Defense and Aerospace ((pound)) 2/28/97 44.1 0.61
Developing Communications 2/28/97 307.6 0.60
((pound))
Electronics ((pound)) 2/28/97 1,297.2 0.61
Energy ((pound)) 2/28/97 176.4 0.60
Energy Service ((pound)) 2/28/97 461.6 0.60
Environmental Services ((pound)) 2/28/97 41.6 0.61
Financial Services ((pound)) 2/28/97 273.8 0.61
Food and Agriculture ((pound)) 2/28/97 278.8 0.60
Health Care ((pound)) 2/28/97 1,266.7 0.60
Home Finance ((pound)) 2/28/97 691.6 0.61
Select Portfolios (continued):
Industrial Equipment ((pound)) 2/28/97 $ 92.5 0.61%
Industrial Materials ((pound)) 2/28/97 97.9 0.60
Insurance ((pound)) 2/28/97 33.8 0.61
Leisure ((pound)) 2/28/97 106.5 0.60
Medical Delivery ((pound)) 2/28/97 216.3 0.60
Multimedia ((pound)) 2/28/97 85.1 0.60
Natural Gas ((pound)) 2/28/97 113.0 0.60
Natural Resources ((pound)) 2/28/98** 2.6 0.60(dagger)
Paper and Forest Products ((pound)) 2/28/97 32.3 0.60
Precious Metals and Minerals 2/28/97 332.0 0.60
((pound))
Regional Banks ((pound)) 2/28/97 416.8 0.61
Retailing ((pound)) 2/28/97 221.9 0.60
Software and Computer 2/28/97 421.4 0.60
Services ((pound))
Technology ((pound)) 2/28/97 463.1 0.60
Telecommunications ((pound)) 2/28/97 476.9 0.60
Transportation ((pound)) 2/28/97 12.6 0.41*
Utilities Growth ((pound)) 2/28/97 238.2 0.60
Magellan ((pound)) 3/31/97 54,132.7 0.45
Large Cap Stock ((pound)) 4/30/97 100.3 0.53
Mid Cap Stock ((pound)) 4/30/97 1,528.2 0.70
Small Cap Stock ((pound)) 4/30/97 548.6 0.55
Advisor Focus Funds:
Consumer: ((pound))
Class A 7/31/97** 0.7 0.61(dagger)
Class T 7/31/97** 3.1 0.61(dagger)
Class B 7/31/97** 0.2 0.61(dagger)
Institutional Class 7/31/97** 1.1 0.61(dagger)
Cyclical: ((pound))
Class A 7/31/97** 0.2 0.61(dagger)
Class T 7/31/97** 0.8 0.61(dagger)
Class B 7/31/97** 0.1 0.61(dagger)
Institutional Class 7/31/97** 5.1 0.61(dagger)
Financial Services: ((pound))
Class A 7/31/97** 2.1 0.61(dagger)
Class T 7/31/97** 15.1 0.61(dagger)
Class B 7/31/97** 1.6 0.61(dagger)
Institutional Class 7/31/97** 1.7 0.61(dagger)
Advisor Focus Funds
(continued):
Health Care: ((pound))
Class A 7/31/97** $ 2.2 0.61(dagger)%
Class T 7/31/97** 15.7 0.61(dagger)
Class B 7/31/97** 1.1 0.61(dagger)
Institutional Class 7/31/97** 1.7 0.61(dagger)
Technology: ((pound))
Class A 7/31/97** 2.7 0.61(dagger)
Class T 7/31/97** 17.7 0.61(dagger)
Class B 7/31/97** 0.7 0.61(dagger)
Institutional Class 7/31/97** 1.2 0.61(dagger)
Utilities Growth: ((pound))
Class A 7/31/97** 0.3 0.61(dagger)
Class T 7/31/97** 2.8 0.61(dagger)
Class B 7/31/97** 0.3 0.61(dagger)
Institutional Class 7/31/97** 1.6 0.61(dagger)
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or as of
April 30, 1997, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets of
each fund at the close of business on each business day throughout its
fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due from
FMR pursuant to voluntary or state expense limitations. Funds so affected
are indicated by an (*).
(dagger) Annualized
** Less than a complete fiscal year
((Rex-all)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity Management
& Research (U.K.) Inc. (FMR U.K.), Fidelity Management & Research (Far
East) Inc. (FMR Far East), Fidelity Investments Japan Ltd. (FIJ), Fidelity
International Investment Advisors (FIIA), and Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.), with respect to the fund.
((sigma)) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: FMR U.K., FMR Far
East, FIIA, and FIIAL U.K., with respect to the fund.
((pound)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FMR U.K. and FMR Far East, with respect to the
fund.
((oval)) Fidelity Management & Research Company has entered into
sub-advisory agreements with FIIA and FIJ, with respect to the fund.
((hollow diamond)) The ratio of net advisory fees to average net assets
paid to FMR represents the amount as of the prior fiscal year end. Updated
ratios will be presented for each class of shares of the fund when the next
fiscal year end figures are available.
AFO-pxs-0797 CUSIP #315918706 / FUND #185
CUSIP #315918656 / FUND #190
CUSIP #315918805 / FUND #195
CUSIP #315918888 / FUND #205
CUSIP #315918870 / FUND #184
CUSIP #315918714 / FUND #234
CUSIP #315918862 / FUND #194
CUSIP #315918854 / FUND #204
CUSIP #315918813 / FUND #183
CUSIP #315918698 / FUND #163
CUSIP #315918797 / FUND #193
CUSIP #315918789 / FUND #273
CUSIP #315918847 / FUND #177
CUSIP #315918680 / FUND #164
CUSIP #315918839 / FUND #191
CUSIP #315918821 / FUND #271
CUSIP #315918771 / FUND #187
CUSIP #315918672 / FUND #197
CUSIP #315918763 / FUND #192
CUSIP #315918755 / FUND #202
CUSIP #315918748 / FUND #186
CUSIP #315918664 / FUND #189
CUSIP #315918730 / FUND #196
CUSIP #315918722 / FUND #206
CUSIP #315918607 / FUND #252
CUSIP #315918409 / FUND #654
CUSIP #315918102 / FUND #175
CUSIP #315918508 / FUND #655
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- --------------------
FIDELITY ADVISOR SERIES VII: FIDELITY ADVISOR OVERSEAS FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Donald J. Kirk, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
Fidelity Advisor Series VII: Fidelity Advisor Overseas Fund as indicated
above which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on September 17, 1997 at 10:45 a.m. and
at any adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one votes
and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt
of the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1997
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the twelve nominees specified below as [ ]FOR all nominees [ ] 1.
Trustees: Ralph F. Cox, Phyllis Burke Davis, Robert listed (except as WITHHOLD
M. Gates, Edward C. Johnson 3d, E. Bradley Jones, marked to the contrary authority to
Donald J. Kirk, Peter S. Lynch, William O. McCoy, below). vote for all
Gerald C. McDonough, Marvin L. Mann, Robert C. nominees.
Pozen, and Thomas R. Williams. (INSTRUCTION: TO
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE NOMINEE(S)
ON THE LINE BELOW.)
</TABLE>
__________________________________________________________________________
___________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of Coopers & Lybrand L.L.P. FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
and Price Waterhouse LLP as independent
accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide each FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
fund with the ability to invest all of its assets in another
open-end investment company.
6. To adopt a new fundamental investment policy for FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
each fund to permit each fund to invest all of its assets
in another open-end investment company with
substantially the same investment objective and
policies.
7. To approve an amended Management Contract for FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
Overseas Fund.
8. To approve a new Sub-Advisory Agreement with FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
Fidelity Investments Japan Limited for Overseas
Fund.
9. FOR CLASS T ONLY: To amend the Class T Distribution FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
and Service Plan for Overseas Fund.
10. To approve an agreement and plan providing for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
reorganization of Overseas Fund.
11. To amend Overseas Fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
limitation concerning diversification to exclude
investments in other investment companies from the
limitation.
12. To amend Overseas Fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
limitation concerning borrowing.
13. To amend Overseas Fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
limitation concerning the underwriting of securities.
14. To amend Overseas Fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
limitation concerning the concentration of its
investments in a single industry.
</TABLE>
AO-PXC-0797 cusip #315918607/fund
#252H
cusip #315918409/fund #654H
cusip #315918102/fund #175H
cusip #315918508/fund #655H
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- --------------------
FIDELITY ADVISOR SERIES VII: FIDELITY ADVISOR CONSUMER INDUSTRIES FUND,
FIDELITY ADVISOR CYCLICAL INDUSTRIES FUND, FIDELITY ADVISOR FINANCIAL
SERVICES FUND, FIDELITY ADVISOR HEALTH CARE FUND, FIDELITY ADVISOR
TECHNOLOGY FUND, AND FIDELITY ADVISOR UTILITIES GROWTH FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, Donald J. Kirk, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of Fidelity
Advisor Series VII which the undersigned is entitled to vote at the Special
Meeting of Shareholders of the fund to be held at the office of the trust
at 82 Devonshire St., Boston, MA 02109, on September 17, 1997 at 10:45 a.m.
and at any adjournments thereof. All powers may be exercised by a majority
of said proxy holders or substitutes voting or acting or, if only one votes
and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt
of the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1997
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the twelve nominees specified below as [ ]FOR all nominees [ ] 1.
Trustees: Ralph F. Cox, Phyllis Burke Davis, Robert listed (except as WITHHOLD
M. Gates, Edward C. Johnson 3d, E. Bradley Jones, marked to the contrary authority to
Donald J. Kirk, Peter S. Lynch, William O. McCoy, below). vote for all
Gerald C. McDonough, Marvin L. Mann, Robert C. nominees.
Pozen, and Thomas R. Williams. (INSTRUCTION: TO
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE NOMINEE(S)
ON THE LINE BELOW.)
</TABLE>
__________________________________________________________________________
___________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of Coopers & Lybrand L.L.P. FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
and Price Waterhouse LLP as independent
accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide each FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
fund with the ability to invest all of its assets in another
open-end investment company.
6. To adopt a new fundamental investment policy for FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
each fund to permit each fund to invest all of its assets
in another open-end investment company with
substantially the same investment objective and
policies.
</TABLE>
AF-PXC-0797
(PHOTO_OF_EDWARD_C_JOHNSON_3D)PROXY MATERIALS
I M P O R T A N T
PLEASE CAST YOUR VOTE NOW!
Dear Fidelity Advisor Funds Shareholder:
On September 17, 1997, a special shareholder meeting of the following
Fidelity Advisor Funds will be held:
(small solid bullet) Overseas Fund (Class A, Class B, Class T, and
Institutional Class)
(small solid bullet) Consumer Industries Fund (Class A, Class B, Class T,
and Institutional Class)
(small solid bullet) Cyclical Industries Fund (Class A, Class B, Class T,
and Institutional Class)
(small solid bullet) Financial Services Fund (Class A, Class B, Class T,
and Institutional Class)
(small solid bullet) Health Care Fund (Class A, Class B, Class T, and
Institutional Class)
(small solid bullet) Technology Fund (Class A, Class B, Class T, and
Institutional Class)
(small solid bullet) Utilities Growth Fund (Class A, Class B, Class T, and
Institutional Class)
THIS PACKAGE CONTAINS A SEPARATE VOTING CARD FOR EACH FUND YOU OWN. IF
THERE IS MORE THAN ONE CARD IN YOUR PACKAGE, IT IS IMPORTANT THAT YOU VOTE
EACH CARD.
The matters to be discussed are important, and directly affect your
investment. As a shareholder, you cast one vote for each share and
fractional votes for fractional shares of each fund you own. YOU MAY THINK
YOUR VOTE IS INSIGNIFICANT, BUT EVERY VOTE IS EXTREMELY IMPORTANT. We must
continue sending requests to vote until a majority of the shares are voted
prior to the meeting. Additional mailings are expensive, and these costs
are charged directly to the funds.
The enclosed Proxy Statement details the proposals under consideration. A
list of the issues can be found beginning on the first page of the Proxy
Statement. In addition, we have attached a Q&A to assist you in
understanding the proposals that may require your vote. After you have read
the material, please cast your vote promptly by signing and returning the
enclosed proxy card(s). It is important that you sign your proxy card
exactly as your name appears in the registration of the proxy card. A
postage-paid envelope has been provided. Your time will be well spent, and
you will help save the cost of additional mailings.
These proposals have been carefully considered by the Board of Trustees,
which is responsible for protecting your interests as a shareholder. THE
BOARD OF TRUSTEES BELIEVES THESE PROPOSALS ARE FAIR AND REASONABLE, AND
RECOMMENDS THAT YOU APPROVE THEM. If you have any questions about any of
the proposals, please do not hesitate to contact Fidelity Client Services
at 800-522-7297.
Remember, this is your opportunity to voice your opinion on matters
affecting your fund or funds. YOUR PARTICIPATION IS EXTREMELY IMPORTANT NO
MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
Thank you. We appreciate your prompt attention.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important Information to Help You Understand the Proposals That You Are
Being Asked to Vote On.
PLEASE READ THE FULL TEXT OF THIS PROXY STATEMENT. BELOW IS A BRIEF
OVERVIEW OF THE MATTERS TO BE VOTED UPON. YOUR VOTE IS IMPORTANT. IF YOU
HAVE ANY QUESTIONS REGARDING THE PROPOSALS PLEASE CALL CLIENT SERVICES AT
800-522-7297. WE APPRECIATE YOU PLACING YOUR TRUST IN THE FIDELITY ADVISOR
FUNDS AND LOOK FORWARD TO HELPING YOU ACHIEVE YOUR FINANCIAL GOALS.
WHAT ARE THE BENEFITS OF THE DOLLAR-BASED VOTING RIGHTS PROPOSAL TO
SHAREHOLDERS?
The proposed amendment would provide a more equitable distribution of
voting rights for certain votes than the one-share, one-vote system
currently in effect. The voting power of each shareholder would be measured
by the value of the shareholder's dollar investment rather than by the
number of shares held.
WHY IS OVERSEAS FUND ADOPTING AN INVESTMENT POLICY TO PERMIT THE FUND TO
INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY WITH
SIMILAR INVESTMENT OBJECTIVES AND POLICIES?
This proposal will allow Overseas Fund to implement a "master-feeder" fund
structure that allows "feeder" funds to invest all of their assets in a
single "master" fund. The purpose of this structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. While neither
the Board of Trustees nor FMR has determined that Overseas Fund should
invest in a Master Fund, the Trustees believe it could be in the best
interests of Overseas Fund to adopt such a structure at a future date.
WHY IS OVERSEAS FUND PROPOSING TO ADOPT AN AMENDED MANAGEMENT CONTRACT?
The amended contract modifies the management fee that FMR receives by
providing for lower fees when FMR's assets under management exceed certain
levels (the Group Fee Rate). The amended contract will result in a
management fee that is the same as, or lower than, the fee payable under
the Present Management Contract. Overseas Fund is also requesting approval
to modify the performance adjustment calculation. The Board of Trustees
believes that the existing management fee structure is fair and reasonable
and that the proposed modifications to the management fees are in the best
interest of the fund's shareholders.
WHAT IS THE IMPACT OF OVERSEAS FUND CHANGING ITS MANAGEMENT FEE
CALCULATION?
The Group Fee Rate modification will provide for lower fees when FMR's
assets under management exceed certain levels. The performance calculation
will be based on the asset-weighted average performance of all classes of
the fund, rather than the worst performing class of the fund, and will
generally lead to higher performance fees being paid. This will avoid
distortions that currently arise from differing class-level expenses, which
are unrelated to the investment management of the fund. When the present
contract was adopted in 1992, the fund had one class of shares, Class T.
The contract did not contemplate the introduction of additional classes. A
performance adjustment is meant to unite the interests of the investment
advisor and shareholders in achieving performance superior to the Index.
WHY IS OVERSEAS FUND PROPOSING TO AMEND ITS DISTRIBUTION AND SERVICE PLAN
ON CLASS T SHARES?
The amended Class T Distribution and Service Plan would be identical to the
current plan, with the exception of calculating the daily net assets of the
fund. Under the current plan, net assets for purposes of calculating the
distribution fee exclude assets attributable to shares held for more than
144 months. The new plan will no longer exclude shares held more than 144
months when calculating the distribution fee. When the 144-month limitation
was introduced by FDC and the Board of Trustees in the 1980s, expense
limitations were limited by the National Association of Securities Dealers,
Inc. (NASD) to front-end sales charges only. The 144-month limitation was
intended to result in a limit on total distribution charges (front-end
sales charges plus 12b-1 fees) comparable to the front-end sales charge
limit then imposed by the NASD. During 1993, however, the NASD established
a combined limit on mutual fund sales charges AND distribution expenses.
The NASD Rule has become the industry standard for restricting distribution
charges.
WHY IS OVERSEAS FUND PROPOSING TO APPROVE A NEW SUB-ADVISORY AGREEMENT
BETWEEN FIJ AND FMR?
The proposal will permit FMR not only to receive investment advice and
research services but also to grant FIJ investment management authority.
The Board of Trustees believes that FMR will have increased flexibility in
portfolio manager assignments and the fund will gain access to managers
located abroad who may have more specialized expertise with respect to
local companies and markets. The Proposed Agreement will not affect fees
paid by the fund to FMR.
WHY IS OVERSEAS FUND REORGANIZING FROM ONE MASSACHUSETTS BUSINESS TRUST TO
ANOTHER?
The fund is presently organized as a series of Fidelity Advisor Series VII,
a Massachusetts business trust, which has seven series of shares or funds.
The Board of Trustees unanimously recommends reorganization of Overseas
Fund to a newly-established series of Fidelity Advisor Series VIII. The
proposed change will consolidate and streamline production and mailing of
shareholder reports and legal documents and have no material effect on
shareholders or management of the fund.
WILL THE AMENDMENT TO CHANGE OVERSEAS FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING DIVERSIFICATION AFFECT MY FUND'S INVESTMENT
OBJECTIVE?
No. The Board of Trustees believes that this proposal is in the best
interest of Overseas Fund's shareholders, and will not affect the fund's
investment philosophy. The proposal will allow the fund to invest without
limit in the securities of other investment companies.
WHAT DO THE PROPOSALS REGARDING ADOPTION OF STANDARD INVESTMENT LIMITATIONS
IMPLY FOR OVERSEAS FUND?
The purpose of proposals 11 through 14 is to revise several of Overseas
Fund's investment limitations to conform to limitations which are standard
for similar types of funds managed by FMR. It is not anticipated that these
proposals will substantially affect the way the fund is currently managed.
WHAT ABOUT THE OTHER PROPOSALS IN THIS PROXY?
The other proposals that require your vote have been unanimously approved
by each fund's Board of Trustees. Proposals regarding the election of a new
Board of Trustees and the ratification of the selection of Coopers &
Lybrand L.L.P. and Price Waterhouse LLP as independent accountants of the
trust are explained clearly in the Proxy Statement. If you have any
questions regarding these, or any of the aforementioned proposals, please
call Fidelity Client Services at 800-522-7297.
HAS MY FUND'S BOARD OF TRUSTEES APPROVED THE PROPOSALS?
Yes. The Board of Trustees of each fund has unanimously approved all of the
proposals, and recommends that you vote to approve each one.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card(s), and mailing them in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposals or how
to vote your shares, please call Fidelity Client Services at 800-522-7297.
(registered trademark)
AFO-PXL-0797
IMPORTANT PROXY MATERIALS
ARE ON THE WAY TO YOUR CLIENTS RIGHT NOW!
Dear Investment Professional:
On September 17, 1997, there will be a Special Meeting of Shareholders of
the following Fidelity Advisor Funds:
(solid bullet) (solid bullet)Overseas Fund (Class A, Class B, Class T, and
Institutional Class)
(solid bullet) Consumer Industries Fund (Class A, Class B, Class T, and
Institutional Class)
(solid bullet) Cyclical Industries Fund (Class A, Class B, Class T, and
Institutional Class)
(solid bullet) Financial Services Fund (Class A, Class B, Class T, and
Institutional Class)
(solid bullet) Health Care Fund (Class A, Class B, Class T, and
Institutional Class)
(solid bullet) Technology Fund (Class A, Class B, Class T, and
Institutional Class)
(solid bullet) Utilities Growth Fund (Class A, Class B, Class T, and
Institutional Class)
The enclosed Proxy Statement details the proposals pertaining to these
funds. A copy of the shareholder letter being mailed to your clients who
hold shares in these funds is also enclosed.
We have also enclosed a Q&A to assist you in understanding the proposals
that will require voting. If you have any questions about this proxy after
reading the letter, Proxy Statement, and Q&A, please call your Fidelity
representative at 800-522-7297.
We appreciate your support, and look forward to serving you in any way we
can.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
This letter is intended for investment professional use only, and may not
be reproduced or shown to
the public in oral or written form as sales material.
