SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-77571)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 35 [X]
and
REGISTRATION STATEMENT (No. 811-3466)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 35 [ ]
Fidelity Advisor Series III
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b)
(X) on ( June 30, 1995 ) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) on ( ) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on ( ) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date for a
previously filed
post-effective amendment.
Registrant filed a declaration pursuant to Rule 24f-2 under the Investment
Company Act of 1940 and has most recently filed the Notice required by such
Rule on or before February 28, 1995.
FIDELITY ADVISOR CLASS A & CLASS B PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
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1 .............................. Cover Page
2 .............................. Expenses
3 a,b .............................. **
c .............................. Performance
d .............................. Cover Page
4 a i............................. Charter
ii........................... Investment Principles and Risks; Securities and
Investment Practices
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. FMR and Its Affiliates
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates; Breakdown of Expenses
f .............................. Expenses
g .............................. Expenses; FMR and Its Affiliates
5A .............................. Charter
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions; Sales Charge Reductions and Waivers
iii.......................... *
b ............................. FMR and Its Affiliates
c .............................. Charter
d .............................. Cover Page; Charter
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions;
Sales Charge Reductions and Waivers
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. Sales Charge Reductions and Waivers
d .............................. How to Buy Shares
e .............................. Transaction Details; Breakdown of Expenses
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
** To Be Filed By Amendment
FIDELITY ADVISOR FUNDS
CLASS A AND CLASS B
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of
the applicable fund's most recent financial report and portfolio listing or
a copy of the Statement of Additional Information (SAI) dated June 30,
1995. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA 02109, or
your Investment Professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
EMERGING MARKETS INCOME, HIGH YIELD, STRATEGIC INCOME AND HIGH INCOME
MUNICIPAL MAY EACH INVEST WITHOUT LIMITATION IN LOWER-QUALITY DEBT
SECURITIES, SOMETIMES CALLED "JUNK BONDS." INVESTORS SHOULD CONSIDER THAT
THESE SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF DEFAULT, THAN
OTHER DEBT SECURITIES. REFER TO "INVESTMENT PRINCIPLES AND RISKS" ON PAGE
FOR FURTHER INFORMATION.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
ACOM-pro-695
GROWTH FUNDS: Class(es)
Fidelity Advisor Overseas Fund A, B
Fidelity Advisor Equity Portfolio Growth A
Fidelity Advisor Global Resources Fund A, B
Fidelity Advisor Growth Opportunities A
Fund
Fidelity Advisor Strategic Opportunities A, B
Fund
GROWTH AND INCOME FUNDS:
Fidelity Advisor Equity Income Fund A, B
Fidelity Advisor Income & Growth Fund A
TAXABLE-INCOME FUNDS:
Fidelity Advisor Emerging Markets A, B
Income Fund
Fidelity Advisor High Yield Fund A, B
Fidelity Advisor Strategic Income Fund A, B
Fidelity Advisor Government Investment A, B
Fund
Fidelity Advisor Limited Term Bond Fund A, B
Fidelity Advisor Short Fixed-Income Fund A
TAX-EXEMPT/MUNICIPAL FUNDS:
Fidelity Advisor High Income Municipal A, B
Fund
Fidelity Advisor Limited Term Tax-Exempt A, B
Fund
Fidelity Advisor Short-Intermediate A
Tax-Exempt Fund
PROSPECTUS
JUNE 30, 1995(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
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KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Each class's sales charge (load) and its yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's financial
data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's overall
approach to investing.
BREAKDOWN OF EXPENSES How operating costs are
calculated and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your
account, including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and making
additional investments.
HOW TO SELL SHARES Taking money out and closing your
account.
INVESTOR SERVICES Services to help you manage your
account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND TAXES
ACCOUNT POLICIES
TRANSACTION DETAILS Share price calculations and the
timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND WAIVERS
APPENDIX
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Class A and Class B s hares are offered through this prospectus to
investors who engage an Investment Professional for investment advice.
Overseas, Equity Portfolio Growth, Global Resources, Growth Opportunities,
Strategic Opportunities, Equity Income, Income & Growth, High Yield,
Government Investment, Limited Term Bond, Short Fixed-Income, High Income
Municipal and Limited Term Tax-Exempt are diversified funds.
Emerging Markets Income, Strategic Income, and Short-Intermediate
Tax-Exempt are non-diversified funds. Non-diversified funds may invest a
greater portion of their assets in securities of a single issuer than
diversified funds. As a result, changes in the financial condition or
market assessment of a single issuer could cause greater fluctuations in
share value than a diversified fund.
Overseas, Equity Portfolio Growth, Global Resources, Growth Opportunities,
Strategic Opportunities, Equity Income and Income & Growth are designed for
investors who are willing to ride out stock market fluctuations in pursuit
of potentially high long-term returns. Overseas, Equity Portfolio Growth,
Global Resources, Growth Opportunities and Strategic Opportunities are
designed for investors who want to be invested in the stock market for its
long-term growth potential. These funds invest for growth and do not pursue
income. Equity Income and Income & Growth are designed for those investors
who seek a combination of growth and income from equity and some bond
investments.
Emerging Markets Income, High Yield, and Strategic Income are designed for
investors who want high current income with some potential for capital
growth from a portfolio of debt instruments with a focus on lower-quality
debt securities and income-producing equity securities. These funds may be
appropriate for long-term, aggressive investors who understand the
potential risks and rewards of investing in lower-quality debt securities,
including defaulted securities.
Government Investment, Limited Term Bond and Short Fixed-Income are
designed for investors who seek high current income from a portfolio of
investment-grade debt securities. These funds also invest consistent with
consideration of capital preservation.
High Income Municipal, Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt are designed for investors in higher tax brackets who seek high
current income that is free from federal income tax. Limited Term
Tax-Exempt and Short-Intermediate Tax-Exempt also invest consistent with
consideration of capital preservation. High Income Municipal focuses on
lower-quality debt securities and may be appropriate for long-term,
aggressive investors who understand the potential risks and rewards of
investing in lower-quality debt securities, including defaulted securities.
The value of each fund's investments and, as applicable, the income they
generate, will vary from day to day, and generally reflect
changes in market conditions, interest rates and other company, political,
and economic news. In the short term, stock prices can fluctuate
dramatically in response to these factors. The securities of small, less
well-known companies may be more volatile than those of larger companies.
The value of bonds fluctuates based on changes in interest rates and in the
credit quality of the issuer. Over time, however, stocks although more
volatile, have shown greater growth potential than other types securities.
Investments in foreign securities may involve risks in addition to those of
U.S. investments, including increased political and economic risk, as well
as exposure to currency fluctuations.
The investments of Strategic Income, Government Investment, Limited Term
Bond, and Short Fixed-Income are also subject to prepayments, which can
lower a fund's yield, particularly in periods of declining interest rates.
In addition, Overseas, Global Resources, Emerging Markets Income and
Strategic Income may also be appropriate for investors who want to pursue
their investment goals in markets outside of the United States. By
including international investments in your portfolio, you can achieve
additional diversification and participate in growth
opportunities around the world.
Each fund is not in itself a balanced investment plan. You should consider
your investment objective and tolerance for risk when making an investment
decision. When you sell your fund shares, they may be worth more or less
than what you paid for them.
Each fund is composed of multiple classes of shares. Each class of a
fund has a common investment objective and investment portfolio. Class A
shares have a front-end sales charge and pay a distribution fee. Class B
shares do not have a front-end sales charge, but do have a contingent
deferred sales charge (CDSC), and pay a distribution fee and a shareholder
service fee. Institutional Class shares have no sales charge, and do not
pay a distribution fee or a shareholder service fee, but are only available
to certain types of investors. See "Transaction Details," page 45 for
Institutional Class eligibility information. You may obtain more
information about Institutional Class shares, which are not offered through
this prospectus, by calling 1-800-423-7020 or from your Investment
Professional. Contact your Investment Professional to discuss which class
is appropriate for you.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell,
exchange or hold shares of a fund. Lower front-end sales charges may be
available with purchases of $50,000 or more in conjunction with various
programs. See "Transaction Details," page , for an explanation of how and
when these charges apply.
A contingent deferred sales charge (CDSC) is imposed only if you redeem
Class B shares within 5 years of purchase. See "Transaction Details," page
, for information about the CDSC.
Clas Clas
s A s B
Maximum sales charge on purchases for all Advisor funds 4.75 None
(except Short Fixed-Income and Short-Intermediate %
Tax-Exempt) (as a % of offering price)
Maximum sales charge on purchases 1.50 None
of Short Fixed-Income or Short-Intermediate Tax-Exempt %
(as a % of offering price)
Maximum CDSC (as a % of the lesser None 4.00%
of original purchase price or redemption proceeds) [A]
Maximum sales charge on None None
reinvested distributions
Redemption fee None None
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Exchange fee None None
Annual account maintenance fee (for accounts under $2,500) $12.0 $12.0
0 0
</TABLE>
[A] DECLINES OVER 5 YEARS FROM 4.00% TO 0%
ANNUAL OPERATING EXPENSES are paid out of each class's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR) that,
for Overseas, Growth Opportunities, and Strategic Opportunities, varies
based on performance and incurs other expenses for services such as
maintaining shareholder records and furnishing shareholder statements and
financial reports.
12b-1 fees for Class A and Class B include a distribution fee and, for
Class B, include a shareholder service fee. Distribution fees are paid by
each class to Fidelity Distributors Corporation (FDC) for services and
expenses in connection with the distribution of the applicable
class' s shares. Shareholder service fees are paid by Class B to
Investment Professionals for services and expenses incurred in connection
with providing personal service and/or maintenance of Class B shareholder
accounts. Long-term shareholders may pay more than the economic equivalent
of the maximum sales charges permitted by the National Association of
Securities Dealers, Inc., (NASD) due to 12b-1 fees.
Each class's expenses are factored into its share price or dividends and
are not charged directly to shareholder accounts (see "Breakdown of
Expenses" on page ).
The following table shows projections based on estimated or
historical expenses , adjusted for current fees, of each class of
each fund and are calculated as a percentage of average net assets of
the applicable class of each fund.
EQUITY FUNDS
Operating Expenses Class A Class B
OVERSEAS Management fee 0.80 0.80
% %
12b-1 fee 0.65 1.00
% %
Other expenses 0.67 0.53%[
% A]
Total operating expenses 2.12 2.33
% %
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EQUITY PORTFOLIO GROWTH Management fee 0.62% [ n/a
B]
12b-1 fee 0.65 n/a
%
Other expenses 0.41%[C n/a
]
Total operating expenses 1.68 n/a
%
GLOBAL RESOURCES Management fee 0.77 0.77
% %
12b-1 fee 0.65 1.00
% %
Other expenses 0.65%[ 0.53%[A
C] ]
Total operating expenses 2.07 2.30
% %
GROWTH OPPORTUNITIES Management fee 0.69 n/a
%
12b-1 fee 0.65 n/a
%
Other expenses 0.28%[ n/a
C]
Total operating expenses 1.62 n/a
%
STRATEGIC OPPORTUNITIES Management fee 0.67 0.67
% %
12b-1 fee (including 0.25% Shareholder 0.65 1.00
Service Fee for Class B shares) % %
Other expenses 0.47%[ 0.47%[
D] A]
Total operating expenses 1.79 2.14
% %
EQUITY INCOME Management fee 0.50 0.50
% %
12b-1 fee (including 0.25% Shareholder 0.65 1.00
Service Fee for Class B shares) % %
Other expenses 0.49%[ 0.49%[
C] A ]
Total operating expenses 1.64 1.99
% %
INCOME & GROWTH Management fee 0.52 n/a
%
12b-1 fee 0.65 n/a
%
Other expenses 0.41%[ n/a
C]
Total fund operating expenses 1.58 n/a
%
</TABLE>
[A] PROJECTIONS ARE BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
[B] EFFECTIVE AUGUST 1, 1994, FMR VOLUNTARILY AGREED TO IMPLEMENT A
MANAGEMENT FEE REDUCTION FOR EQUITY PORTFOLIO GROWTH. THE INDIVIDUAL FUND
FEE RATE WAS REDUCED FROM 0.33% TO 0.30%. IF THIS AGREEMENT WAS NOT IN
EFFECT, THE MANAGEMENT FEE WOULD HAVE BEEN 0.65%.
[ C ] A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAID WAS
USED TO REDUCE OTHER EXPENSES. WITHOUT THIS REDUCTION, OTHER
EXPENSES FOR CLASS A WOULD HAVE BEEN: 0.42% ( EQUITY PORTFOLIO
GROWTH ); 0.68 % ( GLOBAL RESOURCES ); 0.29 %
( GROWTH OPPORTUNITIES ); 0.52% ( EQUITY INCOME ); AND
0.42 % ( INCOME & GROWTH ).
[ D ] INCLUDES THE EFFECT OF ANNUALIZING A VOLUNTARY REIMBURSEMENT OF
FEES BY FMR.
TAXABLE INCOME
Operating Expenses Class A Class B
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EMERGING MARKETS INCOME Management fee 0.70 0.70
% %
12b-1 fee (including 0.25% Shareholder 1.00
Service Fee for Class B shares) 0.25 %
%
Other expenses (after reimbursement) 0.55%[ 0.55%[
A ] A ]
Total operating expenses 1.50 2.25
% %
HIGH YIELD Management fee 0.60 0.60
% %
12b-1 fee (including 0.25% Shareholder 0.25 1.00
Service Fee for Class B shares) % %
Other expenses 0.35 0. 50 %[ A]
% [B ]
Total operating expenses 1.20 2.10
% %
STRATEGIC INCOME Management fee 0.61 0.61
% %
12b-1 fee (including 0.25% Shareholder 0.25 1.00
Service Fee for Class B shares) % %
Other expenses (after reimbursement) 0.49%[ 0.49%[
A ] A ]
Total operating expenses 1.35 2.10
% %
GOVERNMENT INVESTMENT Management fee 0.46 0.46
% %
12b-1 fee (including 0.25% Shareholder 0.25 1.00
Service Fee for Class B shares) % %
Other expenses (after reimbursement) 0. 29 0. 29 %[
% A ]
Total operating expenses 1.00 1 .75
% %
LIMITED TERM BOND Management fee 0.46 0.46
% %
12b-1 fee (including 0.25% Shareholder 0.25 1.00
Service Fee for Class B shares) % %
Other expenses (after reimbursement) 0. 29 0. 29 %[
% A ]
Total operating expenses 1.00 1. 75
% %
SHORT FIXED-INCOME Management fee 0.46 n/a
%
12b-1 fee (Distribution fee) 0.15 n/a
%
Other expenses 0 .36 n/a
%
Total operating expenses 0.97 n/a
%
</TABLE>
TAX-EXEMPT/MUNICIPAL
Operating Expenses Class A Class B
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HIGH INCOME MUNICIPAL Management fee 0.41 0.41
% %
12b-1 fee (including 0.25% Shareholder 0.25 1.00
Service Fee for Class B shares) % %
Other expenses 0.23 0.3 4 % [A]
% [B ]
Total operating expenses 0.89 1. 75
% %
LIMITED TERM TAX-EXEMPT Management fee 0.41 0.41
% %
12b-1 fee (including 0.25% Shareholder 0.25 1.00
Service Fee for Class B shares) % %
Other expenses (after reimbursement) 0. 3 4 0. 3 4%[
% A ]
Total operating expenses 1.00 1. 7 5
% %
SHORT-INTERMEDIATE TAX-EXEMPT Management fee 0.41 n/a
%
12b-1 fee (Distribution fee) 0.15 n/a
%
Other expenses (after reimbursement) 0. 34 n/a
%
Total fund operating expenses 0. 90 n/a
%
</TABLE>
[ A ] PROJECTIONS ARE BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
[B] AFTER REIMBURSEMENT.
EXPENSE TABLE EXAMPLE: You would pay the following expenses, including the
maximum front-end sales charge or CDSC, as applicable, on a $1,000
investment, assuming a 5% annual return and either (1) full redemption or
(2) no redemption, at the end of each time period:
EQUITY FUNDS
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Examples
Class A Class B Class B
(1) (1) (2)
OVERSEAS After 1 year $68 $64[A] $24
After 3 $111 $103[A] $73
years
After 5 $156 $135[A] $125
years
After 10 $281 $250 $250
years [B]
EQUITY PORTFOLIO GROWTH After 1 year $64 n/a n/a
After 3 $9 8 n/a n/a
years
After 5 $13 4 n/a n/a
years
After 10 $23 7 n/a n/a
years
GLOBAL RESOURCES After 1 year $68 $63[A] $23
After 3 $10 9 $102[A] $72
years
After 5 $1 54 $133[A] $123
years
After 10 $276 $247 $247
years [B]
GROWTH OPPORTUNITIES After 1 year $63 n/a n/a
After 3 $96 n/a n/a
years
After 5 $131 n/a n/a
years
After 10 $231 n/a n/a
years
STRATEGIC OPPORTUNITIES After 1 year $65 $6 2 [A] $2 2
After 3 $101 $9 7 [A] $ 67
years
After 5 $140 $12 5 [A] $11 5
years
After 10 $248 $2 30 $2 30
years[B]
EQUITY INCOME After 1 year $64 $6 0 [A] $2 0
After 3 $99 $9 2 [A] $6 2
years
After 5 $135 $1 17 [A] $1 07
years
After 10 $239 $2 14 $2 14
years[B]
INCOME & GROWTH After 1 year $63 n/a n/a
After 3 $95 n/a n/a
years
After 5 $129 n/a n/a
years
After 10 $226 n/a n/a
years
</TABLE>
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION TO CLASS A SHARES AFTER SIX YEARS.
TAXABLE INCOME
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Examples
Class A Class B Class B
(1) (1) (2)
EMERGING MARKETS INCOME After 1 year $62 $63[A] $23
After 3 $93 $100[A] $70
years
After 5 $125 $130[A] $120
years
After 10 $218 $222 $222
years[B]
HIGH YIELD After 1 year $59 $ 61 [A] $2 1
After 3 $84 $ 96 [A] $6 6
years
After 5 $110 $1 23 [A] $1 13
years
After 10 $186 $ 206 $ 206
years[B]
</TABLE>
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STRATEGIC INCOME After 1 year $61 $61[A] $21
After 3 $88 $96[A] $66
years
After 5 $118 $123[A] $113
years
After 10 $202 $206 $206
years[B]
GOVERNMENT INVESTMENT After 1 year $5 7 $5 8 [A] $1 8
After 3 $ 78 $ 85 [A] $ 55
years
After 5 $ 100 $ 105 [A] $ 95
years
After 10 $1 64 $ 168 $ 168
years[B]
LIMITED TERM BOND After 1 year $5 7 $5 8 [A] $1 8
After 3 $ 78 $8 5 [A] $ 55
years
After 5 $ 100 $10 5 [A] $9 5
years
After 10 $1 64 $1 68 $1 68
years[B]
SHORT FIXED-INCOME After 1 year $25 n/a n/a
After 3 $45 n/a n/a
years
After 5 $68 n/a n/a
years
After 10 $132 n/a n/a
years
</TABLE>
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION TO CLASS A SHARES AFTER SIX YEARS.
TAX-EXEMPT/MUNICIPAL
Examples
Class A Class B Class B
(1) (1) (2)
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HIGH INCOME MUNICIPAL After 1 year $56 $5 8 [A] $1 8
After 3 $75 $8 5 [A] $ 55
years
After 5 $94 $ 105 [A] $ 95
years
After 10 $152 $1 68 $1 68
years[B]
LIMITED TERM TAX-EXEMPT After 1 year $5 7 $5 8 [A] $1 8
After 3 $7 8 $8 5 [A] $5 5
years
After 5 $ 100 $10 5 [A] $9 5
years
After 10 $1 64 $1 68 $1 68
years[B]
SHORT-INTERMEDIATE TAX-EXEMPT After 1 year $ 24 n/a n/a
After 3 $ 43 n/a n/a
years
After 5 $ 64 n/a n/a
years
After 10 $ 124 n/a n/a
years
</TABLE>
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION TO CLASS A SHARES AFTER SIX YEARS.
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse Class A and Class B of certain
funds to the extent that total operating expenses as a percentage of
their respective average net assets exceeds the following: for Emerging
Markets Income 1.50% (Class A) and 2.25% (Class B); for High Yield 1.35%
(Class A) and 2.10% (Class B); for Strategic Income 1.35% (Class A) and
2.10% (Class B); for Government Investment 1.00 % (Class A) and
1.7 5 % (Class B); for Limited Term Bond 1.00 % (Class A) and
1. 75 % (Class B); for Short Fixed-Income 1.00% (Class A); for High
Income Municipal 1.00% (Class A) and 1.75% (Class B); for Limited Term
Tax-Exempt 1.00 % (Class A) and 1. 75 % (Class B); and for
Short-Intermediate Tax-Exempt 0. 90 % (Class A). If these agreements
were not in effect, other expenses would have been the following amounts as
a percentage of average net assets:
Other Expenses
Class Class B
A
Emerging Markets Income [ A ] 1.20% 0.90%
High Yield[A] n/a 0.60%
Strategic Income [ A ] 1.64% 0.89%
Government Investment 0.76% 1.16% [
A]
Limited Term Bond 0.43% 1.00% [
A]
High Income Municipal[A] n/a 0.68%
Limited Term Tax-Exempt 0.38% 0.95% [
A]
Short-Intermediate Tax-Exempt [ A ] 0.98% n/a
[ A ] ANNUALIZED
Interest, taxes, brokerage commissions, or extraordinary expenses are not
included in these expense limitations.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in its Annual Report and have been audited by
Coopers & Lybrand L.L.P. or Price Waterhouse LLP (Overseas) . Their
reports on the financial statements and financial highlights are included
in each Annual Report. The financial statements, the financial highlights,
and the reports are incorporated by reference into the funds' SAI, which
may be obtained free of charge from FDC or your Investment
Professional .
On July 3, 1995 each fund (except Equity Portfolio Growth, Equity
Income, Limited Term Bond, and Limited Term Tax-Exempt) is expected to
commence sale of Institutional Class shares, and Overseas and Global
Resources are expected to commence sales of Class B shares.
OVERSEAS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1.Selected Per-Share Data and Ratios 2. 3. 4.Class 5.
A
6.Years ended October 31 1990 B 1991 1992 1993 1994
7.Net asset value, beginning of period $ 10.00 $ 9.55 $ 9.78 $ 9.07 $ 12.93
8.Income from Investment Operations
9. Net investment income .05 .14 .05 .03 .0 1
10. Net realized and unrealized gain (loss) on
investments (.50) .17 (.62) 3.93 1.1 4
11. Total from investment operations (.45) .31 (.57) 3.96 1.15
12.Less Distributions
13. From net investment income -- (.07) (.14) (.07) --
14. From net realized gain -- (.01) E -- (.03) (.02)
15. Total distributions -- (.08) (.14) (.10) (.02)
16.Net asset value, end of period $ 9.55 $ 9.78 $ 9.07 $ 12.93 $ 14.06
17.Total return C (4.50)% D 3.25% (5.88)% 44.13% 8.91%
18.Net assets, end of period (000 omitted) $ 18,161 $ 19,091 $ 18,652 $ 221,37 $ 653,77
0 4
19.Ratio of expenses to average net assets 3.07% 2.85% 2.64% 2.38% 2.12%
A,F
20.Ratio of net investment income to average net
assets 1.45%A 1.48% .48% (.18)% .05%
21.Portfolio turnover rate 137%A 226% 168% 42% 34%
</TABLE>
A 1.ANNUALIZED.
B 2.APRIL 23, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1990.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN.
E INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
F EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE LIMITATION.
EQUITY PORTFOLIO GROWTH
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.Selected Per-Share Data and Institutional Class A
Ratios Class
4.Years ended November 30
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992C 1993 1994
5.Net asset value, beginning of
$ 8.03 $ 11.09 $ 13.18 $ 9.92 $ 12.02 $ 17.32 $ 15.55 $ 24.28 $ 26.37 $ 29.74 $ 23.78 $ 26.33 $ 29.50
period
6.Income from Investment
Operations
7. Net investment income (loss)
.01 .03 .00D .28G .06 .01 .04 .17 D .19D .30 .01 D (.07)D .08
8. Net realized and unrealized
3.05 2.41 (2.03) 2.59 5.50 .34 8.69 4.55 3.78 .42 2.54 3.82 .39
gain
(loss) on investments
9. Total from investment
3.06 2.44 (2.03) 2.87 5.56 .35 8.73 4.72 3.97 .72 2.55 3.75 .47
operations
10.Less Distributions
11. From net investment
- -- (.02) (.01) (.01) (.26) (.08) -- (.03) (.10) (.11) -- (.08) --
income
12. From net realized gain
- -- (.33) (1.22) (.76) -- (2.04) -- (2.60) (.50) (1.45) -- (.50) (1.45)
13. Total distributions
- -- (.35) (1.23) (.77) (.26) (2.12) -- (2.63) (.60) (1.56) -- (.58) (1.45)
14.Net asset value, end of
$ 11.09 $ 13.18 $ 9.92 $ 12.02 $ 17.32 $ 15.55 $ 24.28 $ 26.37 $ 29.74 $ 28.90 $ 26.33 $ 29.50 $ 28.52
period
15.Total return E,F
38.11% 22.55% (17.12) 29.77% 47.18% 2.75% 56.14% 21.14% 15.36% 2.46% 10.72% 14.52% 1.58%
%
16.Net assets, end of period
$ 23,44 $ 63,60 $ 43,53 $ 20,18 $ 24,52 $ 27,47 $ 68,76 $ 179,3 $ 296,4 $ 410,45 $ 22,65 $ 377,8 $ 874,17
(000 omitted)
7 7 7 2 3 3 6 25 66 0 5 94 2
17.Ratio of expenses to
1.50%I 1.07% 1.11% 1.47% 1.60% 1.74% 1.13% .98% .94%H .84%H 1.47%A 1.84%H 1.70%H
average net assets
18.Ratio of expenses to
1.50%I 1.07% 1.11% 1.47% 1.60% 1.74% 1.13% .98% .95%H .86%H 1.47%A 1.85%H 1.71%H
average net
assets before expense
reductions
19.Ratio of net investment
.43% .29% -- 1.20% .38% .07% .25% .73% .66% 1.00% .25%A (.24)% 15%
income (loss)
to average net assets
20.Portfolio turnover
108% 115% 226% 331% 269% 262% 254% 240% 160% 137% 240% 160% 137%
</TABLE>
GLOBAL RESOURCES
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
21.Selected Per-Share Data and Ratios
22. 23. 24. 25.Clas 26. 27.
s A
28.Years ended October 31
1988B 1989 1990 1991K 1992 1993 1994D
29.Net asset value, beginning of period
$ 10.00 $ 11.47 $ 12.60 $ 12.30 $ 14.11 $ 13.88 $ 17.59
30.Income from Investment Operations
31. Net investment income (loss)
(.05) .10J (.10) (.15) (.10) .22 (.11)
32. Net realized and unrealized gain (loss) on investments
1.52 1.96 .93 2.45 .79 4.91 .76
33. Total from investment operations
1.47 2.06 .83 2.30 .69 5.13 .65
34.Less Distributions
35. From net investment income
-- -- (.08) -- -- -- --
36. From net realized gain
-- (.93) (1.05) (.49) (.92) (1.42) (.68)
37. Total distributions
-- (.93) (1.13) (.49) (.92) (1.42) (.68)
38.Net asset value, end of period
$ 11.47 $ 12.60 $ 12.30 $ 14.11 $ 13.88 $ 17.59 $ 17.56
39.Total returnE,F
14.70% 19.63% 6.37% 19.50% 5.97% 41.05% 3.97%
40.Net assets, end of period (000 omitted)
$ 916 $ 2,049 $ 4,615 $ 5,940 $ 7,087 $ 40,309 $ 199,36
1
41.Ratio of expenses to average net assets
2.85% 3.23% 3.34%I 3.35%I 3.27%I 2.62%H 2.07%H
42.Ratio of expenses to average net assets before expense reductions
2.85% 3.23% 3.34%I 3.35%I 3.27%I 2.63%H 2.10%H
43.Ratio of net investment income (loss) to average net assets
(.64)% .83% (1.13)% (1.28)% (1.22)% (1.18)% (.67)%
44.Portfolio turnover rate
220% 249% 229% 256% 248% 208% 125%
</TABLE>
A ANNUALIZED
B DECEMBER 29, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1988.
C COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
G DURING THE PERIOD A SHAREHOLDER REDEEMED A SIGNIFICANT PORTION OF
THE ASSETS OF THE FUND. DUE TO THE TIMING OF THIS TRANSACTION, THE FUND
EXPERIENCED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
H FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A
PORTION OF THE FUND'S EXPENSES.
I EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION.
J NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.17 PER SHARE.
K AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
GROWTH OPPORTUNITIES
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
45.Selected Per-Share Data and Ratios
Class A
46.Years ended October 31
1988B 1989 1990 1991 1992 1993 1994
47.Net asset value, beginning of period
$ 10.00 $ 14.27 $ 16.53 $ 12.99 $ 20.58 $ 21.14 $ 25.39
48.Income from Investment Operations
49. Net investment income
.05 .02 .18D .06 .14 .08 .22
50. Net realized and unrealized gain (loss) on investments
4.22 3.03 (2.50) 7.70 2.04 5.56 1.92
51. Total from investment operations
4.27 3.05 (2.32) 7.76 2.18 5.64 2.14
52.Less Distributions
53. From net investment income
-- (.03) (.05) (.17) (.09) (.13) (.07)
54. From net realized gain
-- (.76) (1.17) -- (1.53) (1.26) (.84)
55. Total distributions
-- (.79) (1.22) (.17) (1.62) (1.39) (.91)
56.Net asset value, end of period
$ 14.27 $ 16.53 $ 12.99 $ 20.58 $ 21.14 $ 25.39 $ 26.62
57.Total returnF,G
42.70% 22.69% (15.05) 60.25% 12.09% 28.11% 8.71%
%
58.Net assets, end of period (000 omitted)
$ 8,097 $ 34,351 $ 51,122 $ 213,09 $ 580,59 $ 2,054,9 $ 4,598,6
5 5 88 68
59.Ratio of expenses to average net assets
2.52%A,I 2.45% 2.00% 1.73% 1.60% 1.64%E 1.62%E
60.Ratio of expenses to average net assets before expense reductions
2.52%A,I 2.45% 2.00% 1.73% 1.60% 1.65%E 1.63%E
61.Ratio of net investment income to average net assets
.82%A .31% 1.49% .47% .80% .43% 1.12%
62.Portfolio turnover rate
143%A 163% 136% 142% 94% 69% 43%
</TABLE>
STRATEGIC OPPORTUNITIES - INITIAL CLASS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
63.Selected Per-Share Data and Ratios
64.Years ended September 30
1985 1986 1987 1988 1989 1990 1991 1992H 1993 1994 1994C
65.Net asset value, beginning of period
$ 11.05 $ 12.70 $ 16.71 $ 19.13 $ 15.65 $ 19.77 $ 17.37 $ 21.55 $ 19.72 $ 22.72 $ 20.23
66.Income from Investment Operations
67. Net investment income
.35 .36 .53 .48 .64 .80 .77 .73 .45 .54J .13J
68. Net realized and unrealized gain (loss) on
1.56 5.05 2.95 (1.80) 4.08 (2.49) 4.26 .58 4.46 (.81) (.74)
investments
69. Total from investment operations
1.91 5.41 3.48 (1.32) 4.72 (1.69) 5.03 1.31 4.91 (.27) (.61)
70.Less Distributions
71. From net investment income
(.06) (.24) (.09) (.25) (.60) (.71) (.85) (.72) (.70) (.51) (.50)
72. From net realized gain
(.20) (1.16) (.97) (1.91) - - - (2.42) (1.21) (1.71) (.26)
73. Total distributions
(.26) (1.40) (1.06) (2.16) (.60) (.71) (.85) (3.14) (1.91) (2.22) (.76)
74.Net asset value, end of period
$ 12.70 $ 16.71 $ 19.13 $ 15.65 $ 19.77 $ 17.37 $ 21.55 $ 19.72 $ 22.72 $ 20.23 $ 18.86
75.Total returnF,G
17.64% 46.10 21.87 (4.63) 31.19 (8.96) 30.01 7.89% 26.98 (1.51)% (3.02)
% % % % % % % %
76.Net assets, end of period (000 omitted)
$ 13,60 $ 31,99 $ 27,80 $ 19,22 $ 19,78 $ 15,98 $ 19,19 $ 17,93 $ 20,70 $ 18,850 $ 17,58
2 1 9 1 0 8 3 3 7 3
77.Ratio of expenses to average net assets
1.50%K 1.50%K 1.30%K 1.49%K .64%L 1.03% 1.00% .87% .89%M 1.14%E 1.11%A,E
78.Ratio of expenses to average net assets before
1.50%K 1.50%K 1.30%K 1.49%K 1.04% 1.03% 1.00% .87% 1.05% 1.15%E 1.14%A,E
expense reductions ,
79.Ratio of net investment income to average net
2.87% 2.40% 2.88% 3.31% 4.08% 4.21% 4.12% 3.78% 2.74% 2.60% 2.65%A
assets
80.Portfolio turnover
214% 225% 225% 160% 89% 114% 223% 211% 183% 159% 228%A
</TABLE>
A ANNUALIZED.
B NOVEMBER 18, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1988.
C FOR THE THREE MONTHS ENDED DECEMBER 31, 1994.
D NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.09 PER SHARE.
E FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A
PORTION OF THE FUND'S EXPENSES.
F TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
H AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
I EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION.
J NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
K EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. IN ADDITION, DURING THE PERIOD JULY 1, 1986 THROUGH OCTOBER 31,
1987 FMR WAIVED .05% OF THE ANNUAL INDIVIDUAL FUND FEE OF .35%.
L INCLUDES REIMBURSEMENT OF $.08 PER SHARE FROM FIDELITY SERVICE
COMPANY FOR ADJUSTMENTS TO PRIOR PERIODS FEES.
M INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FMR FOR ADJUSTMENTS
TO PRIOR PERIODS' FEES.
STRATEGIC OPPORTUNITIES
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
81.Selected Per-Share Data and ratios Class A Class B
82.Years ended September 30
1986B 1987 1988 1989 1990 1991 1992I 1993 1994 1994E 1994D 1994E
83.Net asset value, beginning of period
$ 17.81 $ 16.71 $ 19.06 $ 15.53 $ 19.55 $ 17.21 $ 21.38 $ 19.53 $ 22.52 $ 19.96 $ 19.65 $ 19.98
84.Income from Investment Operations
85. Net investment income
.08J .46 .42 .50 .70 .66 .61 .33 .39P .10P .05P .06P
86. Net realized and unrealized gain
(1.18) 2.95 (1.80) 4.08 (2.49) 4.26 .58 4.44 (.81) (.75) .28 (.74)
(loss) on investments
87. Total from investment operations
(1.10) 3.41 (1.38) 4.58 (1.79) 4.92 1.19 4.77 (.42) (.65) .33 (.68)
88.Less Distributions
89. From net investment income
- -- (.09) (.24) (.56) (.55) (.75) (.62) (.57) (.43) (.35) -- (.47)
90. From net realized gain
- -- (.97) (1.91) -- -- -- (2.42) (1.21) (1.71) (.26) -- (.26)
91. Total distributions
- -- (1.06) (2.15) (.56) (.55) (.75) (3.04) (1.78) (2.14) (.61) -- (.73)
92.Net asset value, end of period
$ 16.71 $ 19.06 $ 15.53 $ 19.55 $ 17.21 $ 21.38 $ 19.53 $ 22.52 $ 19.96 $ 18.70 $ 19.98 $ 18.57
93.Total returnG,H
(6.23) 21.28% (4.98) 30.45% (9.49) 29.51% 7.26% 26.33% (2.24)% (3.26)% 1.68% (3.41)%
% % %
94.Net assets, end of period (000
$ 22,14 $ 283,1 $ 191,4 $ 198,1 $ 172,0 $ 199,6 $ 194,7 $ 269,8 $ 385,34 $ 375,69 $ 8,824 $ 17,090
omitted)
1 17 54 74 86 04 10 83 9 1
95.Ratio of expenses to average net
1.50%A,K 1.67%K 1.71% 1.51% 1.59% 1.56% 1.46% 1.57%L 1.84% 1.73%A,F,Q 2.63%A,F 2.53%A,F
assets
96.Ratio of expenses to average net
1.50%A,K 1.67%K 1.71% 1.51% 1.59% 1.56% 1.46% 1.73% 1.85% 1.84%A,F 2.84%A,F 2.58%A,F
assets before expense reductions
97.Ratio of net investment income to
2.77%A 2.36% 3.10% 3.23% 3.70% 3.61% 3.22% 2.06% 1.89% 2.03%A 1.11%A 1.22%A
average net assets
98.Portfolio turnover
225% 225% 160% 89% 114% 223% 211% 183% 159% 228%A 159% 228%A
</TABLE>
EQUITY INCOME
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.Selected Per-Share Institutional Class A Class B
Data and Ratios Class
Year s ended November 30
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992C 1993 1994 1994D
100.Net asset value,
$ 10.24 $ 11.95 $ 13.54 $ 10.93 $ 11.10 $ 12.27 $ 9.52 $ 11.08 $ 12.88 $ 14.93 $ 12.37 $ 12.86 $ 14.86 $ 15.21
beginning of period
101.Income from
Investment Operations
102. Net investment
.79 .78 .76 .75 .75 .69 .63O .49 .39 .41P .13 .33 .28P .08P
income
103. Net realized and
1.69 1.92 (1.53) 1.81 1.17 (2.42) 1.52 1.79 2.02 1.05 .47 1.97 1.03 .72
unrealized
gain (loss) on
investments
104. Total from investment
2.48 2.70 (.77) 2.56 1.92 (1.73) 2.15 2.28 2.41 1.46 .60 2.30 1.31 .80
operations
105.Less Distributions
106. From net investment
(.77) (.77) (.70) (.74) (.75) (.72) (.59) (.48) (.36) (.32) (.11) (.30) (.21) (.07)
income
107. From net realized
- -- (.34) (1.14) (1.65) -- (.30) -- -- -- -- -- -- -- --
gain
108. Total distributions
(.77) (1.11) (1.84) (2.39) (.75) (1.02) (.59) (.48) (.36) (.32) (.11) (.30) (.21) (.07)
109.Net asset value, end
$ 11.95 $ 13.54 $ 10.93 $ 11.10 $ 12.27 $ 9.52 $ 11.08 $ 12.88 $ 14.93 $ 16.07 $ 12.86 $ 14.86 $ 15.96 $ 15.94
of period
110.Total return G,H
24.86 23.48 (7.28) 26.99 17.58 (14.90) 22.97 20.91 18.90 9.82% 4.88% 18.03 8.84% 5.25%
% % % % % % % % % %
111.Net assets, end of
$ 349,2 $ 544,2 $ 443,6 $ 436,7 $ 463,6 $ 253,0 $ 168,5 $ 139,3 $ 191,1 $ 197,5 $ 1,462 $ 42,32 $ 179,5 $ 35,37
period (000 omitted)
62 69 03 53 96 49 90 91 38 33 6 01 3
112.Ratio of expenses to
.63% .61% .54%N .55%N .55%N .61%N .67%N .71%N .79%F .71%F 1.55%A 1.77% 1.64%F 2.18%A,F
average net assets
113.Ratio of expenses to
.63% .61% .61%N .65%N .65%N .71%N .77%N .79%N .80%F .73%F 1.55%A 1.77% 1.67%F 2.24%A,F
average net assets before
expense reductions
114.Ratio of net
7.36% 6.06% 5.58% 6.86% 6.09% 6.11% 5.66% 3.77% 3.00% 2.62% 3.39%A 2.02% 1.69% 1.15%A
investment income
to average net assets
115.Portfolio turnover
110%M 107% 137% 78% 93% 103% 91% 51% 120% 140% 51% 120% 140% 140%
</TABLE>
A ANNUALIZED.
B AUGUST 20, 1986 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30,
1986.
C COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E FOR THE THREE MONTHS ENDED DECEMBER 31, 1994.
F FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A
PORTION OF THE FUND'S EXPENSES.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD FMR NOT REIMBURSED
CERTAIN EXPENSES DURING THE PERIODS SHOWN.
I AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
J NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE AT THE END OF THE PERIOD LESS
THE AMOUNT OF UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE OF THE FUND AT
AUGUST 20, 1986.
K EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. IN ADDITION, DURING THE PERIOD JULY 1, 1986 THROUGH OCTOBER 31,
1987 FMR WAIVED .05% OF THE ANNUAL INDIVIDUAL FUND FEE OF .35%.
L INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FMR FOR ADJUSTMENTS
TO PRIOR PERIODS' FEES.
M IN JULY 1985, THE SEC ADOPTED REVISIONS TO EXISTING RULES WITH
RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER RATE. THE REVISED
RULES REQUIRE THE INCLUSION IN THE CALCULATION OF LONG-TERM U.S. GOVERNMENT
SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE EXCLUDED FROM THE
CALCULATION.
N EFFECTIVE APRIL 1, 1987 TO SEPTEMBER 10, 1992, FMR REIMBURSED .10%
OF THE ANNUAL MANAGEMENT FEE OF .50%.
O INCLUDES $.04 PER SHARE FROM FOREIGN TAXES RECOVERED.
P NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
Q INCLUDES THE EFFECT OF ANNUALIZING A VOLUNTARY REIMBURSEMENT OF
FEES BY FMR.
INCOME & GROWTH
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
116.Selected Per-Share Data and Ratios Class A
117.Years ended October 31
1987B 1988 1989 1990 1991 1992 1993 1994
118.Net asset value, beginning of period
$ 10.00 $ 9.44 $ 11.07 $ 12.77 $ 10.41 $ 14.13 $ 14.41 $ 15.91
119.Income from Investment Operations
120. Net investment income
.27 .62 1.01G .56 .51 .50 .48 .38
121. Net realized and unrealized gain (loss) on investments
(.63) 1.56 1.27 (1.34) 3.74 .85 2.18 (.79)
122. Total from investment operations
(.36) 2.18 2.28 (.78) 4.25 1.35 2.66 (.41)
123.Less Distributions
124. From net investment income
(.20) (.55) (.58) (1.06) (.53) (.46) (.56) (. 28 )
125. In excess of net investment income
-- -- -- -- -- -- -- (.02)
126. From net realized gain
- -- -- -- (.52) -- (.61) (.60) (.49)
127. Return of Capital
-- -- -- -- -- -- -- (.04)
128. Total distributions
(.20) (.55) (.58) (1.58) (.53) (1.07) (1.16) (.83)
129.Net asset value, end of period
$ 9.44 $ 11.07 $ 12.77 $ 10.41 $ 14.13 $ 14.41 $ 15.91 $ 14.67
130.Total return E,F
(3.90)% 23.66% 21.15% (7.15)% 41.73% 10.27% 19.66% (2.69)%
131.Net assets, end of period (000 omitted)
$ 34,376 $ 36,224 $ 46,139 $ 60,934 $ 135,53 $ 397,67 $ 1,654,1 $ 3,128,7
3 2 24 76
132.Ratio of expenses to average net assets
2.06%A 2.06% 1.91% 1.85% 1.71% 1.60% 1.51%H 1.58%H
133.Ratio of expenses to average net assets before expense
2.06%A 2.06% 1.91% 1.85% 1.71% 1.60% 1.52%H 1.59%H
reductions
134.Ratio of net investment income to average net assets
3.95%A 5.83% 8.80% 5.29% 4.19% 3.97% 3.24% 3.79%
135.Portfolio turnover rate
206%A 204% 151% 297% 220% 389% 200% 202 %
</TABLE>
EMERGING MARKETS INCOME
<TABLE>
<CAPTION>
<S> <C> <C>
136.Selected Per-Share Data and Ratios Class A Class B
137.Year ended December 31 1994C 1994D
138.Net asset value, beginning of period $ 10.000 $ 9.700
139.Income from Investment Operations
140. Net investment income .356 .167
141. Net realized and unrealized gain (loss) on investments (.073) .227
142. Total from investment operations .283 .394
143.Less Distributions
144. From net investment income (.353) (.220)
145. In excess of net investment income (.150) (.094)
146. From net realized gain (.010) (.010)
147. In excess of net realized gain (.250) (.250)
148. Total distributions (.763) (.574)
149.Net asset value, end of period $ 9.520 $ 9.520
150.Total returnE,F 2.47% 3.67%
151.Net assets, end of period (000 omitted) $ 30,029 $ 5,034
152.Ratio of expenses to average net assets 1.50%A 2.25%A
153.Ratio of expenses to average net assets before expense reductions 2.15%A 2.60%A,I
154.Ratio of net investment income to average net assets 6.60%A 5.86%A
155.Portfolio turnover 354%A 354%A
</TABLE>
A ANNUALIZED.
B JANUARY 6, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C 3.MARCH 10, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1994.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
G NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $ .26 PER SHARE.
H FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A
PORTION OF THE FUND'S EXPENSES.
I 1.EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE LIMITATION.
HIGH YIELD
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
2.Selected Per-Share Data and Ratios Class A Class B
3.Years ended October 31
1987B 1988 1989 1990 1991 1992 1993 1994 1994D
4.Net asset value, beginning of period
$ 10.000 $ 9.090 $ 9.860 $ 8.970 $ 8.150 $ 10.120 $ 11.070 $ 12.010 $ 11.300
5.Income from Investment Operations
6. Net investment income
.878 1.165 1.237 1.144 1.115 1.146 .980 .848 .223
7. Net realized and unrealized gain (loss) on
(.910) .770 (.890) (.820) 1.948 .975 1.153 (.537) (.118)
investments
8. Total from investment operations
(.032) 1.935 .347 .324 3.063 2.121 2.133 .311 .105
9.Less Distributions
10. From net investment income
(.878) (1.165) (1.237) (1.144) (1.093) (1.171) (.963) (.851)I (.195)
11. From net realized gain
- -- -- -- -- -- -- (.230) (.250)I --
12. Total distributions
(.878) (1.165) (1.237) (1.144) (1.093) (1.171) (1.193) (1.101) (.195)
13.Net asset value, end of period
$ 9.090 $ 9.860 $ 8.970 $ 8.150 $ 10.120 $ 11.070 $ 12.010 $ 11.220 $ 11.210
14.Total returnE,F
(.81)% 22.14% 3.34% 3.58% 39.67% 21.96% 20.47% 2.64% .93%
15.Net assets, end of period (000 omitted)
$ 9,077 $ 11,900 $ 13,315 $ 15,134 $ 38,681 $ 136,31 $ 485,55 $ 679,623 $ 16,959
6 9
16.Ratio of expenses to average net assets
1.24%A 1.10% 1.10% 1.10% 1.10% 1.10% 1.11% 1.20% 2.20%A
17.Ratio of expenses to average net assets before
2.25%A,G 2.22% 2.17% 2.04% 1.76% 1.16% 1.11% 1.20% 2.20%A
expense reductions
18.Ratio of net investment income to average net
10.74%A 11.86% 12.98% 12.72% 12.20% 9.95% 8.09% 6.92% 5.92%A
assets
19.Portfolio turnover
166%A 135% 131% 90% 103% 100% 79% 118% 118%
</TABLE>
STRATEGIC INCOME
<TABLE>
<CAPTION>
<S> <C> <C>
20.Selected Per-Share Data and Ratios Class A Class B
21.Year ended December 31 1994C 1994C
22.Net asset value, beginning of period $ 10.000 $ 10.000
23.Income from Investment Operations
24. Net investment income .064H .072H
25. Net realized and unrealized gain (loss) on investments (.046) (.078)
26. Total from investment operations .018 (.006)
27.Less Distributions
28. From net investment income (.098) (.084)
29.Net asset value, end of period $ 9.920 $ 9.910
30.Total returnE,F .17% (.06)%
31.Net assets, end of period (000 omitted) $ 10,687 $ 9,379
32.Ratio of expenses to average net assets 1.35%A 2.10%A
33.Ratio of expenses to average net assets before expense reductions 2.50%A,G 2.50%A,G
34.Ratio of net investment income to average net assets 5.80%A 5.06%A
35.Portfolio turnover 104%A 104%A
</TABLE>
A ANNUALIZED.
B JANUARY 5, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C OCTOBER 31, 1994 (COMMENCEMENT OF SALES OF CLASS A & CLASS B
SHARES) TO DECEMBER 31, 1994.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
G EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
I THE AMOUNT SHOWN REFLECTS CERTAIN RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES.
GOVERNMENT INVESTMENT
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
36.Selected Per-Share Data and Ratios Class A Class B
37.Years ended October 31
1987B 1988 1989 1990 1991 1992 1993 1994 1994D
38.Net asset value, beginning of period
$ 10.000 $ 9.200 $ 9.260 $ 9.310 $ 9.150 $ 9.590 $ 9.730 $ 10.140 $ 9.100
39.Income from Investment Operations
40. Net investment income
.614 .769 .773 .735 .700 .666 .567 .515 .144
41. Net realized and unrealized gain (loss) on
(.800) .060 .050 (.160) .419 .125 .601 (1.031) (.137)
investments
42. Total from investment operations
(.186) .829 .823 .575 1.119 .791 1.168 (.516) .007
43.Less Distributions
44. From net investment income
(.614) (.769) (.773) (.735) (.679) (.651) (.558) (.504)H (.157)H
45. From net realized gain
- -- -- -- -- -- -- (.200) (.1 3 0)H --
46. In excess of net realized gain on investments
-- -- -- -- -- -- -- (.030) --
47. Total distributions
(.614) (.769) (.773) (.735) (.679) (.651) (.758) (.664) (.157)
48.Net asset value, end of period
$ 9.200 $ 9.260 $ 9.310 $ 9.150 $ 9.590 $ 9.730 $ 10.140 $ 8.960 $ 8.950
49.Total returnE,F
(1.84)% 9.34% 9.37% 6.48% 12.65% 8.49% 12.53% (5.27)% 0 .10%
50.Net assets, end of period (000 omitted)
$ 4,584 $ 6,590 $ 8,203 $ 9,822 $ 13,058 $ 23,281 $ 69,876 $ 114,453 $ 2,062
51.Ratio of expenses to average net assets
1.29%A 1.10% 1.10% 1.10% 1.10% 1.10% .68% .74% 1.70%A
52.Ratio of expenses to average net assets before
2.36%A 2.25% 2.75% 2.74% 2.46% 1.79% 1.32% 1.47% 2.62%A
expense reductions
53.Ratio of net investment income to average net
8.12%A 8.30% 8.45% 8.04% 7.47% 6.98% 6.11% 6.18% 5.22%A
assets
54.Portfolio turnover
32%A 44% 42% 31% 54% 315% 333% 313% 313%
</TABLE>
LIMITED TERM BOND
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55.Selected Per-Share Institutional Class A Class B
Data and Ratios Class
Years ended November 30
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992C 1993 1994 1994D
56.Net asset value,
$ 9.960 $ 10.55 $ 11.24 $ 10.25 $ 10.18 $ 10.41 $ 10.14 $ 10.55 $ 10.64 $ 11.16 $ 10.96 $ 10.64 $ 11.14 $ 10.43
beginning of period
0 0 0 0 0 0 0 0 0 0 0 0 0
57.Income from
Investment Operations
58. Net investment
1.053 1.026 .953 .944 .937 .901 .884 .840 .832 .6 02 .170 .785 .609 .204
income
59. Net realized and
.590 .710 (.770) (.070) .230 (.270) .411 .102 .531 (.8 33)(.320) .511 (.876) (.178)
unrealized gain
(loss) on investments
60. Total from
1.643 1.736 .183 .874 1.167 .631 1.295 .942 1.363 (.231) (.150) 1.296 (.267) .02
6
investment operations
61.Less Distributions
62. From net
(1.053) (1.026) (.953) (.944) (.937) (.901) (.885) (.852) (.843) (.597) (.170) (.796) (.555) (.187 )
investment income
63. From Return of
-- -- -- -- -- -- -- -- -- (.062) -- -- (.058) (.019)
Capital
64. From net realized
- -- (.020) (.220) -- -- -- -- -- -- -- -- -- -- --
gain
65. Total distributions
(1.053) (1.046) (1.173) (.944) (.937) (.901) (.885) (.852) (.843) (.659) (.170) (.796) (.613) (.206)
66.Net asset value, end
$ 10.55 $ 11.24 $ 10.25 $ 10.18 $ 10.41 $ 10.14 $ 10.55 $ 10.64 $ 11.16 $ 10.27 $ 10.64 $ 11.14 $ 10.26 $ 10.25
of period
0 0 0 0 0 0 0 0 0 0 0 0 0 0
67.Total returnE,F
17.40 17.04 1.78% 8.81% 12.03 6.46% 13.35 9.21% 13.17 (2.10) (1.37) 12.50 (2.44) .24%
% % % % % % % % %
68.Net assets, end of
$ 253,9 $ 418,6 $ 407,2 $ 418,9 $ 426,8 $ 356,5 $ 327,7 $ 160,1 $ 183,7 $ 172,1 $ 2,583 $ 59,18 $ 141,8 $ 3,156
period (000 omitted)
13 32 28 29 32 64 56 56 90 22 4 66
69.Ratio of expenses to
.65% .53% .53% .54% .54% .58% .57% .57% .64% .61% .82%A 1.23% 1.02% 1.65%A
average net assets
70.Ratio of expenses to
.65% .53% .53% .54% .54% .58% .57% .57% .64% .61% .82%A 1.23% 1.09% 2.41%A
average net assets
before expense
reductions
71.Ratio of net
10.29 9.22% 9.03% 9.16% 9.16% 8.90% 8.59% 7.96% 7.41% 6.45% 7.67%A 6.81% 6.04% 5.42%A
investment income to
%
average net assets
72.Portfolio turnover
88%G 59% 92% 48% 87% 59% 60% 7% 59% 68% 7% 59% 68% 68%
</TABLE>
A ANNUALIZED.
B JANUARY 7, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
G IN JULY 1985, THE SEC ADOPTED REVISIONS TO EXISTING RULES WITH RESPECT TO
THE CALCULATION OF THE PORTFOLIO TURNOVER RATE. THE REVISED RULES REQUIRE
THE INCLUSION IN THE CALCULATION OF LONG-TERM U.S. GOVERNMENT SECURITIES
WHICH, PRIOR TO THESE REVISIONS, WERE EXCLUDED FROM THE CALCULATION.
H THE AMOUNT SHOWN REFLECTS CERTAIN RECLASSFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
SHORT FIXED-INCOME
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
73.Selected Per-Share Data and Ratios Class A
74.Years ended October 31
1987B 1988 1989 1990 1991 1992 1993 1994
75.Net asset value, beginning of period
$ 10.000 $ 10.060 $ 9.940 $ 9.950 $ 9.620 $ 9.870 $ 9.950 $ 10.090
76.Income from Investment Operations
.101 .852 .832 .868 .848 .830 .732 .559
Net investment income
77. Net realized and unrealized gain (loss) on investments
.060 (.120) .010 (.330) .270 .071 .146 (.58 1 )
78. Total from investment operations
.161 .732 .842 .538 1.118 .901 .878 (.022)
79.Less Distributions
(.101) (.852) (.832) (.868) (.868) (.821) (.738) (.464)
From net investment income
80. In excess of net investment income
-- -- -- -- -- -- -- (.044)
81. Return of Capital
-- -- -- -- -- -- -- (.080)
82. Total Distributions
(.101) (.852) (.832) (.868) (.868) (.821) (.738) (.588)
83.Net asset value, end of period
$ 10.060 $ 9.940 $ 9.950 $ 9.620 $ 9.870 $ 9.950 $ 10.090 $ 9.480
84.Total returnD,E
1.61% 7.56% 8.89% 5.59% 12.19% 9.44% 9.13% (.22)%
85.Net assets, end of period (000 omitted)
$ 3,252 $ 13,433 $ 12,394 $ 13,062 $ 25,244 $ 170,55 $ 654,20 $ 787,92
8 2 6
86.Ratio of expenses to average net assets
.90%A .90% .90% .90% .90% .90% .95% .97%
87.Ratio of expenses to average net assets before expense
2.15%A,F 1.84% 2.22% 1.90% 1.74% 1.03% .95% .97%
reductions
88.Ratio of net investment income to average net assets
7.65%A 8.39% 8.45% 8.86% 8.50% 7.59% 6.77% 5.91%
89.Portfolio turnover rate
119%A 178% 157% 144% 127% 57% 58% 108%
</TABLE>
HIGH INCOME MUNICIPAL
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
90.Selected Per-Share Data and Ratios Class A Class B
91.Years ended October 31
1987B 1988 1989 1990 1991 1992 1993 1994 1994C
92.Net asset value, beginning of period
$ 10.000 $ 9.850 $ 10.460 $ 10.820 $ 10.870 $ 11.410 $ 11.650 $ 12.720 $ 11.610
93.Income from Investment Operations
94. Net investment income
.092 .750 .800 .811 .803 .774 .710 .689 .188
95. Net realized and unrealized gain (loss) on
(.150) .610 .410 .150 .660 .250 1.100 (1.430) (.400)
investments
96. Total from investment operations
(.058) 1.360 1.210 .961 1.463 1.024 1.810 (.741) (.212)
97.Less Distributions
98. From net investment income
(.092) (.750) (.800) (.811) (.803) (.774) (.710) (.689) (.188)
99. From net realized gain
- -- -- (.050) (.100) (.120) (.010) (.030) (.0 6 0) --
100. In excess of net realized gain
- -- -- -- -- -- -- -- (.0 1 0) --
101. Total distributions
(.092) (.750) (.850) (.911) (.923) (.784) (.740) (.759) (.188)
102.Net asset value, end of period
$ 9.850 $ 10.460 $ 10.820 $ 10.870 $ 11.410 $ 11.650 $ 12.720 $ 11.220 $ 11.210
103.Total returnD,F
(.58)% 14.22% 12.05% 9.28% 14.02% 9.21% 15.95% (6.03)% (1.86)%
104.Net assets, end of period (000 omitted)
$ 1,275 $ 3,290 $ 6,669 $ 22,702 $ 67,135 $ 156,65 $ 497,57 $ 544,422 $ 9,968
9 5
105.Ratio of expenses to average net assets
.80%A .89% .90% .90% .90% .90% .92% .89% 2.09%A
106.Ratio of expenses to average net assets before
2.25%A 2.25%F 2.75%F 2.09% 1.24% .96% .92% .89% 2.09%A
expense reductions
107.Ratio of net investment income to average net
7.24%A 7.33% 7.60% 7.37% 7.08% 6.59% 5.59% 5.78% 4.58%A
assets
108.Portfolio turnover
- -- 19% 27% 11% 10% 13% 27% 38% 38%
</TABLE>
A ANNUALIZED.
B SEPTEMBER 16, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
LIMITED TERM TAX-EXEMPT
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
109.Selected Institutional Class A Class B
Per-Share Data and Class
Ratios
Years ended November
1985B 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992D 1993 1994 1994E
30
110.Net asset value,
$ 10.00 $ 10.28 $ 10.99 $ 10.38 $ 10.52 $ 10.61 $ 10.64 $ 10.80 $ 11.08 $ 10.460 $ 11.01 $ 11.08 $ 10.460 $ 9.890
beginning of period
0 0 0 0 0 0 0 0 0 0 0
111.Income from
Investment Operations
112. Net investment
.130 .671 .641 .650 .674 .689 .682 .666 .536 .481 .131 .508 .455 .155
income
113. Net realized and
.280 .760 (.540) .140 .090 .030 .160 .280 .260 (1.030) .070 .260 (1.040) (.490)
unrealized
gain (loss) on
investments
114. Total from
.410 1.431 .101 .790 .764 .719 .842 .946 .796 (.549) .201 .768 (.585) (.335)
investment operations
115.Less Distributions
116. From net
(.130) (.671) (.641) (.650) (.674) (.689) (.682) (.666) (.536) (.481) (.131) (.508) (.455) (.155)
investment income
117. From net realized
- -- (.050) (.070) -- -- -- -- -- (.880) -- -- (.880) -- --
gain
118. In excess of net
-- -- -- -- -- -- -- -- -- (.020) -- -- (.020) --
realized gain
119. Total distributions
(.130) (.721) (.711) (.650) (.674) (.689) (.682) (.666) (1.416) (.501) (.131) (1.388) (.475) (.155)
120.Net asset value,
$ 10.28 $ 10.99 $ 10.38 $ 10.52 $ 10.61 $ 10.64 $ 10.80 $ 11.08 $ 10.46 $ 9.410 $ 11.08 $ 10.46 $ 9.400 $ 9.400
end of period
0 0 0 0 0 0 0 0 0 0 0
121.Total return F,G
4.12% 14.39% .97% 7.77% 7.50% 7.04% 8.15% 9.01% 8.01% (5.43)% 1.3 7% 7.72% (5.78)% (3.44)
122.Net assets, end of
$ 94,39 $ 161,0 $ 162,8 $ 132,4 $ 121,4 $ 111,50 $ 100,2 $ 28,42 $ 15,07 $ 11,702 $ 1,752 $ 39,80 $ 57,382 $ 1,682
period
1 45 57 43 18 6 94 8 6 0
(000 omitted)
123.Ratio of expenses
.69%A .58% .59% .63% .65% .62% .61% .66% .65% .65% 1.04%A .90% .90% 1.65%A
to
average net assets
124.Ratio of expenses
.69%A .58% .59% .63% .65% .62% .61% .67% .83% .76% 1.06%A 1.36% 1.04% 2.36%A
to average net assets
before expense
reductions
125.Ratio of net
6.33%A 6.29% 6.01% 6.20% 6.45% 6.53% 6.40% 6.05% 5.01% 4.75% 5.65%A 4.76% 4.49% 3.74%A
investment income
to average net assets
126.Portfolio turnover
103%A 34% 43% 24% 31% 32% 20% 36% 46% 53% 36% 46% 53% 53%
</TABLE>
SHORT-INTERMEDIATE TAX-EXEMPT
<TABLE>
<CAPTION>
<S> <C>
127.Selected Per-Share Data and Ratios Class A
128.Year ended November 30 1994C
129.Net asset value, beginning of period $ 10.000
130.Income from Investment Operations .259
Net interest income
131. Net realized and unrealized gain (loss) on investments (.230)
132. Total from investment operations .029
133.Less Distributions (.259)
From net interest income
134.Net asset value, end of period $ 9.770
135.Total return F,G .27%
136.Net assets, end of period (000 omitted) $ 16,563
137.Ratio of expenses to average net assets .75%A,H
138.Ratio of expenses to average net assets before expense reductions 1.54%A,H
139.Ratio of net interest income to average net assets 3.74%A
140.Portfolio turnover rate 111%A
</TABLE>
A ANNUALIZED.
B SEPTEMBER 19, 1985 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1985.
C MARCH 16, 1994 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1994.
D COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
E COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
F TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
H FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST,
TAXES BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO .75% OF AVERAGE
NET ASSETS.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or YIELD.
The exclusion of any applicable sales charge from a performance calculation
produces a higher return.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period.
Average annual total returns smooth out variations in performance; they
are not the same as actual year-by-year results. Average annual total
returns covering periods of less than one year assume that performance will
remain constant for the rest of the year.
Average annual and cumulative total returns usually will include the effect
of paying the maximum applicable sales charge.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
This difference may be significant for a fund whose investments are
denominated in foreign currencies.
In calculating yield, the fund may from time to time use a security's
coupon rate instead of its yield to maturity in order to reflect the risk
premium on that security. This practice will have the effect of reducing a
fund's yield.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
Each Class of a growth or growth and income fund may quote its adjusted NAV
including all distributions paid. This value may be averaged over specified
periods and may be used to calculate a moving average.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please contact your
Investment Professional.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Equity Portfolio Growth is a
diversified fund of Fidelity Advisor Series I, a Massachusetts business
trust organized on June 24, 1983. Growth Opportunities, Income & Growth,
High Yield, Government Investment and Short Fixed-Income are diversified
funds of Fidelity Advisor Series II, a Massachusetts business trust
organized on April 24, 1986. Equity Income is a diversified fund of
Fidelity Advisor Series III, a Massachusetts business trust organized on
May 17, 1982. Limited Term Bond is a diversified fund of Fidelity Advisor
Series IV, a Massachusetts business trust organized on May 6, 1983. Global
Resources and High Income Municipal are diversified funds of Fidelity
Advisor Series V, a Massachusetts business trust organized on April 24,
1986. Limited Term Tax-Exempt is a diversified fund and Short-Intermediate
Tax-Exempt is a non-diversified fund of Fidelity Advisor Series VI, a
Massachusetts business trust organized on June 1, 1983. Overseas is a
diversified fund of Fidelity Advisor Series VII, a Massachusetts business
trust organized on March 21, 1980. Emerging Markets Income and Strategic
Income are non-diversified funds and Strategic Opportunities is a
diversified fund of Fidelity Advisor Series VIII, a Massachusetts business
trust organized on September 23, 1983. Each trust is an open-end management
investment company. There is a remote possibility that one fund might
become liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. For shareholders
of Overseas, Equity Portfolio Growth, Strategic Opportunities, Emerging
Markets Income, and Strategic Income, you are entitled to one vote for each
share you own. For shareholders of Global Resources, Growth Opportunities,
Equity Income, Income & Growth, High Yield, Government Investment, Limited
Term Bond, Short Fixed-Income, High Income
Municipal, Limited Term Tax-Exempt, and Short-Intermediate Tax Exempt, the
number of votes you are entitled to is based upon the dollar value of your
investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which chooses their investments and
handles their business affairs. FMR chooses the investments for each
fund (except Government Investment, High Income Municipal, Limited Term
Tax-Exempt and Short-Intermediate Tax-Exempt) with the assistance of
foreign affiliates.
As of April 30, 1995, FMR advised funds having approximately 20 million
shareholder accounts with a total value of more than $28 5 billion.
Affiliates assist FMR with foreign securities: Fidelity Management &
Research (U.K.) Inc. (FMR U.K.), in London, England; Fidelity Management &
Research Far East Inc. (FMR Far East), in Tokyo, Japan; Fidelity
International Investment Advisors (FIIA), in Pembroke, Bermuda; Fidelity
International Investment Advisors (U.K.) Limited (FIIAL U.K.), in Kent,
England; and Fidelity Investment Japan Ltd. (FIJ), in Tokyo, Japan.
John Carlson is manager of Advisor Emerging Markets Income which he has
managed since joining Fidelity in June 1995. Mr. Carlson also manages New
Markets Income. Previously, he was executive director of emerging markets
at Lehman Brothers. From 1990 to 1992, Mr. Carlson was executive vice
president of capital markets for Daiwa Securities America.
Bettina E. Doulton has been manager of Advisor Equity Income since August
1993, VIP Equity-Income since July 1993 and Value Fund since March
1995 . Previously, she managed Select Automotive and assisted on
Magellan(registered trademark). Ms. Doulton also served as an analyst
following the domestic and European automotive and tire manufacturing
industry, as well as the gaming and lodging industry. She joined Fidelity
in 1986.
Margaret L. Eagle is vice president and manager of Advisor High
Yield , which she has managed since it began in January 1987. Ms.
Eagle also manages several pension fund accounts. Previously, she
managed Spartan High Income and High Income (now Capital & Income). She
also managed the bond portion of Puritan(registered trademark). Ms. Eagle
joined Fidelity in 1980.
Daniel R. Frank is vice president and manager of Advisor Strategic
Opportunities , which he has managed since its inception in December
1983. Previously he was an assistant to Peter Lynch on Magellan(registered
trademark). Mr. Frank joined Fidelity in 1979.
Michael S. Gray is vice president and manager of Advisor Limited Term
Bond , which he has managed since August 1987. Mr. Gray also manages
Investment Grade Bond, Spartan Investment Grade Bond, and Intermediate
Bond. Mr. Gray joined Fidelity in 1982.
Robert E. Haber is vice president and manager of Advisor Income &
Growth , which he has managed since January 1987. Mr. Haber also
manages Balanced and co-manages Global Balanced. Previously, he managed
Convertible Securities. Mr. Haber joined Fidelity in 1985.
John R. Hickling is vice president and manager of Advisor
Overseas , which he has managed since February 1993. Mr. Hickling
also manages Overseas and VIP: Overseas. Previously he managed Emerging
Markets, Europe, Pacific Basin, Japan, and International Growth & Income.
Mr. Hickling joined Fidelity in 1982.
Robert Ives is manager of Advisor Government Investment, which he has
managed since February 1995. Mr. Ives also manages Spartan Government
Income and Government Securities. Previously, he managed Ginnie Mae ,
Spartan Ginnie Mae , and Mortgage Securities . Mr. Ives joined
Fidelity in 1991, after receiving an M.B.A. from the University of Chicago.
Malcolm W. MacNaught is vice president and manager of Advisor Global
Resources , which he has managed since December 1987. Mr. MacNaught
also manages Select Precious Metals and Minerals and Select American Gold.
Mr. MacNaught joined Fidelity in 1968.
Charles Morrison is manager of Advisor Short Fixed-Income , which he
has managed since February 1995. He also manages Spartan Short-Term
Income and Short-Term Bond. Mr. Morrison is vice president of
Fidelity Management Trust Company. He Joined Fidelity in 1987.
David Murphy is manager of Advisor Limited Term Tax-Exempt and Advisor
Short-Intermediate Tax-Exempt. Mr. Murphy also manages Limited Term
Municipal, Spartan Intermediate Municipal, Spartan New Jersey Municipal
High Yield, Spartan New York Intermediate Municipal, and Spartan
Short-Intermediate Municipal. Previously, he managed Spartan California
Intermediate Municipal. Mr. Murphy joined Fidelity in 1989.
Robert E. Stansky is vice president and manager of Advisor Equity Portfolio
Growth , which he has managed since April 1987. Mr. Stansky also
manages Growth Company. Previously, he managed Emerging Growth and Select
Defense and Aerospace. Mr. Stansky joined Fidelity in 1983.
Donald G. Taylor is manager of Advisor Strategic Income, which he has
managed since October 1994. Mr. Taylor also manages VIP II: Investment
Grade Bond. In addition, he manages Income Plus for Fidelity International.
Previously, he managed Short-Term Bond, Spartan Short-Term Bond, Advisor
Short Fixed-Income, Corporate Trust, Qualified Dividend, VIP: Zero Coupon
Bond, and Utilities Income. Mr. Taylor joined Fidelity in 1986.
George A. Vanderheiden is vice president and manager of Advisor Growth
Opportunities , which he has managed since November 1987. Mr.
Vanderheiden also manages Destiny I and Destiny II. He is a managing
director of FMR Corp., and l eader of the g rowth
g roup . Mr. Vanderheiden joined Fidelity in 1971.
Guy E. Wickwire is vice president and manager of Advisor High Income
Municipal which he has managed since July 1994. Mr. Wickwire also manages
Massachusetts Tax-Free High Yield and Insure d Tax-Free managed
High Yield Tax-Free. Previously, he managed High Yield Tax-Free. Mr.
Wickwire joined Fidelity in 1981.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services. Fidelity
Investments Institutional Operations Company (FIIOC) performs
certain transfer agent servicing functions for Class A and Class B
shares of each fund .
FMR Corp. is the ultimate parent company of FMR, FMR Texas, FMR U.K., and
FMR Far East. Through ownership of voting common stock, members of the
Edward C. Johnson 3d family form a controlling group with respect to FMR
Corp. Changes may occur in the Johnson family group, through death or
disability, which would result in changes in each individual family
member's holding of stock. Such changes could result in one or more family
members becoming holders of over 25% of the stock. FMR Corp. has received
an opinion of counsel that changes in the composition of the Johnson family
group under these circumstances would not result in the termination of the
funds' management or distribution contracts and, accordingly, would not
require a shareholder vote to continue operation under those contracts.
Fidelity International Limited (FIL), is the parent company of FIIA, FIJ,
and FIIAL U.K.. The Johnson family group also owns, directly or indirectly,
more than 25% of the voting common stock of FIL.
UMB Bank, n.a. (UMB) is the transfer agent for High Income Municipal,
Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt, although it
employs State Street Bank & Trust Company (State Street) to perform these
functions for Class A of each fund and employs FIIOC to perform
these functions for Class B of each fund. UMB is located at 1010 Grand
Avenue, Kansas City, Missouri 64106. State Street's address is P.O. Box
8302, Boston, Massachusetts 02266-8302
A broker-dealer may use a portion of the commissions paid by Overseas,
Equity Portfolio Growth, Global Resources, Growth Opportunities, Strategic
Opportunities, Equity Income, Income & Growth and High Yield to reduce
custodian or transfer agent fees for those funds. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
a fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The value of each fund's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies and general market and economic
conditions.
The value of bonds fluctuates based on changes in interest rates , market
conditions, other economic and political news, and on their quality and
maturity . In general, bond prices rise when interest rates fall, and
vice versa. Lower-quality securities offer higher yields, but also carry
more risk. This effect is usually more pronounced for longer-term
securities.
A fund ' s focus on international investing involves increased
or additional risks from those above. Investments in foreign securities
may involve risks in addition to those of U.S. investments, including
increased political and economic risks , as well
as exposure to currency fluctuations . This is especially true for
emerging markets. Also, because many of the funds' investments are
denominated in foreign currencies, changes in the value of foreign
currencies can significantly affect a fund's share price. FMR may use a
variety of investment techniques to either increase or decrease a fund's
investment exposure to any currency.
FMR may use various investment techniques to hedge a portion of the
fund's risks, but there is no guarantee that these strategies will work
as FMR intends. When you sell your shares, they may be worth more or less
than what you paid for them.
If you are subject to the federal alternative minimum tax, you should note
that High Income Municipal may invest up to 100% of its assets and each of
Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt may invest up to
20% of its assets in municipal securities issue d to finance private
activities. T he interest from these investments is a tax-preference
item for purposes of the tax.
OVERSEAS FUND seeks growth of capital primarily through investments in
foreign securities.
The fund defines foreign securities as securities of issuers whose
principal activities are outside of the United States. The fund currently
intends to invest at least 65% of its total assets in securities of issuers
from at least three different countries outside of North America (the
United States, Canada, Mexico and Central America). There is no limit on
investments in any one region, country, or currency, although the fund
normally invests in at least three different countries. The fund expects to
invest most of its assets in securities of issuers located in developed
countries in these general geographic areas: the Americas (other than the
United States), the Far East and Pacific Basin, and Western Europe.
The fund may invest in many types of issuers, including companies and other
business organizations as well as governments and their agencies. The fund
expects that equity securities (including shares of closed-end investment
companies and depositary receipts) will account for the majority of its
investments. Although the majority of the fund's investments are expected
to be in equity securities, the fund may also purchase debt securities,
including lower-quality, higher yielding securities. FMR will not emphasize
income in choosing investments unless FMR believes the income will
contribute to the securities' growth potential. FMR may also invest a
portion of the fund's assets in high-quality, short-term debt securities,
bank deposits and money market instruments (including repurchase
agreements) denominated in U.S. dollars or foreign currencies.
FMR determines where an issuer is located by looking at such factors as its
country of organization, the primary trading market for its securities, and
the location of its assets, personnel, sales, and earnings. When allocating
the fund's investments among countries and regions, FMR considers such
factors as the potential for economic growth, expected levels of inflation,
governmental policies and the outlook for currency relationships. Although
the fund may invest significantly in the United States, the fund currently
intends to be as fully invested in non-U.S. issuers as is practicable in
light of the fund's cash flow and cash needs.
EQUITY PORTFOLIO GROWTH seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics.
The fund, under normal conditions, will invest at least 65% of its total
assets in common and preferred stock. The fund looks for domestic and
foreign companies with above-average growth characteristics compared to the
average of the companies included in the S&P 500. Growth may be measured by
factors such as earnings or gross sales. Companies with strong growth
potential often have new products, technologies, distribution channels, or
other opportunities. As a general rule, these companies may include
smaller, less well-known companies, and companies whose stocks have higher
than average price/earnings (P/E) ratios. The market prices of these stocks
may be particularly sensitive to economic, market, or company news. FMR may
also pursue growth in larger or revitalized companies or companies that
hold a strong position in the market. These growth characteristics may be
found in mature or declining industries.
GLOBAL RESOURCES FUND seeks long-term growth of capital and protection of
the purchasing power of shareholders' capital by investing primarily in
securities of foreign and domestic companies that own or develop natural
resources, or supply goods and services to such companies, or in physical
commodities.
The fund, under normal conditions, will invest at least 65% of its total
assets in securities of foreign and domestic companies that own or develop
natural resources, or supply goods and services to such companies, or in
physical commodities. FMR will seek securities whose prices directly
reflect positive changes in the value of an underlying natural resource or
whose issuers will benefit from particular phases in the overall
economic cycle. Accordingly, the fund may shift its emphasis from one
natural resource industry to another depending upon prevailing trends or
developments. The fund may also invest in securities of companies in other
industries, and in corporate and governmental debt securities of all types.
The fund expects to invest a majority of its assets in the securities of
companies that have their principal business activities in at least three
different countries (including the United States).
A company will be deemed to have substantial ownership of, or activities in
natural resources if, at the time those company's securities are acquired,
at least 50% of the company's assets are involved, either directly or
through subsidiaries, in exploring, mining, refining, processing,
transporting, fabricating, dealing in, or owning natural resources. Natural
resources include precious metals (e.g., gold, platinum and silver),
ferrous and nonferrous metals (e.g., iron, aluminum and copper), strategic
metals (e.g., uranium and titanium), hydrocarbons (e.g., coal, oil and
natural gases), chemicals, forest products, real estate, food products and
other basic commodities.
Although the fund is authorized to invest up to 50% of its assets in
physical commodities, it currently intends to invest no more than 25% of
its total assets in them, and intends to limit its physical commodity
investments to readily marketable precious metals. Precious metals, at
times, have been subject to substantial price fluctuations over short
periods of time and may be affected by unpredictable international monetary
and political policies such as currency devaluations or revaluations,
economic and social conditions within a country, trade imbalances, or trade
or currency restrictions between countries.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common stocks.
The fund, under normal conditions, will invest at least 65% of its total
assets in securities of companies that FMR believes have long-term growth
potential. Although the fund invests primarily in common stock and
securities convertible into common stock, it has the ability to purchase
other securities, such as preferred stock and bonds, that may produce
capital growth. The fund may invest in foreign securities without
limitation.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a "special
situation."
Under normal conditions, the fund will invest at least 65% of its total
assets in companies involving a special situation. The term "special
situation" refers to FMR's identification of an unusual, and possibly
non-repetitive, development taking place in a company or a group of
companies in an industry.
A special situation may involve one or more of the following
characteristics:
(small solid bullet) A technological advance or discovery, the offering of
a new or unique product or service, or changes in consumer demand or
consumption forecasts.
(small solid bullet) Changes in the competitive outlook or growth potential
of an industry or a company within an industry, including changes in the
scope or nature of foreign competition or the development of an emerging
industry.
(small solid bullet) New or changed management, or material changes in
management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences abroad,
including changes in foreign or domestic import and tax laws or other
regulations.
(small solid bullet) Other events, including natural disasters, favorable
litigation settlements, or a major change in demographic patterns.
"Special situations" often involve breaks with past experience. They can be
relatively aggressive investments. In seeking capital appreciation, the
fund also may invest in securities of companies not involving a special
situation, but which are companies with valuable fixed assets and whose
securities are believed by FMR to be undervalued in relation to the
companies' assets, earnings, or growth potential. FMR intends to invest
primarily in common stocks and securities that are convertible into common
stocks; however, it also may invest in debt securities of all types and
quality if FMR believes that investing in these securities will result in
capital appreciation. The fund may invest up to 30% of its assets in
foreign investments.
EQUITY INCOME seeks a yield from dividend and interest income which exceeds
the composite dividend yield on securities comprising the S&P 500. In
addition, consistent with the primary objective of obtaining dividend and
interest income, the fund will consider the potential for achieving capital
appreciation.
Under normal conditions, the fund will invest at least 65% of its total
assets in income-producing equity securities. For purposes of this policy,
equity securities are defined as common and preferred stocks. The balance
of the fund's assets will tend to be invested in debt securities, a high
percentage of which are expected to be convertible into common stocks. The
fund does not intend to invest in securities of issuers without proven
earnings and/or credit histories. Because the fund invests for income, as
well as capital appreciation, investors should not expect capital
appreciation comparable with funds which seek only capital appreciation.
The yield on the fund's assets generally will increase or decrease from
year to year in accordance with market conditions and in relation to the
changes in yields of the stocks included in the S&P 500.
INCOME & GROWTH FUND seeks both income and growth of capital by investing
in a diversified portfolio of equity and fixed-income securities with
income, growth of income and capital appreciation potential.
The fund invests in equity securities, convertible securities, common and
preferred stocks, and fixed-income securities that provide income or
opportunities for capital growth. The fund may buy securities that are not
currently paying income but offer prospects for future income. The fund may
invest in securities of foreign issuers. In selecting investments for the
fund, FMR will consider such factors as the issuer's financial strength,
its outlook for increased dividend or interest payments, and the potential
for capital gains.
EMERGING MARKETS INCOME FUND seeks a high level of current income by
investing primarily in debt securities and other instruments of issuers in
emerging markets. As a secondary objective, the fund seeks capital
appreciation.
The fund, under normal conditions, will invest at least 65% of its total
assets in debt securities and other instruments of issuers in emerging
markets. Countries with emerging markets include countries (i) that have an
emerging stock market, as defined by the International Finance Corporation,
(ii) with low-to middle-income economies, according to the World Bank, or
(iii) that are listed in World Bank publications as "developing."
The fund emphasizes countries with relatively low gross national product
per capita compared to the world's major economies, and with the potential
for rapid economic growth. FMR expects that emerging market opportunities
will be found mainly in Latin America, Asia, Africa, and emerging European
nations. FMR determines where an issuer is located by looking at such
factors as its country of organization, the primary trading market for its
securities, and the location of its assets, personnel, sales, and earnings.
There is no limit on investments in any one region, country, or currency,
although the fund normally invests in at least three different countries.
The fund may also invest a portion of its assets in common and preferred
stocks of emerging markets issuers, debt securities of non-emerging market
foreign issuers, and lower-quality debt securities of U.S. issuers. FMR
does not currently anticipate that these investments will exceed
approximately 20% of the fund's total assets. The fund may invest in
securities of any maturity. In addition, for cash management purposes, the
fund will ordinarily invest a portion of its assets in high-quality,
short-term debt securities and money market instruments, including
repurchase agreements and bank deposits denominated in U.S. or foreign
currencies.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible securities and
preferred stocks.
The fund, under normal conditions, will invest at least 65% of its total
assets in income producing debt securities and preferred stocks, including
convertible and zero coupon securities. The fund may also invest in
securities issued or guaranteed by the U.S. Government, any state or any of
their respective subdivisions, agencies or instrumentalities, and
securities of foreign issuers, including securities of foreign governments.
The fund may invest up to 35% of its total assets in equity securities,
including common stocks, warrants and rights.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation.
The fund invests primarily in fixed-income securities, allocated among
three broad categories: (1) U.S. government securities, including mortgage
securities and securities issued by government agencies; (2) corporate
securities, including lower-quality, high-yield securities as well as
investment-grade corporate bonds; and (3) foreign corporate and
governmental securities, including emerging market instruments and
securities of issuers in more developed markets. Although FMR expects that
the fund will normally have investments in each of the three asset
categories, there is no limit on the amount that the fund may invest in any
one type of fixed-income securities. Diversification, when successful, can
mean higher returns with decreased volatility. By allocating its
investments across different types of fixed-income securities, the fund
attempts to moderate the significant investment risks of each category
through diversification. However, each category may decline at the same
time. FMR regularly reviews the fund's allocation and makes changes
gradually over time to favor investments that it believes provide the most
favorable outlook for achieving the fund's objective.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
The fund, under normal circumstances, will invest at least 65% of its total
assets in government securities. The fund considers "government securities"
to include those which are subject to repurchase agreements. The fund
invests primarily in obligations issued or guaranteed by the U.S.
G overnment or any of its agencies or instrumentalities, including
U.S. Treasury bonds, notes and bills, Government National Mortgage
Association mortgage-backed pass-through certificates (Ginnie Maes) and
mortgage-backed securities issued by the Federal National Mortgage
Association (Fannie Maes) or the Federal Home Loan Mortgage Corporation
(Freddie Macs). These securities may or may not be fully backed by the U.S.
Government. In seeking current income, the fund also may consider the
potential for capital gain.
LIMITED TERM BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed - income obligations.
The fund invest s primarily in fixed-income obligations of all types.
The fund may invest in domestic and foreign investment grade
securities. When consistent with its primary objective, the fund may also
seek capital appreciation.
Under normal conditions, the fund maintains a dollar-weighted average
maturity of 10 years or less, but individual securities may be of any
maturity. In determining a security's maturity for purposes of calculating
the fund's average maturity, estimates of the expected time for its
principal to be repaid may be used. This can be substantially shorter than
its stated final maturity.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current income,
consistent with the preservation of capital, by investing primarily in a
broad range of investment-grade fixed-income securities. Where appropriate
the fund will take advantage of opportunities to realize capital
appreciation.
Under normal conditions, at least 65% of the fund's total assets will be
invested in fixed-income securities of all types, which may include
convertible and zero coupon securities. The fund may invest a portion of
its assets in securities issued by foreign companies and foreign
governments.
Under normal conditions, the fund maintains a dollar-weighted average
maturity of three years or less, but individual securities may be of any
maturity. In determining a security's maturity for purposes of calculating
the fund's average maturity, estimates of the expected time for its
principal to be repaid may be used. This can be substantially shorter than
its stated final maturity.
HIGH INCOME MUNICIPAL FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax.
The fund normally invests so that at least 80% of its net assets is
invested in municipal obligations whose interest is free from federal
income tax. The fund may invest in medium- and lower-quality municipal
obligations. The fund may invest more than 25% of its total assets
in securities whose revenue sources are from similar types of projects
(e.g., education, electric utilities, health care, housing, transportation,
or water, sewer and gas utilities) or whose issuers share the same
geographic location. The fund may invest up to 100% of its assets in
municipal obligations subject to the federal alternative minimum tax.
The fund may purchase long-term municipals with maturities of 20 years
or more, which generally produce higher yields than short-term municipals.
The fund also may purchase short-term municipal obligations in order to
provide for short-term capital needs. The average maturity of the fund is
currently expected to be greater than 20 years, but individual securities
may be of any maturity.
LIMITED TERM TAX-EXEMPT FUND seeks the highest level of income exempt from
federal income taxes that can be obtained consistent with the preservation
of capital.
The fund normally will invest so that 80% or more of its net assets will be
invested in securities whose interest is free from federal tax. The fund
invests in municipal obligations rated investment grade or higher. The fund
may also invest more than 25% of its total assets in securities
whose revenue sources are from similar types of projects (e.g., education,
electric utilities, health care, housing, transportation or water, sewer,
and gas utilities) or whose issuers share the same geographic location. The
fund may, under normal circumstances, invest up to 20% of its net assets in
obligations subject to the federal alternative minimum tax.
Under normal conditions, at least 80% of the fund's net assets will be
invested in obligations having remaining maturities of 15 years or less but
individual securities may be of any maturity. Under normal conditions, the
fund maintains a dollar-weighted average maturity of 10 years or less, but
individual securities may be of any maturity. In determining a security's
maturity for purposes of calculating the fund's average maturity, estimates
of the expected time for its principal to be repaid may be used. This can
be substantially shorter than its stated final maturity.
SHORT - INTERMEDIATE TAX-EXEMPT FUND seeks as high a level of current
income, exempt from federal income tax, as is consistent with preservation
of capital.
The fund invests primarily in municipal securities. The fund normally will
invest so that 80% or more of its net assets will be invested in securities
whose interest is free from federal income tax. The fund may, under normal
circumstances, invest up to 20% of its net assets in municipal securities
subject to the federal alternative minimum tax. The fund may invest any
portion of its assets in industrial revenue bonds (IRBs) backed by private
issuers, and may invest up to 25% of its total assets in IRBs related to a
single industry. The fund may also invest 25% or more of its total assets
in securities whose revenue sources are from similar types of projects
(e.g., education, electric utilities, health care, housing, transportation,
or water, sewer and gas utilities) or whose issuers share the same
geographic location.
Under normal conditions, the fund maintains a dollar-weighted average
maturity of between two and four years, but individual securities may be of
any maturity. In determining a security's maturity for purposes of
calculating the fund's average maturity, estimates of the expected time for
its principal to be repaid may be used. This can be substantially shorter
than its stated final maturity.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to its investment strategy.
Overseas, Equity Portfolio Growth, Global Resources, Growth Opportunities,
Strategic Opportunities, Equity Income, High Yield and Income &
Growth each reserve the right to invest without limitation in
preferred stocks and investment-grade debt instruments for temporary,
defensive purposes.
Emerging Markets Income, Strategic Income, Government Investment, Limited
Term Bond, and Short Fixed-Income each reserve the right to invest
without limitation in investment-grade money market or short-term
debt instruments for temporary, defensive purposes.
High Income Municipal, Limited Term Tax-Exempt, and Short-Intermediate
Tax-Exempt each do not expect to invest in federally taxable obligations.
Each, however, reserves the right to invest without limitation in
short-term instruments, to hold a substantial amount of uninvested cash, or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may employ in
pursuit of a fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. A complete listing of each fund's policies
and limitations and more detailed information about each fund's investments
is contained in the SAI. Policies and limitations are considered at the
time of purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help a fund
achieve its goal. Current holdings and recent investment strategies are
described in a fund's financial reports, which are sent to shareholders
twice a year. For a free SAI or financial report, call your Investment
Professional.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors.
RESTRICTIONS: With respect to 75% of its total assets, each of Overseas,
Global Resources, Growth Opportunities, Equity Income, Income & Growth,
High Yield, Government Investment, Limited Term Bond, Short Fixed-Income,
High Income Municipal, and Limited Term Tax-Exempt may not purchase more
than 10% of the outstanding voting securities of a single issuer.
With respect to 100% of its assets, each of Equity Portfolio Growth, and
Strategic Opportunities may not purchase more than 10% of the outstanding
voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa.
Debt securities, loans, and other direct debt have varying degrees of
quality and varying levels of sensitivity to changes in interest rates.
Longer-term bonds are generally more sensitive to interest rate changes
than short-term bonds.
Taxable lower-quality debt securities (sometimes called "junk bonds") and
tax-exempt lower-quality debt securities (sometimes called "municipal
junk bonds") often have speculative characteristics and involve
greater risk of default or price changes due to changes in the issuer's
creditworthiness, or they may already be in default. The market prices of
these securities may fluctuate more than higher-quality securities and may
decline significantly in periods of general or regional economic
difficulty.
The table on the following page provides a summary of ratings assigned to
debt holdings (not including money market instruments) in the funds'
portfolios. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1994, and are presented as a percentage of
total security investments. These percentages are historical and do not
necessarily indicate a fund's current or future debt holdings.
FISCAL 1994 DEBT HOLDINGS, BY RATING
(AS A % OF INVESTMENTS IN EACH RATING CATEGORY) (AS A % OF
INVESTMENTS IN EACH RATING CATEGORY)
INVESTMENT GRADE LOWER QUALITY
STANDARD & POOR'S CORPORATION AAA, AA, A BBB BB B CCC CC,C D NR
EQUITY FUNDS:
Overseas .43 -- -- -- -- -- -- -- -- -- --
- -- -- .61
Equity Portfolio Growth -- -- - -- - .01 -- --
- -- -- -- -- -- -- .01
Global Resources -- -- - -- - -- -- -- --
- -- -- -- -- -- -- -- --
Growth Opportunities 6.38 -- -- -- -- -- -- -- --
- -- -- -- -- .17
Strategic Opportunities 15.67 -- -- .28 .33 -- -- .04 .76
1.29
Equity Income 2.03 .50 .38 2.17 .03 -- -- -- -- .50
Income & Growth 19.17 2.93 4.39 4.28 .97 -- -- -- -- 11.79
TAXABLE/INCOME
Emerging Markets Income -- -- - -- - 9.37 5.32 -- --
- -- -- -- -- 54.79
High Yield .79 .26 8.02 32.56 4.79 .61 4.69 29.11
Strategic Income 31.24 .69 2.84 20.62 -- -- -- -- -- --
10.73
Government Investment 89.71 -- -- - -- - -- --
- -- -- -- -- -- -- .56
Limited Term Bond 69.85 .12 - -- - -- -- -- --
- -- -- -- -- .09
Short Fixed-Income 28.28 21.14 6.40 .69 -- -- -- --
- -- -- 16.94
TAX-EXEMPT/MUNICIPAL FUNDS:
High Income Municipal 32.93 22.73 6.31 2.32 -- -- -- --
- -- -- 31.76
Limited Term Tax-Exempt 78.53 -- -- -- -- -- --
- -- -- -- -- -- -- 10.16
Short - Intermediate Tax-Exempt 64.65 -- -- 9.86 -- --
- -- -- -- -- -- -- 10.96
MOODY'S INVESTOR SERVICE, INC.
Aaa, Aa, A Baa Ba B Caa Ca C -- --
EQUITY FUNDS:
Overseas .49 - -- - -- -- .50 -- -- -- --
- -- -- .05
Equity Portfolio Growth - -- - - -- - .02 -- --
- -- -- -- -- -- -- - -- -
Global Resources - -- - - -- - -- -- -- --
- -- -- -- -- -- -- - -- -
Growth Opportunities 6.42 -- -- -- -- .13 -- --
- - -- - -- -- -- --
Strategic Opportunities 15.67 -- -- .61 -- -- .88 .03 .04
1.14
Equity Income 2.13 .61 .19 2.38 -- -- -- -- -- -- .32
Income & Growth 20.40 1.97 3.92 8.48 .55 .25 -- -- 7.97
TAXABLE/INCOME
Emerging Markets Income 1.01 -- -- 8.44 16.37 -- --
- -- -- -- -- 43.66
High Yield -- -- .18 3.71 38.04 7.49 2.77 .56 28.07
Strategic Income 31.24 -- -- 1.49 22.86 -- -- -- --
- -- -- 10.51
Government Investment 90.27 -- -- -- -- -- --
- -- -- -- -- -- -- - -- -
Limited Term Bond 69.25 .72 -- -- -- -- -- --
- -- -- -- -- .09
Short Fixed-Income 29.78 21.17 9.90 3.27 -- -- -- --
- -- -- 9.32
TAX-EXEMPT/MUNICIPAL FUNDS:
High Income Municipal 27.46 28.41 10.76 1.38 -- -- -- --
- -- -- 28.05
Limited Term Tax-Exempt 88.37 -- -- -- -- -- --
- -- -- -- -- -- -- .33
Short - Intermediate Tax-Exempt 69.51 7.11 2.75 -- --
- -- -- -- -- -- -- 6.10
FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED DIRECTLY OR
INDIRECTLY BY MOODY'S OR S&P AMOUNTED TO .05%
(OVERSEAS), 0% (EQUITY PORTFOLIO GROWTH), 0% (GLOBAL RESOURCES), 0% (GROWTH
OPPORTUNITIES), 1.14% (STRATEGIC
OPPORTUNITIES), .31% (EQUITY INCOME), 4.85% (INCOME & GROWTH), 41.73%
(EMERGING MARKETS INCOME ), 22.19% (HIGH
YIELD), 5.51% (STRATEGIC INCOME) AND 7.85% FOR (SHORT
FIXED-INCOME). THESE PERCENTAGES MAY INCLUDE SECURITIES RATED
BY OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED
SECURITIES. FMR HAS DETERMINED THAT UNRATED
SECURITIES THAT ARE LOWER QUALITY ACCOUNT FOR 0% (OVERSEAS), 0%
(EQUITY PORTFOLIO GROWTH), 0% (GLOBAL RESOURCES), 0%
(GROWTH OPPORTUNITIES), 1.14% (STRATEGIC OPPORTUNITIES), .31% (EQUITY
INCOME), 3.87% (INCOME & GROWTH), 41.51%
(EMERGING MARKETS INCOME), 22.19% (HIGH YIELD), 5.51% (STRATEGIC
INCOME) AND 3.88% (SHORT FIXED-INCOME) OF EACH
FUND'S TOTAL SECURITY INVESTMENTS. REFER TO THE APPENDIX FOR A MORE
COMPLETE DISCUSSION OF THESE RATINGS.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S AND S&P
AMOUNTED TO 20.86% (HIGH INCOME
MUNICIPAL), 0% (LIMITED TERM TAX-EXEMPT) AND 1.46% (SHORT-INTERMEDIATE
TAX-EXEMPT). THESE PERCENTAGES MAY
INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS
WELL AS UNRATED SECURITIES. FMR HAS
DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER QUALITY ACCOUNT FOR
18.09% (HIGH INCOME MUNICIPAL), 0% (LIMITED
TERM TAX-EXEMPT) AND 0% (SHORT-INTERMEDIATE TAX-EXEMPT) OF EACH FUND'S
SECURITY INVESTMENTS. REFER TO THE FUND'S
SAI FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
RESTRICTIONS: For all funds, except Short-Intermediate Tax-Exempt,
purchase of a debt security is consistent with a fund's debt quality policy
if it is rated at or above the stated level by Moody's or rated in
equivalent categories by S&P, or is unrated but judged to be of equivalent
quality by FMR.
Limited Term Bond currently intends to limit its investments in debt
securities to those of Baa-quality and above, and currently intends to
limit its investments in debt securities rated Baa to 5% of its assets.
Short Fixed-Income currently intends to limit its investments in lower than
Baa-quality debt securities to 35% of its assets and currently intends to
limit its investments in debt securities to B-quality and above.
Global Resources currently intends to limit its investments in lower than
Baa-quality debt securities to 35% of its assets and currently intends to
limit its investments in debt securities to Caa-quality and above.
Each of Overseas, Equity Portfolio Growth, Growth Opportunities, Strategic
Opportunities, Equity Income and Income & Growth currently intends to limit
its investments in lower than Baa-quality debt securities to 35% of its
assets.
Limited Term Tax-Exempt currently intends to limit its investments in debt
securities to those of Baa-quality and above and currently intends to limit
its investments in debt securities rated Baa to 25% of its assets.
Government Investment currently intends to limit its investments in debt
securities to A-quality and above.
Purchase of a debt security is consistent with Short-Intermediate
Tax-Exempt's debt quality policy if, with respect to 60% of its assets, it
is judged by FMR to be of equivalent quality to debt securities rated A or
better by Moody's or S&P. The fund currently intends to limit its
investments in debt securities rated below Baa by Moody's or BBB by S&P, or
unrated debt securities judged by FMR to be of equivalent quality, to 5% of
its assets. The fund currently intends to limit its investments in debt
securities to Ba- quality and above.
MONEY MARKET INSTRUMENTS are high-quality instruments that present minimal
credit risk. They may include U.S. Government obligations, commercial paper
and other short-term corporate obligations, and certificates of deposit,
bankers' acceptances, bank deposits, and other financial institution
obligations. These instruments may carry fixed or variable interest rates.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. Government. Not all U.S. Government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. They may be issued in
anticipation of future revenues, and may be backed by the full taxing power
of a municipality, the revenues from a specific project, or the credit of a
private organization. A security's credit may be enhanced by a bank,
insurance company, or other entity. The value of some or all
municipal securities may be affected by uncertainties in the municipal
market related to legislation or litigation involving the taxation of
municipal securities or the rights of municipal securities holders. A
fund may own a municipal security directly or through a participation
interest.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign securities may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile.
AMERICAN DEPOSITARY RECEIPTS AND EUROPEAN DEPOSITARY RECEIPTS (ADRS AND
EDRS) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
ASSET-BACKED SECURITIES may include interests in pools of the following:
purchase contracts, financing leases, or sales agreements entered into by
municipalities; lower-rated debt securities; or consumer loans. The value
of these securities may be significantly affected by changes in interest
rates, the market's perception of issuers, and the creditworthiness of the
parties involved. Certain asset-backed securities rely on continued
payments by a municipality, and may also be subject to prepayment risk.
MORTGAGE SECURITIES are interests in pools of commercial or residential
mortgages, and may include complex instruments such as collateralized
mortgage obligations and stripped mortgage-backed securities. Mortgage
securities may be issued by the U.S. Government or by private entities. For
example, Ginnie Maes are interests in pools of mortgage loans insured or
guaranteed by a U.S. Government agency. Because mortgage securities pay
both interest and principal as their underlying mortgages are paid off,
they are subject to prepayment risk. This is especially true for stripped
securities. Also, the value of a mortgage security may be significantly
affected by changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other factors
difficult to predict, making their value highly volatile.
VARIABLE AND FLOATING RATE SECURITIES may have interest rates that move in
tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other debt securities,
although they may be more volatile and the value of certain types of
stripped securities may move in the same direction as interest rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S. repurchase
agreements, and may be denominated in foreign currencies. They also may
involve greater risk of loss if the counterparty defaults. Some
counterparties in these transactions may be less creditworthy than those in
U.S. markets.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features and
standby commitments are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as changes in real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the management
skill and creditworthiness of the issuer. Real estate-related instruments
may also be affected by tax and regulatory requirements, such as those
relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, purchasing
indexed securities, and selling securities short.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that the fund supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities and some other securities may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS. Each fund (except Overseas, Emerging Markets Income, High
Yield, and Strategic Income) may not purchase a security if, as a
result, more than 10% of its net assets would be invested in illiquid
securities.
Each of Overseas, Emerging Markets Income, High Yield, and Strategic Income
may not purchase a security if, as a result, more than 15% of its net
assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
WARRANTS are instruments which entitle the holder to buy underlying equity
securities at a specific price for a specific period of time. A warrant
tends to be more volatile than its underlying securities and ceases to have
value if it is not exercised prior to its expiration date. In addition,
changes in the value of a warrant do not necessarily correspond to changes
in the value of its underlying securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
changes in the market value of a single issuer or industry.
RESTRICTIONS: With respect to 100% of its assets each of Equity Portfolio
Growth and Strategic Opportunities may not purchase a security if, as a
result, more than 5% would be invested in the securities of a ny
issuer.
With respect to 75% of its total assets each of Overseas, Global Resources,
Growth Opportunities, Equity Income, Income & Growth, High Yield,
Government Investment, Limited Term Bond, Short Fixed-Income, High Income
Municipal, and Limited Term Tax-Exempt may not purchase a security if, as a
result, more than 5% would be invested in the securities of a ny
issuer.
Emerging Markets Income, Strategic Income, and Short-Intermediate
Tax-Exempt are considered non-diversified. Generally, to meet federal tax
requirements at the close of each quarter, each fund does not invest more
than 25% of its total assets in any issuer and, with respect to 50% of
total assets, does not invest more than 5% of its total assets in any
issuer
These limitations do not apply to U.S. Government securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 33% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. ( FBSI ) , an affiliate of
FMR, is a means of earning income. This practice could result in a loss or
a delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of each fund's
total assets; however , High Income Municipal , Limited Term
Tax-Exempt, and Short-Intermediate Tax-Exempt do not currently intend
to make loans.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
OVERSEAS FUND seeks growth of capital primarily through investments in
foreign securities.
EQUITY PORTFOLIO GROWTH seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics.
GLOBAL RESOURCES FUND seeks long-term growth of capital and protection of
the purchasing power of shareholders' capital by investing primarily in
securities of foreign and domestic companies that own or develop natural
resources, or supply goods and services to such companies, or in physical
commodities.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common stocks.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a "special
situation." Under normal conditions, the fund will invest at least 65% of
its total assets in companies involving a special situation. FMR intends to
invest primarily in common stocks and securities that are convertible
into common stocks ; however, it also may invest in debt
securities of all types and quality if FMR believes that investing in these
securities will result in capital appreciation. The fund may invest up to
30% of its assets in foreign investments.
EQUITY INCOME FUND seeks a yield from dividend and interest income which
exceeds the composite dividend yield on securities comprising the S&P 500.
In addition, consistent with the primary objective of obtaining dividend
and interest income, the fund will consider the potential for achieving
capital appreciation.
INCOME & GROWTH FUND seeks both income and growth of capital by investing
in a diversified portfolio of equity and fixed-income securities with
income, growth of income and capital appreciation potential.
EMERGING MARKETS INCOME FUND seeks a high level of current income by
investing primarily in debt securities and other instruments of issuers in
emerging markets. As a secondary objective, the fund seeks capital
appreciation.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible securities and
preferred stocks.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
LIMITED TERM BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed-income obligations.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current income,
consistent with the preservation of capital, by investing primarily in a
broad range of investment-grade fixed-income securities. Where appropriate
the fund will take advantage of opportunities to realize capital
appreciation.
HIGH INCOME MUNICIPAL FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests so that at least 80% of
its net assets are invested in municipal obligations whose interest is free
from federal income tax.
LIMITED TERM TAX-EXEMPT FUND seeks the highest level of income exempt from
federal income taxes that can be obtained consistent with the preservation
of capital. The fund normally will invest so that 80% or more of its net
assets will be invested in securities whose interest is free from federal
tax.
SHORT - INTERMEDIATE TAX-EXEMPT FUND seeks as high a level of current
income, exempt from federal income tax, as is consistent with preservation
of capital. The fund normally will invest so that 80% or more of its net
assets will be invested in securities whose interest is free from federal
income tax.
With respect to 75% of its total assets, each of Overseas, Global
Resources, Growth Opportunities, Equity Income, Income & Growth, High
Yield, Government Investment, Limited Term Bond, Short Fixed-Income, High
Income Municipal and Limited Term Tax-Exempt may not purchase a security
if, as a result, more than 5% would be invested in the securities of a
single issuer. With respect to 100% of its assets, each of Equity Portfolio
Growth and Strategic Opportunities may not purchase a security if, as a
result, more than 5% would be invested in the securities of a single
issuer.
With respect to 75% of its total assets, each of Overseas, Global
Resources, Growth Opportunities, Equity Income, Income & Growth, High
Yield, Government Investment, Limited Term Bond, Short Fixed-Income, High
Income Municipal, and Limited-Term Tax-Exempt may not purchase more than
10% of the outstanding voting securities of a single issuer. With respect
to 100% of its assets, each of Equity Portfolio Growth and Strategic
Opportunities may not purchase more than 10% of the outstanding voting
securities of a single issuer.
Each fund may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
Loans, in the aggregate, may not exceed 33% of each fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in
its share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services for certain of the funds. Each fund also
pays OTHER EXPENSES, which are explained on page .
FMR may, from time to time, agree to reimburse a fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by a fund if expenses fall below the specified limit prior to
the end of the fiscal year. Reimbursement arrangements, which may be
terminated at any time without notice, can decrease a fund's
expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Equity Income
pays FMR a monthly management fee at an annual rate of 0.50% of its average
net assets. The fee for Equity Portfolio Growth, Global Resources, Income &
Growth, Emerging Markets Income, High Yield, Strategic Income, Government
Investment, Limited Term Bond, Short Fixed-Income, High Income Municipal,
Limited Term Tax-Exempt, and Short-Intermediate Tax-Exempt is calculated by
adding a group fee rate to an individual fee rate, and multiplying the
result by each fund's average net assets. The fee for Overseas, Growth
Opportunities and Strategic Opportunities is determined by taking a basic
fee and then applying a performance adjustment. The performance adjustment
either increases or decreases the management fee, depending on how well
each fund has performed relative to the Morgan Stanley Capital
International Europe , Australia, Far East Index for Overseas or the
S&P 500 for each of Growth Opportunities and Strategic Opportunities.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. For Overseas, Equity Portfolio Growth, Global
Resources, Growth Opportunities, Strategic Opportunities, and Income &
Growth (the Equity Funds), this rate cannot rise above 0.52%, and it
drops as total assets under management increase. For Emerging Markets
Income, High Yield, Strategic Income, Government Investment, Limited Term
Bond, Short Fixed-Income, High Income Municipal, Limited Term Tax-Exempt
and Short-Intermediate Tax-Exempt (the Fixed-Income Funds) this rate cannot
rise above 0.37%, and it drops as total assets under management increase.
The basic fee rate (calculated monthly) is calculated by adding a group fee
rate to an individual fund fee rate, and multiplying the result by each
fund's average net assets.
The performance adjustment rate is calculated monthly by comparing the
performance of Overseas, Growth Opportunities, and Strategic Opportunities
to that of the respective indices over the most recent 36-month period. The
difference is translated into a dollar amount that is added to or
subtracted from the basic fee. The maximum annualized performance
adjustment rate is " 0.20%.
Investment performance will be measured separately for each class of shares
offered by Strategic Opportunities, Growth Opportunities, and Overseas and
the least of the results obtained will be used in calculating the
performance adjustment.
The following table states the management fee ratio for each fund for
its most recent fiscal year end.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Group Individual Total
Fee Rate Fund Fee Manageme
Rate nt Fee
Overseas [A] 0.32% 0.45% 0.80%
Equity Portfolio Growth 0.32% 0.32%[ B ] 0.64%[ B ]
Global Resources 0.32% 0.45% 0.77%
Growth Opportunities [A] 0.32% 0.30% 0.69%
Strategic Opportunities [A] 0.32% 0.30% 0.67%[C]
Equity Income N/A N/A 0.50%
Income & Growth 0.32% 0.20% 0.52%
Emerging Markets Income 0.16% 0.55% 0.70%[C]
High Yield 0.1 6 % 0.45% 0.60%
Strategic Income 0.16% 0.45% 0.60%[C]
Government Investment 0.16% 0.30% 0.46%
Limited Term Bond 0.16% 0.25%[ D ] 0.41%
Short Fixed-Income 0.16% 0.30% 0.46%
High Income Municipal 0.16% 0.25% 0.41%
Limited Term Tax-Exempt 0.16% 0.25% 0.41%
Short-Intermediate Tax-Exempt 0.16% 0.25% 0.41%[C]
</TABLE>
[A]THE BASIC FEE RATE FOR FISCAL 1994 WAS 0.77% FOR OVERSEAS, 0.62% FOR
GROWTH OPPORTUNITIES AND 0.62% FOR STRATEGIC OPPORTUNITIES
[B ] EFFECTIVE AUGUST 1, 1994, FMR VOLUNTARILY AGREED TO REDUCE THE
FUND'S INDIVIDUAL FUND FEE RATE FROM 0.33% TO 0.30%. IF THIS REDUCTION WERE
NOT IN EFFECT DURING FISCAL 1994, THE TOTAL FEE WOULD HAVE BEEN 0.65%.
[ C ]ANNUALIZED
[D] ON DECEMBER 14, 1994, SHAREHOLDERS OF THE FUND APPROVED AN INCREASE
OF THE INDIVIDUAL FUND FEE RATE FROM 0.25% TO 0.30% EFFECTIVE FEBRUARY 24,
1995.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR Far
East, FIJ, and FIIA. FIIA in turn has a sub-advisory agreement with FIIAL
U.K. These sub-advisers are compensated for providing FMR with investment
research and advice on issuers based outside the United States. FMR pays
FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively, of the
costs of providing these services. FMR pays FIJ and FIIA a fee equal to 30%
of its management fee rate associated with investments for which the
sub-adviser provided investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50%
of its management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis. FIIA pays FIIAL U.K. a fee
equal to 110% of the cost of providing these services.
For fiscal 1994, FMR, on behalf of each fund with sub-advisory agreements,
paid FMR U.K., FMR Far East, FIJ, and FIIA fees amounting to less than
0.01% of each fund's average net assets. Limited Term Bond did not pay fees
to any of FMR U.K., FMR Far East, FIJ, or FIIA, for fiscal 1994.
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
State Street performs certain transfer agency, dividend disbursing and
shareholder services for Class A of Overseas, Equity Portfolio Growth,
Global Resources, Growth Opportunities, Strategic Opportunities, Equity
Income, Income & Growth, Emerging Markets Income, High Yield, Strategic
Income, Government Investment, Limited Term Bond, and Short Fixed-Income
(the Taxable Funds). FIIOC performs certain transfer agency, dividend
disbursing and shareholder services for Class B of the Taxable Funds. FSC
calculates the NAV and dividends for each class of the Taxable Funds,
maintains the general accounting records , and administers the
securities lending program for each of the Taxable Funds. In fiscal 1994,
fees based on Class A average net assets paid by Class A to State
Street amount ed to 0.43% for Overseas, 0.32% for Equity Portfolio
Growth, 0.42% for Global Resources, 0.22% for Growth Opportunities, 0.39%
(annualized) for Strategic Opportunities, 0.38% for Equity Income, 0.20%
for Income & Growth, 0.36% (annualized) for Emerging Markets Income, 0.24%
for High Yield, 0.39% (annualized) for Strategic Income, 0.55% for
Government Investment, 0.30% for Limited Term Bond, and 0.22% for
Short Fixed-Income . In fiscal 1994, fees based on Class B average
net assets paid by Class B to FIIOC (annualized) amounted to
0.66% for Strategic Opportunities, 0.51% for Equity Income, 0.86% for
Emerging Markets Income, 0.40% for High Yield, 0.16% for Strategic Income,
0.45% for Government Investment, and 0.50% for Limited Term Bond. In fiscal
1994, fees based on each fund's average net assets paid by each
fund to FSC amounted to 0.06% for Overseas, 0.04% for Equity Portfolio
Growth, 0.06% for Global Resources, 0.02% for Growth Opportunities, 0.06%
(annualized) for Strategic Opportunities, 0.06% for Equity Income, 0.03%
for Income & Growth, 0.21% (annualized) for Emerging Markets Income, 0.04%
for High Yield, 0.43% for Strategic Income, 0.05% for Government
Investment, 0.04% for Limited Term Bond, and 0.03% for Short Fixed-Income.
UMB has entered into sub-arrangements pursuant to which State Street
performs certain transfer agency, dividend disbursing and shareholder
services for Class A shares of High Income Municipal, Limited Term
Tax-Exempt and Short-Intermediate Tax-Exempt (the Tax-Exempt Funds). UMB
has entered into sub-arrangements pursuant to which FIIOC performs certain
transfer agency, dividend disbursing and shareholder services for Class B
shares of the Tax-Exempt Funds. UMB has entered into sub-arrangements
pursuant to which FSC calculates the NAV and dividends for each class of
the Tax-Exempt Funds, and maintains each of the Tax-Exempt Fund's general
accounting records. All of the fees are paid to State Street, FIIOC, and
FSC by UMB, which is reimbursed by the applicable class or fund, as
appropriate, for such payments. In fiscal 1994, fees paid by UMB to State
Street on behalf of Class A shares amounted to 0.15% for High Income
Municipal, 0.18% for Limited Term Tax-Exempt, and 0.11% (annualized) for
Short-Intermediate Tax-Exempt, of Class A' s average net assets. In fiscal
1994, fees paid by UMB to FIIOC on behalf of Class B shares amounted to
0.28% (annualized)for High Income Municipal, and 0.25% (annualized) for
Limited Term Tax-Exempt , of Class B's average net assets. In fiscal
1994 fees paid by UMB to FSC amounted to 0.04% for High Income Municipal,
0.07% for Limited Term Tax-Exempt , and 0.42% (annualized) for
Short-Intermediate Tax-Exempt, of each fund's average net assets.
State Street has entered into sub-arrangements pursuant to which FIIOC
performs certain transfer agency, dividend disbursing and shareholder
services for Class A shares. State Street pays FIIOC a portion of its fee
for Class A accounts for which FIIOC provides limited services, or its full
fee for Class A accounts that FIIOC maintains on its behalf.
Class A shares have adopted a DISTRIBUTION AND SERVICE PLAN. Under the
Plans, Class A of each fund is authorized to pay FDC a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of Class A shares and providing personal
service to and/or maintenance of Class A shareholder accounts. Class A of
Equity Portfolio Growth and Equity Income may pay FDC a distribution fee at
an annual rate up to 0.75% of its average net assets, or such lesser amount
as the Trustees may determine from time to time. Class A of Emerging
Markets Income, High Yield, Strategic Income, Government Investment,
Limited Term Bond, High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt may pay FDC a distribution fee at an annual
rate up to 0.40% of its average net assets, or such lesser amount as the
Trustees may determine from time to time.
Class A of each of Overseas, Equity Portfolio Growth, Global Resources,
Growth Opportunities, Strategic Opportunities, Equity Income, and Income &
Growth currently pays FDC monthly at an annual rate of 0.65% of its
average net assets; and Class A of each of Emerging Markets Income,
High Yield, Strategic Income, Government Investment, Limited Term Bond,
High Income Municipal and Limited Term Tax-Exempt currently pays FDC at an
annual rate of 0.25% of its average net assets; and Class A of each
of Short Fixed-Income and Short-Intermediate Tax-Exempt currently pays FDC
monthly at an annual rate of 0.15% of its average net assets. For
purposes of calculating the distribution fee, average net assets are
determined at the close of business on each day throughout the month. The
Class A distribution fee may be increased only when the Trustees
believe that it is in the best interest of the applicable class's
shareholders to do so.
Up to the full amount of the Class A distribution fee may be reallowed to
Investment Professionals based upon the level of marketing and distribution
services provided.
Class B shares of each fund of have also adopted a DISTRIBUTION AND
SERVICE PLAN. Under the Class B Plans, Class B shares are authorized
to pay FDC a monthly distribution fee as compensation for its services and
expenses in connection with the distribution of Class B shares of the
applicable fund. Class B of each fund currently pays FDC monthly at
an annual rate of 0.75% of its average net assets determined at the close
of business on each day throughout the month. In addition, pursuant to each
Class B Plan, Investment Professionals are compensated at an annual rate of
0.25% of average net assets of that fund's Class B for providing personal
service to and/or maintenance of Class B shareholder accounts.
The Plans also specifically recognize that FMR may make payments from its
management fee, revenue, past profits or other resources to Investment
Professionals for their services to each class's shareholders. The Board
of Trustees of each fund has not authorized such payments.
Each fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity. A broker-dealer may use a
portion of the commissions paid by the fund to reduce the fund's custodian
or transfer agent fees.
The portfolio turnover rate for fiscal 1994 was 34% for Overseas, 137% for
Equity Portfolio Growth, 125% for Global Resources, 43% for Growth
Opportunities, 228% (annualized) for Strategic Opportunities, 140% for
Equity Income, 202% for Income & Growth, 354% (annualized) for Emerging
Markets Income, 118% for High Yield, 104% (annualized) for Strategic
Income, 68% for Limited Term Bond, 313% for Government Investment, 108% for
Short Fixed-Income, 38% for High Income Municipal, 53% for Limited Term
Tax-Exempt, and 111% (annualized) for Short-Intermediate Tax-Exempt. These
rates vary from year to year. High turnover rates increase transaction
costs and may increase taxable capital gains. FMR considers these effects
when evaluating the anticipated benefits of short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
Read your Investment Professional's program materials in conjunction
with this prospectus for additional service features or fees that may
apply. Certain features of the funds, such as minimum initial or subsequent
investment amounts, may be modified in these programs, and administrative
charges may be imposed for the services rendered.
The different ways to set up (register) your account with Fidelity are
listed on the right.
The account guidelines that follow may not apply to certain funds or to
certain retirement accounts. For instance, tax-free funds are not available
for purchase in retirement accounts. If your employer offers a fund through
a retirement program, contact your employer for more information. Otherwise
call your Investment Professional directly. If you have selected Fidelity
Advisor Funds as an investment option through an Insurance Company group
pension program, please contact the provider directly.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR TAXABLE
FUNDS)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 401(K) PLANS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
(solid bullet) MONEY PURCHASE/PROFIT SHARING PLANS (KEOGH PLANS) are
tax-deferred pension accounts designated for employees of unincorporated
businesses or for persons who are self-employed.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA). Contact your Investment
Professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Contact your Investment Professional.
HOW TO BUY SHARES
Once each business day, two share prices are calculated for Class A shares
of each fund: the offering price and the NAV. The offering price for
Class A includes a front-end sales charge, which you pay when you buy
Class A shares, unless you qualify for a reduction or waiver as
described beginning on page . When you buy Class A shares at
the offering price, the transfer agent deducts the applicable sales charge
and invests the rest at NAV. Each fund's Class B NAV, is also calculated
every business day. Class B shares of each fund are sold without a
front-end sales charge and may be subject to a CDSC upon redemption. For
information on how the CDSC is calculated, see "Transaction Details," page
.
Shares are purchased at the next offering price or NAV, as applicable,
calculated after your order is received and accepted by the transfer agent.
The offering price and NAV are normally calculated at 4:00 p.m. Eastern
time.
If you are placing your order through an Investment Professional, it is the
responsibility of your Investment Professional to transmit your order to
buy shares to the appropriate transfer agent before 4:00 p.m. Eastern time.
The transfer agent must receive payment within three business days
after an order for shares is placed; otherwise your purchase order may be
canceled and you could be held liable for resulting fees and/or losses.
Share certificates may be available for Class A shares upon request.
Share certificates are not available for Class B shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an account
application and mail it along with your check. If there is no account
application accompanying this prospectus, call your Investment
Professional.
If you are investing through a tax-sheltered retirement plan, such as an
IRA, for the first time, you will need a special application. Contact your
Investment Professional for more information and a retirement account
application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Wire money into your account,
(small solid bullet) Open your account by exchanging from the same class of
another Fidelity Advisor fund, or
(small solid bullet) Contact your Investment Professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity Advisor retirement accounts $500
Through automatic investment plans $1,000
TO ADD TO AN ACCOUNT $250
For Fidelity Advisor retirement accounts $100
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity Advisor retirement accounts NONE
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS B
SHARES.
For further information on opening an account, please consult your
Investment Professional or refer to the account application.
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE (small solid bullet) Contact your Investment Professional (small solid bullet) Contact your
Investment Professional
YOUR INVESTMENT PROFESSIONAL or, if you are investing through a or, if you are investing through a
Broker-Dealer or Insurance Broker-Dealer or Insurance
Representative call 1-800-522-7297. Representative call 1-800-522-7297. If
If you are investing through a Bank you are investing through a Bank
Representative call 1-800-843-3001. Representative call 1-800-843-3001.
(small solid bullet) Exchange from the same class of (small solid bullet) Exchange from the
same class of
another Fidelity Advisor fund account another Fidelity Advisor fund
account
with the same registration, including with the same registration,
including
name, address, and taxpayer ID name, address, and taxpayer ID
number. number.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (small solid bullet) Complete and sign the account (small solid bullet) Make your check payable to the
application. Make your check payable complete name of the fund of your
to the complete name of the fund of choice and note the applicable class.
your choice and note the applicable Indicate your fund account number on
class. Mail to the address indicated your check and mail to the address
on the application. printed on your account statement.
(small solid bullet) Exchange by mail: call your
Investment
Professional for instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (small solid bullet) Bring your account application and (small solid bullet) Bring your check to
your Investment
check to your Investment Professional.
Professional.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (small solid bullet) Not available (small solid bullet) If you are investing
through a
Broker-Dealer or Insurance
Representative, wire to:
State Street Bank & Trust Co.
Routing # 011000028
ATTN: Custody & Shareholder
Services Division
CREDIT: Fund Name
DDA# 99029084
FBO: (Account name)
(Account number)
If you are investing through a Bank
Representative, wire to:
Banker's Trust Co.
Routing # 021001033
Custody & Shareholder Services
Division
Fidelity Advisor DART System
A/C #00159759
FBO: (Account name)
(Account number)
Specify the complete name of the fund
of your choice , note the applicable
class,
and include your account number and
your name.
Automatically (automatic_graphic) (small solid bullet) Not available. (small solid bullet) Use Fidelity Advisor
Investment Program. Sign up for this
service when opening your account, or
call your Investment Professional to
begin the program.
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent, less any applicable CDSC. NAV is normally calculated at
4:00 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the
methods described on these pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request must
be made in writing, except for exchanges to other Fidelity funds, which can
be requested by phone or in writing.
To sell certificate d shares, call your Investment
Professional for instructions.
If you have selected Fidelity Advisor Funds as an investment option through
an Insurance Company group pension program, ple a se contact the
provider directly.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR NON-RETIREMENT ACCOUNT SHARES,
leave at least $1,000 worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE, you will need to sign up for th is
service in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and the fund from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of shares,
(small solid bullet) Your account registration has changed within the last
30 days,
(small solid bullet) The check is being mailed to a different address than
the one on your account (record address),
(small solid bullet) The check is being made payable to someone other than
the account owner,
(small solid bullet) The redemption proceeds are being transferred to a
Fidelity Advisor account with a different registration, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be redeemed,
signed certificates (if applicable), and
(small solid bullet) Any other applicable requirements listed in the
following table.
Deliver your letter to your Investment Professional, or mail it to the
following address:
(small solid bullet) If you purchase d your shares through a
Broker-Dealer or Insurance Representative:
Fidelity Advisor Funds
P.O. Box 8302
Boston, MA 02266-8302
(small solid bullet) If you purchased your shares through a Bank
Representative:
Fidelity Investments Institutional Operations Co mpany
82 Devonshire Street ZR5
Boston, MA 02109
Unless otherwise instructed, the transfer agent will send a check to the
record address.
CHECKWRITING
If you have a checkbook for your account in Short Fixed-Income or
Short-Intermediate Tax-Exempt, you may write an unlimited number of checks.
The minimum amount for a check is $500. Do not, however, try to close out
your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE All account types except retirement (small solid bullet) Maximum check request: $100,000.
YOUR INVESTMENT PROFESSIONAL
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(phone_graphic) All account types (small solid bullet) You may exchange to
the same class of
other Fidelity Advisor funds or to
other
Fidelity funds if both accounts
are
registered with the same name(s),
address, and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint Tenant, (small solid bullet) The letter of
Sole Proprietorship, by all persons required to sign for
UGMA, UTMA transactions, exactly as their names
appear on the account and sent to your
Retirement account Investment Professional or the transfer
agent.
(small solid bullet) The account owner
should complete a
retirement distribution form. Contact
your
Investment Professional or, if you
purchased your shares through a
Broker-Dealer or Insurance
Representative, call 1-800-522-7297. If
you purchased your shares through a
Bank Representative, call
1-800-843-3001.
Trust (small solid bullet) The trustee must sign
the letter indicating
capacity as trustee. If the trustee's
name
is not in the account registration,
provide a
copy of the trust document certified
within
the last 60 days.
Business or Organization (small solid bullet) At least one person
authorized by
corporate resolution to act on the
account must sign the letter.
Executor, Administrator, (small solid bullet) For instructions
contact your Investment
Conservator/Guardian Professional or, if you purchased your
shares through a Broker-Dealer or
Insurance Representative, call
1-800-522-7297. If you purchased your
shares through a Bank Representative,
call 1-800-843-3001.
Wire (wire_graphic) All account types except retirement (small solid bullet) You must sign up
for the wire feature
before using it. To verify that it is in
place, contact your Investment
Professional or, if you purchased your
shares through a Broker-Dealer or
Insurance Representative, call
1-800-522-7297. If you purchased your
shares through a Bank Representative,
call 1-800-843-3001. Minimum wire:
$500.
(small solid bullet) Your wire redemption
request must be
received by the transfer agent before
4:00 p.m. Eastern time for money to be
wired on the next business day.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) For all non-retirement Short (small solid bullet) Minimum check: $500.
Fixed-Income and Short-Intermediate (small solid bullet) All account owners must sign a signature
Tax-Exempt accounts only. card to receive a checkbook.
</TABLE>
Telephone redemptions cannot be processed for Fidelity Advisor fund
prototype retirement accounts where State Street Bank and Trust Company is
the custodian.
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you manage
your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction
that affects your account balance or your account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed,
even if you have more than one account in the fund. Call your Investment
Professional if you need additional copies of financial reports.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your shares and buy shares of the same
class of other Fidelity Advisor funds or shares of other Fidelity
funds by telephone or in writing. The Class A shares you exchange will
carry credit for any front-end sales charge you previously paid in
connection with their purchase.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see "Exchange
Restrictions" page .
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up periodic
redemptions from your account. Only Class A shares with an account value of
$10,000 or more are eligible for this program. Because of Class A's
front-end sales charge, you may not want to set up a systematic withdrawal
plan during a period when you are buying Class A shares on a regular basis.
One easy way to pursue your financial goals is to invest money regularly.
Fidelity Advisor funds offer convenient services that let you transfer
money into your fund account, or between fund accounts, automatically.
While regular investment plans do not guarantee a profit and will not
protect you against loss in a declining market, they can be an excellent
way to invest for retirement, a home, educational expenses, and other
long-term financial goals. Certain restrictions apply for retirement
accounts. Call your Investment Professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM MINIMUM FREQUENCY SETTING UP OR CHANGING
INITIAL ADDITIONAL Monthly, bimonthly, (small solid bullet) For a new account, complete the appropriate section on the
$1,000 $100[A] quarterly, application.
or semi-annually (small solid bullet) For existing accounts, call your Investment Professional for an
application.
(small solid bullet) To change the amount or frequency of your investment, contact
your Investment Professional directly or, if you purchased your
shares through a Broker-Dealer or Insurance Representative, call
1-800-522-7297. If you purchased your shares through a Bank
Representative, call 1-800-843-3001. Call at least 10 business
days prior to your next scheduled investment date (20 business
days if you purchased your shares through a bank) .
</TABLE>
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND OR A FIDELITY ADVISOR FUND
TO ANOTHER FIDELITY ADVISOR FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, (small solid bullet) To establish, call your Investment Professional after both
semi-annually, or accounts are opened.
annually (small solid bullet) To change the amount or frequency of your investment, contact
your Investment Professional directly or, if you purchased your
shares through a Broker-Dealer or Insurance Representative, call
1-800-522-7297. If you purchased your shares through a Bank
Representative, call 1-800-843-3001.
(small solid bullet) The account from which the exchanges are to be processed must
have a minimum balance of $10,000. The account into which the
exchange is being processed must have a minimum balance of
$1,000.
(small solid bullet) Both accounts must have the same registration and taxpayer ID
numbers.
(small solid bullet) Call at least 2 business days prior to your next scheduled
exchange date.
</TABLE>
[A] BECAUSE THEIR SHARE PRICES FLUCTUATE, THE FUNDS MAY NOT BE
APPROPRIATE CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital gains
to shareholders each year. Each fund pays capital gains, if any, in
December and may pay additional capital gains after the close of its fiscal
year. Normally, dividends for Equity Income and Income & Growth are
distributed in March, June, September and December; dividends for Overseas,
Equity Portfolio Growth, Global Resources, Growth Opportunities and
Strategic Opportunities are distributed in December; dividends for Equity
Portfolio Growth and Equity Income may also be distributed in January;
dividends for Emerging Markets Income, Strategic Income, High Yield,
Limited Term Bond, Government Investment, Short Fixed-Income, High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt are
declared daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the same class of the
fund. If you do not indicate a choice on your application, you will be
assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS PROGRAM(registered trademark). Your dividend and
capital gain distributions will be automatically invested in the same class
of shares of another identically registered Fidelity Advisor fund.
If you select distribution option 2 or 3 and the U.S. Postal Service cannot
deliver your checks, or if your checks remain uncashed for six months,
those checks will be reinvested in your account at the current NAV and your
election may be converted to the Reinvestment Option.
You may change your distribution option at any time by notifying the
transfer agent in writing.
For retirement accounts, all distributions are automatically reinvested.
When you are over 59 1/2 years old, you can receive distributions in cash.
Shares purchased through reinvestment of dividend and capital gain
distributions are not subject to a sales charge. If you direct Class A
distributions to a fund with a 4.75% front-end sales charge, you will not
pay a sales charge on those purchases.
When each of Overseas, Equity Portfolio Growth, Global Resources, Growth
Opportunities, Strategic Opportunities, Equity Income and Income & Growth
deducts a distribution from its NAV, the reinvestment price is the
applicable fund's NAV at the close of business that day.
Dividends from Emerging Markets Income, High Yield, Strategic Income,
Government Investment, Limited Term Bond, Short Fixed-Income, High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt will
be reinvested at the applicable fund ' s NAV on the last day of the
month. Capital gain distributions from these funds will be reinvested at
the NAV as of the date the applicable fund deducts the distributions from
its NAV. Distribution checks will be mailed within seven days for a
December ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds' tax implications. If your
account is not a tax-deferred retirement account, be aware of these tax
implications.
TAXES ON DISTRIBUTIONS. Interest income that High Income Municipal, Limited
Term Tax-Exempt, and Short-Intermediate Tax-Exempt earn is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed. Distributions from each fund
(except High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt) , however, are subject to federal income
tax and may also be subject to state or local taxes. If you live outside
the United States, your distributions from these funds could also be taxed
by the country in which you reside.
For federal tax purposes, income and short-term capital gain distributions
for each fund (except High Income Municipal, Limited Term Tax-Exempt,
and Short-Intermediate Tax-Exempt), are taxed as dividends; long-term
capital gain distributions are taxed as long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally free
from state and local income taxes. However, particular states may limit
this benefit, and some types of securities, such as repurchase agreements
and some agency-backed securities, may not qualify for the benefit. In
addition, some states may impose intangible property taxes. You should
consult your own tax adviser for details and up-to-date information on the
tax laws in your state.
However, for shareholders of High Income Municipal, Limited Term
Tax-Exempt, and Short-Intermediate Tax-Exempt, gain on the sale of
tax-free bonds results in taxable distributions. For shareholders of
High Income Municipal, Limited Term Tax-Exempt, and Short-Intermediate
Tax-Exempt, s hort-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends; long-term capital gain
distributions, if any, are taxed as long-term capital gains.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. High Income Municipal may invest up to 100% of its
assets and each of Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt may invest up to 20% of its assets in these securities.
Individuals who are subject to the tax must report this interest on their
tax returns.
A portion of the dividends from High Income Municipal, Limited Term
Tax-Exempt, and Short-Intermediate Tax-Exempt may be free
from state or local taxes. Income from investments in your state are often
tax-free to you. Each year, the transfer agent will send you a breakdown of
income from each state to help you calculate your taxes.
During fiscal 1994, 100% of the income dividends from High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt's were
free from federal income tax. And during fiscal 1994, 5.63% of High Income
Municipal's and 11.07% of Short-Intermediate Tax-Exempt's income dividends
were subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges - are subject
to capital gains tax. A capital gain or loss is the difference between the
cost of your shares and the price you receive when you sell them.
Whenever you sell shares of a fund, the transfer agent will send you a
confirmation statement showing how many shares you sold and at what price.
You will also receive a consolidated transaction statement at least
quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of tax
to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount of
your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution or dividend distribution, as applicable, from its NAV,
you will pay the full price for the shares and then receive a portion of
the price back in the form of a taxable distribution.
CURRENCY CONSIDERATIONS. For funds that can invest in foreign securities,
if a fund's dividends exceed its taxable income in any year, which is
sometimes the result of currency-related losses, all or a portion of the
fund's dividends may be treated as a return of capital to shareholders for
tax purposes. To minimize the risk of a return of capital, each of these
funds may adjust its dividends to take currency fluctuations into account,
which may cause the dividends to vary. Any return of capital will reduce
the cost basis of your shares, which will result in a higher reported
capital gain or a lower reported capital loss when you sell your shares.
The statement you receive in January will specify if any distributions
included a return of capital.
Undistributed net gains from currency transactions, if any, will generally
be distributed as a separate dividend in December.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and
its investments and these taxes generally will reduce a fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Each class's NAV and offering price are calculated as of the close
of business of the NYSE, normally 4:00 p.m. Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting that
class's pro rata share of the value of the applicable fund's liabilities,
subtracting the liabilities allocated to that class, and divid ing
the result by the number of shares of that class that are
outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. If quotations are not
readily available or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued by a
method that the Board of Trustees believes accurately reflects fair value.
THE OFFERING PRICE (price to buy one share) is the applicable class's NAV,
plus a sales charge for Class A shares. Class A has a maximum sales charge
of 4.75% (1.50% for Short Fixed-Income and Short-Intermediate Tax-Exempt)
of the offering price. The REDEMPTION PRICE (price to sell one share) is
the applicable class's NAV, minus any applicable CDSC for Class B shares.
SALES CHARGES AND INVESTMENT PROFESSIONAL
CONCESSIONS - CLASS A
(EXCEPT SHORT FIXED INCOME AND SHORT-INTERMEDIATE TAX-EXEMPT)
Sales Charge as % of
Investment
Offering Net Profession
Amount al
Price Investe Concession
d as % of
Offering
Price
Less than $50,000 4.75 4.99 4.00%
% %
$50,000 to less than $100,000 4.50 4.71 4.00%
% %
$100,000 to less than $250,000 3.50 3.63 3.00%
% %
$250,000 to less than $500,000 2.50 2.56 2.00%
% %
$500,000 to less than $1,000,000 2.00 2.04 1.75%
% %
$1,000,000 or more None None See
Below[A]
SHORT-FIXED-INCOME FUND AND
SHORT-INTERMEDIATE TAX-EXEMPT FUND:
Less than $1,000,000 1.50 1.52 1.20%
% %
$1,000,000 or more None None See
Below[A]
[A] INVESTMENT PROFESSIONALS WILL BE COMPENSATED WITH A FEE OF 0.25% FOR
PURCHASES OF $1 MILLION OR MORE IF THE ASSETS ON WHICH THE 0.25% IS PAID
REMAIN WITHIN THE FIDELITY ADVISOR FUNDS FOR ONE YEAR, EXCEPT FOR PURCHASES
THROUGH A BANK OR BANK-AFFILIATED BROKER-DEALER THAT QUALIFY FOR A SALES
CHARGE WAIVER DESCRIBED BEGINNING ON PAGE . ALL ASSETS ON WHICH THE
0.25% FEE IS PAID MUST REMAIN IN CLASS A SHARES OF THE FIDELITY ADVISOR
FUNDS, INITIAL CLASS SHARES OF DAILY MONEY FUND: U.S. TREASURY PORTFOLIO,
OR SHARES OF DAILY MONEY FUND: MONEY MARKET PORTFOLIO OR DAILY TAX-EXEMPT
MONEY FUND FOR A PERIOD OF ONE UNINTERRUPTED YEAR, OR THE INVESTMENT
PROFESSIONAL WILL BE REQUIRED TO REFUND THIS FEE TO FDC.
CONTINGENT DEFERRED SALES CHARGE. Class B shares may, upon redemption, be
assessed a CDSC based on the following schedule:
From Date of Purchase Contingent
Deferred
Sales Charge
Less than 1 year 4%
1 year to less than 3 years 3%
3 years to less than 4 years 2%
4 years to less than 5 years 1%
5 years to less than 6 years [A] 0%
[A] AFTER A MAXIMUM HOLDING PERIOD OF 6 YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND. SEE
"CONVERSION FEATURE" BELOW FOR MORE INFORMATION.
Investment Professionals with wh om FDC has agreements receive as
compensation from FDC a concession equal to 3.00% of your purchase of Class
B shares.
The CDSC will be calculated based on the lesser of the cost of Class B
shares at the initial date of purchase or the value of Class B shares at
redemption, not including any reinvested dividends or capital gains. In
determining the applicability and rate of any CDSC at redemption, Class B
shares representing reinvested dividends and capital gains, if any, will be
redeemed first, followed by Class B shares that have been held for the
longest period of time. Class B shares acquired through distributions
(dividends or capital gains) will not be subject to a CDSC.
CONVERSION FEATURE. After a maximum holding period of six years from the
initial date of purchase, Class B shares and any capital appreciation
associated therewith, convert automatically to Class A shares of the
same Fidelity Advisor fund. Conversion to Class A shares will be made at
NAV. At the time of conversion, a portion of the Class B shares purchased
through the reinvestment of dividends or capital gains (Dividend Shares)
will also convert to Class A shares. The portion of Dividend Shares that
will convert is determined by the ratio of your converting Class B
non-Dividend Shares to your total Class B non-Dividend Shares.
For more information about the CDSC, including the conversion feature and
the permitted circumstances for CDSC waivers, contact your Investment
Professional.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A or
Class B shares of a fund, you may reinvest an amount equal to all or a
portion of the redemption proceeds in the same class of the fund or of any
of the other Fidelity Advisor funds, at the NAV next determined after
receipt of your investment order, provided that such reinvestment is made
within 30 days of redemption. Under these circumstances, the dollar amount
of the CDSC you paid on Class B shares will be reimbursed to you by
reinvesting that amount in Class B shares. You must reinstate your shares
into an account with the same registration. This privilege may be exercised
only once by a shareholder with respect to a fund and certain restrictions
may apply. For purposes of the CDSC schedule, the holding period of your
Class B shares will continue as if Class B shares had not been redeemed.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations and certain
fiduciaries.
IF YOU ARE UNABLE TO REACH THE TRANSFER AGENT BY PHONE (for example, during
periods of unusual market activity), consider placing your order by mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they
would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV or offering price, as applicable, calculated after your order is
received and accepted by the transfer agent. Note the following:
(small solid bullet) The funds do not accept cash.
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees a fund or the
transfer agent has incurred.
(small solid bullet) Direct Purchases: You begin to earn dividends as of
the first business day following the day the fund receives payment.
(small solid bullet) Automated Purchase Orders : You begin to earn
dividends as of the business day your order is received and accepted.
AUTOMATED PURCHASE ORDERS. S hares of each fund can be
purchased or sold through Investment Professionals utilizing an automated
order placement and settlement system that guarantees payment for orders on
a specified date.
TO AVOID THE COLLECTION PERIOD associated with check purchases, consider
buying shares by bank wire, U.S. Postal money order, U.S. Treasury check,
or Federal Reserve check.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV, minus any applicable CDSC, calculated after your order is
received and accepted by the transfer agent . Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of Emerging Markets Income, High Yield,
Strategic Income, Government Investment, Limited Term Bond,
Short Fixed-Income, High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday will
continue to earn dividends until the next business day.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check have been collected,
which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the amount
of the check is greater than the value of your account, your check will be
returned to you and you may be subject to additional charges.
THE TRANSFER AGENTS RESERVE THE RIGHT TO DEDUCT AN ANNUAL
MAINTENANCE FEE of $12.00 from accounts with a value of less than
$2,500, subject to an annual maximum charge of $60.00 per shareholder.
In determining whether an annual maintenance fee will be deducted,
Class A accounts will be given credit for the current maximum front-end
sales charge multiplied by the value of the account on the calculation
date. Accounts opened after September 30 will not be subject to the fee
for that year. The fee, which is payable to the transfer agent, is designed
to offset in part the relatively higher costs of servicing smaller
accounts. The fee will not be deducted from retirement accounts (except
non-Fidelity prototype retirement accounts), accounts using a systematic
investment program, or if total assets in Fidelity mutual funds exceed
$50,000. Eligibility for the $50,000 waiver is determined by aggregating
Fidelity mutual fund accounts maintained by FIIOC or State Street which are
registered under the same primary social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000, you will be
given 30 days' notice to reestablish the minimum balance. If you do not
increase your balance, the transfer agent reserves the right to close your
account and send the proceeds to you. Your shares will be redeemed at the
NAV, minus any applicable CDSC, on the day your account is closed.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to Investment Professional s who support
the sale of shares of the funds. In some instances, these incentives will
be offered only to certain types of Investment Professionals, such as
bank-affiliated or non-bank affiliated broker-dealers, or to Investment
Professionals whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging Class A or Class B
shares of a fund for the same class of shares of other Fidelity Advisor
funds ; Class A shares for Initial Class shares of Daily Money Fund: U.S.
Treasury Portfolio or shares of Daily Money Fund: Money Market Portfolio or
Daily Tax-Exempt Money Fund; and Class B shares for Class B shares of Daily
Money Fund: U.S. Treasury Portfolio. However, you should note the
following:
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the difference between that fund's sales charge and any sales charge
you may have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge. If you have held Class A shares of
Short Fixed-Income or Short-Intermediate Tax-Exempt for at least six
months, you may exchange at NAV into the same class of any other Advisor
fund.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund performance
and shareholders, each fund reserves the right to temporarily or
permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
SALES CHARGE REDUCTIONS AND WAIVERS
The front-end sales charge will be reduced for purchases of Class A shares
according to the Sales Charge Schedule shown on page if your purchase
qualifies for one of the following reduction plans. Please refer to the
funds' SAI for more details about each plan or call your Investment
Professional. If you purchased your shares through a Broker-Dealer or
Insurance Representative, call 1-800-522-7297. If you purchased your shares
through a Bank Representative, call 1-800-843-3001.
Your purchases and existing balances of Class B shares may be included in
the following programs for purposes of qualifying for a Class A front-end
sales charge reduction.
QUANTITY DISCOUNTS apply to purchases of Class A shares of a single
Fidelity Advisor fund or to combined purchases of Class A and Class B
shares of any Fidelity Advisor funds, and to purchases of Initial Class
shares and Class B shares of Daily Money Fund: U.S. Treasury Portfolio and
shares of Daily Money Fund: Money Market Portfolio and Daily Tax-Exempt
Money Fund acquired by exchange from any Fidelity Advisor fund. (Minimum
investment is $50,000, except that the minimum investment in each of Short
Fixed-Income or Short-Intermediate Tax-Exempt is $1 million).
To qualify for a quantity discount, investing in the fund's Class A
shares for several accounts at the same time will be considered a single
transaction (Combined Purchase), as long as shares are purchased through
one Investment Professional and the total is at least $50,000 (or at least
$1 million for each of Advisor Short Fixed-Income Fund or Advisor
Short-Intermediate Tax-Exempt Fund).
RIGHTS OF ACCUMULATION let you determine your front-end sales charge on
Class A shares by adding to your new purchase of Class A shares the value
of all of the Fidelity Advisor fund Class A and Class B shares held by you,
your spouse, and your children under age 21. You can also add the value of
Initial Class shares and Class B shares of Daily Money Fund: U.S. Treasury
Portfolio and shares of Daily Money Fund: Money Market Portfolio and Daily
Tax-Exempt Money Fund acquired by exchange from any Fidelity Advisor fund.
A LETTER OF INTENT (the "Letter") lets you receive the same reduced
front-end sales charge on purchases of Class A shares made during a
13-month period as if the total amount invested during the period had been
invested in a single lump sum. (See Quantity Discounts above.) You must
file your non-binding Letter with the Transfer Agent within 90 days
of the start of your purchases. Your initial investment must be at least 5%
of the amount you plan to invest. Out of the initial investment, 5% of the
dollar amount specified in the Letter will be registered in your name and
held in escrow. You will earn income dividends and capital gain
distributions on escrowed Class A shares. Neither income dividends nor
capital gain distributions reinvested in additional Class A or Class B
shares will apply toward completion of the Letter. The escrow will be
released when your purchase of the total amount has been completed. You are
not obligated to complete the Letter, and in such a case, sufficient
escrowed Class A shares will be redeemed to pay any applicable front-end
sales charges.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING CLASS A SHARES:
1. Purchased by a bank trust officer, registered representative, or other
employee (or a member of one of their immediate families) of Investment
Professionals having agreements with FDC;
2. Purchased by a current or former trustee or officer of a Fidelity fund
or a current or retired officer, director or regular employee of FMR Corp.
or its direct or indirect subsidiaries (a Fidelity trustee or employee),
the spouse of a Fidelity trustee or employee, a Fidelity trustee or
employee acting as custodian for a minor child, or a person acting as
trustee of trust for the sole benefit of the minor child of a Fidelity
trustee or employee;
3. Purchased by a charitable organization (as defined in Section 501(c)(3)
of the Internal Revenue Code) investing $100,000 or more;
4. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined in
Section 501(c)(3) of the Internal Revenue Code);
5. Purchased for a Fidelity or Fidelity Advisor IRA account with the
proceeds of a distribution (i) from an employee benefit plan that qualified
for waiver ( 7 ) or had a minimum of $3 million in plan assets
invested in Fidelity funds; or (ii) from an insurance company separate
account qualifying under (6) below, or used to fund annuity contracts
purchased by employee benefit plans having in the aggregate at least $3
million in plan assets invested in Fidelity funds;
6. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans which, in the aggregate, have
more than 200 eligible employees or a minimum of $1 million in plan assets
invested in Fidelity Advisor funds;
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund
complexes on which you have previously paid a front-end sales charge or
CDSC;
9. Purchased by a trust institution or bank trust department
(excluding assets described in (11) and (12) below) that has executed a
participation agreement with FDC specifying certain asset minimums and
qualifications, and marketing restrictions. Assets managed by third parties
do not qualify for this waiver.
10. Purchased for use in a broker-dealer managed account program,
provided the broker-dealer has executed a participation agreement with FDC
specifying certain asset minimums and qualifications and marketing, program
and trading restrictions. Employee benefit plans assets do not qualify for
this waiver;
11. Purchased as part of an employee benefit plan having more than (i) 200
eligible employees or a minimum of $1 million of plan assets invested of
Fidelity Advisor funds; or (ii) 25 eligible employees or $250,000 of plan
assets invested in Fidelity Advisor Funds that subscribe to the Advisor
Retirement Connection or similar FIIS-sponsored program.
12. Purchased as part of an employee benefit plan through an intermediary
that has signed a participation agreement with FDC specifying certain asset
minimums and qualifications, and marketing, program and trading
restrictions; or
13. Purchased on a discretionary basis by a registered investment advisor
which is not part of an organization primarily engaged in the
brokerage business , that has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver.
In order to continue to qualify for waivers (9), (10) and (13), eligible
investors with existing Class A accounts will be required to sign and
comply with a participation agreement. Eligible investors that do not meet
revised asset requirements specified in the Participation Agreement will be
allowed to continue investing in Class A shares under the terms of their
current relationship until June 30, 1997, after which they will be
prevented from making new or subsequent purchases in Class A load waived,
except that employee benefit plans will be permitted to make additional
purchases of Class A shares load waived.
You must notify FDC in advance if you qualify for a front-end sales charge
waiver. Employee benefit plan investors must meet additional requirements
specified in the funds' SAI.
If you have authorized a broker-dealer or investment adviser to make
investment decisions for you, or if you are investing through a trust
department, you may qualify to purchase either Class A shares without a
sales charge (as described in (9), (10) and (13), above) or Institutional
Class shares. Because Institutional Class shares have no sales charge, and
do not pay a distribution fee or a shareholder service fee, Institutional
Class shares are expected to have a higher total return than Class A or
Class B shares. Contact your Investment Professional to discuss if you
qualify.
THE CDSC ON CLASS B SHARES MAY BE WAIVED:
1. In cases of disability or death, provided that Class B shares are
redeemed within one year following the death or the initial determination
of disability, or
2. In connection with a total or partial redemption related to certain
distributions from retirement plans or accounts.
Your Investment Professional should call Fidelity for more information.
APPENDIX
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge d ." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
AA - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
BAA - Bonds which are rated Baa are considered as medium-grade
obligations , ( i.e., they are neither highly protected nor poorly
secured ) . Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative
elements ; t heir future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds which are rated C are the lowest-rated class of
bonds , and issue s so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category. Those bonds in the Aa, A, Baa, Ba, and B groups
which Moody's believes possess the strongest investment attributes are
designated by the symbols Aa1, A1, Baa1, and B1.
DESCRIPTION OF S&P'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highe st -rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories .
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC - The rat ing CC typically is applied to debt
subordinated to senior debt that is assigned an actual or implied
CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been
filed , but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also
will be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized. The ratings from AA to CCC may be modified by
the addition of a plus or minus to show relative standing within the major
rating categories.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by a fund or FDC. This Prospectus and related SAI do not
constitute an offer by a fund or by FDC to sell or to buy shares of a fund
to any person to whom it is unlawful to make such offer.
Fidelity Advisor Class A and Class B
Cross Reference Sheet
Item Number Statement of Additional Information
Section
-----------
- -------------------------------------------
10, 11 .................... Cover Page; Table of Contents
........
12 .................... *
........
13 a - c .................... Investment Policies and
Limitations
........
d .................... Portfolio Transactions
........
14 a - c .................... Trustees and Officers
........
15 a .................... *
........
b .................... Description of the Trusts
........
c .................... Trustees and Officers
........
16 a i .................... FMR
........
ii .................... Trustees and Officers
........
iii .................... Management Contracts; Contracts
with FMR
........ Affiliates
b,c,d .................... Management Contracts; Contracts
with FMR
........ Affiliates
e .................... *
........
f .................... Distribution and Service Plans
........
g .................... *
........
h .................... Description of the Trust
........
i .................... Contracts with FMR Affiliates
........
17 a .................... Portfolio Transactions
........
b .................... Portfolio Transactions
........
c .................... Portfolio Transactions
........
d, e .................... *
........
18 a .................... Description of the Trust
........
b .................... *
........
19 a .................... Additional Purchase and
Redemption Information
........
b .................... Additional Purchase and
Redemption Information;
........ Valuation of Portfolio
Securities
c .................... *
........
20 Distributions and Taxes
21 a, b .................... Distribution and Service Plans;
Contracts with FMR
........ Affiliates
c .................... *
........
22 .................... Performance
........
23 .................... Financial Statements
........
* Not Applicable
** To Be Filed By Amendment
FIDELITY ADVISOR FUNDS
CLASS A AND CLASS B
STATEMENT OF ADDITIONAL INFORMATION
JUNE 30, 1995
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
June 30, 1995) for Class A and Class B shares. Please retain this document
for future reference. Each fund's financial statements and financial
highlights, included in their respective Annual Reports, for the most
recent fiscal period are incorporated herein by reference. To obtain an
additional copy of this SAI, the Prospectus or any Annual Report, please
call Fidelity Distributors Corporation, 82 Devonshire Street, Boston,
Massachusetts 02109 or your Investment Professional.
TABLE OF CONTENTS PAGE
<TABLE>
<CAPTION>
<S> <C>
Investment Policies and Limitations
Special Considerations Affecting Canada
Special Considerations Affecting Latin America
Special Considerations Affecting Japan, the Pacific Basin, and Southeast Asia
Special Considerations Affecting Europe
Special Considerations Affecting Africa
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange, and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts with FMR Affiliates
Distribution and Service Plans
Description of the Trusts
Financial Statements
Appendix
</TABLE>
ACOM-ptb-695
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Global Resources Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Limited Term Bond Fund
Fidelity Advisor Short Fixed-Income Fund
TAX-EXEMPT/MUNICIPAL FUNDS
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Limited Term Tax-Exempt Fund
Fidelity Advisor Short-Intermediate
Tax-Exempt Fund
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.
(FMR U.K.)
Fidelity Management & Research (Far East) Inc.
(FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.)
Limited (FIIAL U.K.)
Fidelity Investments Japan Limited (FIJ)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
State Street Bank and Trust Company (State Street)
(Class A - Taxable Funds)
Fidelity Investments Institutional Operations Company (FIIOC) (Class B -
Taxable Funds)
UMB Bank, n.a. (UMB) (Class A and Class B -
Tax-Exempt Funds)
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets or other circumstances will not be considered when determining
whether the investment complies with a fund's investment policies and
limitations.
A fund's fundamental investment policies and limitations cannot be changed
without approval of a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940 ) of the fund. However,
except for the fundamental investment limitations listed below and the
policies restated in the "Fundamental Policies" paragraph on pag e ,
the investment policies and limitations described in this SAI are not
fundamental and may be changed without shareholder approval.
OVERSEAS FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than obligations issued or guaranteed by the
government of the United States, its agencies or instrumentalities) if, as
a result thereof: (i) more than 5% of the fund's total assets would be
invested in the securities of such issuer or (ii) the fund would hold more
than 10% of the outstanding voting securities of such issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed), less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the fund's total assets by reason of a decline in
net assets will be reduced within three days (exclusive of Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite any issue of securities, except to the extent that the fund
may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States, its agencies or
instrumentalities) if, as a result thereof, more than 25% of the fund's
total assets (taken at current value) would be invested in the securities
of issuers having their principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the price
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System if, as a result, the sum of such interests
and other investments considered illiquid under limitation (iv) would
exceed 15% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5. 0 %
of the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements).
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 10% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
For the fund's limitations on futures and options transactions, see the
section entitled " Futures and Options" beginning on page .
For the fund's limitations on short sales, see the section entitled "Short
Sales" on page .
EQUITY PORTFOLIO GROWTH
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) 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 (a) more than 5% of the fund's total
assets (taken at current value) would be invested in the securities of such
issuer, or (b) the fund would hold more than 10% of the voting securities
of such issuer;
(2) make short sales of securities (unless it owns or by virtue of its
ownership of other securities has the right to obtain, securities
equivalent in kind and amount to the securities sold), provided, however,
that the fund may purchase or sell futures contracts;
(3) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions, provided, however, that
the fund may make initial and variation margin payments in connection with
purchases or sales of futures contracts or of options on futures contracts;
(4) 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 the fund's total assets (including the
amount borrowed) less liabilities (not including borrowings). Any
borrowings that come to exceed 33 1/3% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within 3 days
(exclusive of Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(5) underwrite any issue of securities (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);
(6) 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, 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;
(7) purchase or sell real estate (but this shall not prevent the fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of the fund's total assets would be lent to other parties, except (i)
through the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies and limitations, or (ii)
by engaging in repurchase agreements with respect to portfolio securities;
(10) purchase securities of other investment companies (except in the open
market where no commission other than the ordinary broker's commission is
paid, or as a part of a merger or consolidation, and in no event may
investments in such securities exceed 10% of the total assets of the fund);
(11) purchase the securities of any issuer if, as a result, more than 5% of
the fund's total assets (taken at current value) would be invested in the
securities of companies which, including predecessors, have a record of
less than three years of continuous operation; or
(12) invest in oil, gas, or other mineral exploration or development
programs.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The fund does not currently intend to purchase interests in real
estate investment trusts that are not readily marketable, or interests in
real estate limited partnerships that are not listed on an exchange or
traded on the NASDAQ National Market System if, as a result, the sum of
such interests and other investments considered illiquid under limitation
(iii) would exceed 10% of the fund's net assets.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by (a) lending money (up to 5% of the fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities or
to repurchase agreements.)
(vi) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(vii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(viii) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled " Futures and Options" beginning on page .
For the fund's limitations on short sales, see the section entitled "Short
Sales" on page .
GLOBAL RESOURCES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than obligations issued or guaranteed by the
government of the United States, or any of its agencies or
instrumentalities) if, as a result thereof, (a) more than 5% of the fund's
total assets would be invested in the securities of such issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of such
issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed 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;
(4) underwrite securities issued by others, except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business ) ;
or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) 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 with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to invest in physical commodities
other than precious metals (i.e., gold, palladium, platinum and silver) and
it intends to limit such investments to not more than 25% of the fund's
total assets. The fund may receive no more than 10% of its yearly income
from gains resulting from selling metals or any other physical commodity.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 10% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xii) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xii i ) The fund does not currently intend to invest all of its
assets in the securities of a single open-end management investment company
with substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures contracts and options, see the
section entitled "Futures and Options " on page . For the
fund's limitations on short sales, see the section entitled "Short Sales"
on page .
GROWTH OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments, and
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limit does not apply to purchases of debt securities or
to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower cost of the market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options " on page . For the
fund's limitations on short sales, see the section entitled "Short Sales"
on page .
STRATEGIC OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) 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 5% of the fund's
total assets (taken at current value) would be invested in the securities
of such issuer;
(2) purchase the securities of any issuer, if such purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of
such issuer to be held in the fund's portfolio;
(3) issue senior securities (except to the extent that issuance of one or
more classes of shares of the fund in accordance with an order issued by
the Securities and Exchange Commission may be deemed to constitute issuance
of a senior security);
(4) make short sales of securities, (unless it owns, or by virtue of its
ownership of other securities has the right to obtain, at no additional
cost, securities equivalent in kind and amount to the securities sold);
provided, however, that the fund may enter into forward foreign currency
exchange transactions; and further provided that the fund may purchase or
sell futures contracts;
(5) purchase any securities or other property on margin, (except for such
short-term credits as are necessary for the clearance of transactions);
provided, however, that the fund may make initial and variation margin
payments in connection with purchases or sales of futures contracts or
options on futures contracts;
(6) 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 the fund's total assets (including the
amount borrowed) less liabilities (not including 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 fund will not purchase securities for investment while
borrowings equaling 5% or more of its total assets are outstanding;
(7) 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");
(8) 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 would be invested in the securities of one or more issuers
having their principal business activities in the same industry;
(9) purchase or sell real estate (but this shall not prevent the fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(10) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(11) lend any security or make any other loan if as a result, more than 33
1/3% of the fund's total assets would be lent to other parties except (i)
through the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies, and limitations, or
(ii) by engaging in repurchase agreements with respect to portfolio
securities;
(12) purchase securities of other investment companies (except in the open
market where no commission other than the ordinary broker's commission is
paid, or as part of a merger or consolidation, and in no event may
investments in such securities exceed 10% of the value of total assets of
the fund). The fund may not purchase or retain securities issued by other
open-end investment companies;
(13) invest more than 5% of the fund's total assets (taken at market value)
in the securities of companies which, including predecessors, have a record
of less than three years' continuous operation; or
(14) invest in oil, gas, or other mineral exploration or development
programs.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (6)). The fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the fund's total assets.
(ii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iii) The fund does not currently intend to purchase interests in real
estate investment trusts that are not readily marketable or interests in
real estate limited partnerships that are not listed on an exchange or
traded on the NASDAQ National Market System if, as a result, the sum of
such interests and other investments considered illiquid under limitation
(ii) would exceed 10% of the fund's net assets.
(iv) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(v) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(vi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(vii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" on page . For the fund's
limitations on short sales, see the section entitled "Short Sales" on page
.
EQUITY INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System if, as a result, the sum of such interests
and other investments considered illiquid under limitation (iv) would
exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation or merger.
(viii) The fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page . For the fund's
limitations on short sales, see the section entitled "Short Sales" on page
.
INCOME & GROWTH FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of its net assets. Included in
that amount, but not to exceed 2% of the fund's net assets, may be warrants
that are not listed on the New York Stock Exchange or the American Stock
Exchange. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, other mineral
exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page . For the fund's
limitations on short sales, see the section entitled "Short Sales" on page
.
EMERGING MARKETS INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) 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;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(8) 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 with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 10% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xii) With respect to 75% of its total assets, the fund does not
currently intend to 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, the fund would hold more
than 10% of the outstanding voting securities of that issuer.
(xiii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi v ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
HIGH YIELD FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the value of the fund's total assets would be invested
in the securities of that issuer, or (b) it would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System if, as a result, the sum of such interests
and other investments considered illiquid under limitation (iv) would
exceed 15% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or attached
to securities are not subject to these restrictions.
(ix) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
STRATEGIC INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) 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;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) 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 with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL:
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans and loan participations or other forms of direct debt instruments
and, in connection therewith, assuming any associated unfunded loan
commitments of the sellers. (This limitation does not apply to purchases of
debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral explorations or development programs or leases.
(xi) With respect to 75% of its total assets, the fund does not
currently intend to 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, the fund would hold more
than 10% of the outstanding voting securities of that issuer.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
GOVERNMENT INVESTMENT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940.
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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 issuers having their
principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other investments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
(v) T he fund does not currently intend to invest in interests in
real estate investment trusts that are not readily marketable or to invest
in intere s ts in real estate limited partnerships that are not listed
on the New York Stock Exchange or the American Stock Exchange or traded
on the NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange or as a result of a reorganization, consolidation or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result more than 5%
of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than
thre e years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to enter into any futures contract
or option on a futures contract if, as a result, the sum of initial margin
deposits on futures contracts and related options and premiums paid for
options on futures contracts the fund has purchased, after taking into
account unrealized profits and losses on such contracts would exceed 5% of
the fund's total assets.
(xiii) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
LIMITED TERM BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) i ssue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment), in an
amount not exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures contracts
or from investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment advisor or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by: (a) lending money (up to 7.5% of the fund's
net assets) to a registered investment company or fund for which FMR or an
affiliate serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments, and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities or
to repurchase agreements.)
(vi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(vii) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(viii) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(ix) The fund currently does not intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to (a) purchase securities of other
investment companies except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(xi) The fund does nor currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options " beginning on page .
SHORT FIXED-INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental limitation (3)). The fund will not purchase any
security while borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR or
its affiliates if total outstanding borrowings immediately after such
borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by (i) lending money (up to 7.5% of the fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (ii) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities or
to repurchase agreements.)
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange or as a result of a reorganization, consolidation, or merger.
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or attached
to securities are not subject to these restrictions.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(x i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Option s " on page .
HIGH INCOME MUNICIPAL FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) underwrite securities issued by others (except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests of real
estate investment trusts that are not readily marketable, or to invest in
interests of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vii) The fund does not currently intend to engage in repurchase agreements
or make loans , but this limitation does not apply to purchases of
debt securities.
(viii) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" on page .
LIMITED TERM TAX-EXEMPT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS AND
POLICIES SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of its 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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 tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by Fidelity Management &
Research Company or an affiliate or successor with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to engage in repurchase agreements
or make loans , but this limitation does not apply to purchases of
debt securities.
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger. Any
securities issued by other investment companies would also have to meet the
fund's credit and maturity standards. In some cases, other investment
companies may incur expenses that are comparable to expenses paid by the
fund, which would be taken into account in considering investments in such
securities.
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to invest in oil, gas, other
mineral exploration or development programs or leases.
(ix) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
Trustees of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(x) 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.
For the fund's limitations on futures contracts and options, see the
section entitled "Futures and Options " beginning on page .
SHORT-INTERMEDIATE TAX-EXEMPT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) 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 tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate, unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business;
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this
limitation does not apply to purchases of debt securities or to repurchase
agreements) .
(8) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by Fidelity Management &
Research Company or an affiliate or successor with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the Trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years continuous operation.
(x) The fund may not purchase or sell physical commodities unless acquired
as a result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities.)
(xi) The fund does not currently intend to invest in interests of real
estate investment trusts that are not readily marketable, or to invest in
interests of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(xii) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xiii) With respect to 75% of its total assets, the fund does not
currently intend to 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, the fund would hold more
than 10% of the outstanding voting securities of that issuer.
(xi v ) 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.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options " beginning on page .
For purposes of certain fundamental investment limitations, FMR identifies
the issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an issuing
political subdivision are separated from those of other political entities;
and whether a governmental body is guaranteeing the security.
EACH FUND'S INVESTMENTS MUST BE CONSISTENT WITH ITS INVESTMENT OBJECTIVE
AND POLICIES. ACCORDINGLY, NOT ALL OF THE SECURITY TYPES AND INVESTMENT
TECHNIQUES DISCUSSED BELOW ARE ELIGIBLE INVESTMENTS FOR EACH OF THE FUNDS.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940 (1940
Act) . These transactions may include repurchase agreements with
custodian banks; short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); municipal securities;
U.S. government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions; and
short-term borrowings. In accordance with exemptive orders issued by the
Securities and Exchange Commission (SEC), the Board of Trustees has
established and periodically reviews procedures applicable to transactions
involving affiliated financial institutions.
ASSET-BACKED SECURITIES represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured as
pass-through securities. Interest and principal payments ultimately depend
upon payment of the underlying loans by individuals, although the
securities may be supported by letters of credit or other credit
enhancements. The value of asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator
of the loans, or the financial institution providing the credit
enhancement.
DELAYED-DELIVERY TRANSACTIONS. A fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered. A fund
may receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, a fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
a fund's other investments. If a fund remains substantially fully invested
at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, a fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, a fund could miss a
favorable price or yield opportunity, or could suffer a loss.
A fund may renegotiate delayed-delivery transactions after they are entered
into, and may sell underlying securities before they are delivered, which
may result in capital gains or losses.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions the tax-exempt funds
do not intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, each tax-exempt fund may
invest a portion of its assets in fixed-income obligations whose interest
is subject to federal income tax.
Should a tax-exempt fund invest in federally taxable obligations, it would
purchase securities that, in FMR's judgment, are of high quality. These
obligations would include those issued or guaranteed by the U.S. government
or its agencies or instrumentalities; obligations of domestic banks; and
repurchase agreements. The funds' standards for high-quality, taxable
obligations are essentially the same as those described by Moody's Investor
Services (Moody's) in rating corporate obligations within its two highest
ratings of Prime-1 and Prime-2, and those described by Standard & Poor's
Corporation (S&P) in rating corporate obligations within its two highest
ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of the tax-exempt funds'
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the tax-exempt funds' holdings would
be affected and the Trustees would reevaluate the tax-exempt funds'
investment objectives and policies.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. A fund will convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to a fund at one rate, while offering a lesser rate
of exchange should a fund desire to resell that currency to the dealer.
Forward contracts are generally traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. The parties to a forward contract may agree to offset or
terminate the contract before its maturity, or may hold the contract to
maturity and complete the contemplated currency exchange.
A fund may use currency forward contracts for any purpose consistent with
its investment objective. The following discussion summarizes the principal
currency management strategies involving forward contracts that could be
used by a fund. A fund may also use swap agreements, indexed securities,
and options and futures contracts relating to foreign currencies for the
same purposes.
When a fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, a fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." A fund may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
A fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if a fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. A fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
A fund may enter into forward contracts to shift its investment exposure
from one currency into another. This may include shifting exposure from
U.S. dollars to a foreign currency, or from one foreign currency to another
foreign currency. For example, if a fund held investments denominated in
Deutschemarks, a fund could enter into forward contracts to sell
Deutschemarks and purchase Swiss Francs. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to the
currency that is sold, and increase exposure to the currency that is
purchased much as if a fund had sold a security denominated in one currency
and purchased an equivalent security denominated in another. Cross-hedges
protect against losses resulting from a decline in the hedged currency, but
will cause a fund to assume the risk of fluctuations in the value of the
currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. A fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on FMR's skill
in analyzing and predicting currency values. Currency management strategies
may substantially change a fund's investment exposure to changes in
currency exchange rates, and could result in losses to a fund if currencies
do not perform as FMR anticipates. For example, if a currency's value rose
at a time when FMR had hedged a fund by selling that currency in exchange
for dollars, a fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, a fund
could realize currency losses from the hedge and the security position at
the same time if the two currencies do not move in tandem. Similarly, if
FMR increases a fund's exposure to a foreign currency, and that currency's
value declines, a fund will realize a loss. There is no assurance that
FMR's use of currency management strategies will be advantageous to the
fund or that it will hedge at an appropriate time.
FOREIGN INVESTMENTS. Investing in securities issued by companies or other
issuers whose principal activities are outside the United States may
involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in foreign currencies and
of dividends and interest paid with respect to such securities will
fluctuate based on the relative strength of the U.S. dollar. In addition,
there is generally less publicly available information about foreign
issuers' financial condition and operations, particularly those not subject
to the disclosure and reporting requirements of the U.S. securities laws.
Foreign issuers are generally not bound by uniform accounting, auditing,
and financial reporting requirements and standards of practice comparable
to those applicable to U.S. issuers. Further, economies of particular
countries or areas of the world may differ favorably or unfavorably from
the economy of the United States.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects. The considerations noted above generally are
intensified for investments in developing countries. Developing countries
may have relatively unstable governments, economies based on only a few
industries, and securities markets that trade a small number of securities.
Foreign markets may offer less protection to investors than U.S. markets.
It is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may expose a fund to increased risk
in the event of a failed trade or the insolvency of a foreign
broker-dealer, and may involve substantial delays. In addition, the costs
of foreign investing, including withholding taxes, brokerage commissions
and custodial costs, are generally higher than for U.S. investing. In
general, there is less overall governmental supervision and regulation of
securities exchanges, brokers, and listed companies than in the United
States. It may also be difficult to enforce legal rights in foreign
countries.
Each fund may invest in foreign securities that impose restrictions on
transfer within the United States or to U.S. persons. Although securities
subject to such transfer restrictions may be marketable abroad, they may be
less liquid than foreign securities of the same class that are not subject
to such restrictions.
A fund may invest in American Depository Receipts and European Depository
Receipts (ADRs and EDRs), which are certificates evidencing ownership of
shares of a foreign-based issuer held in trust by a bank or similar
financial institution. Designed for use in the U.S. and European securities
markets, respectively, ADRs and EDRs are alternatives to the purchase of
the underlying securities in their national markets and currencies.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may include
agreements to purchase and sell foreign securities in exchange for fixed
U.S. dollar amounts, or in exchange for specified amounts of foreign
currency. Unlike typical U.S. repurchase agreements, foreign repurchase
agreements may not be fully collateralized at all times. The value of the
security purchased by the fund may be more or less than the price at which
the counterparty has agreed to repurchase the security. In the event of a
default by the counterparty, the fund may suffer a loss if the value of the
security purchased is less than the agreed-upon repurchase price, or if the
fund is unable to successfully assert a claim to the collateral under
foreign laws. As a result, foreign repurchase agreements may involve higher
credit risks than repurchase agreements in U.S. markets, as well as risks
associated with currency fluctuations. In addition, as with other emerging
market investments, repurchase agreements with counterparties located in
emerging markets or relating to emerging market securities may involve
issuers or counterparties with lower credit ratings than typical U.S.
repurchase agreements.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however, may
exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of a fund's investment in the company.
The activities that a fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing
third-party takeover efforts. This area of corporate activity is
increasingly prone to litigation and it is possible that a fund could be
involved in lawsuits related to such activities. FMR will monitor such
activities with a view to mitigating, to the extent possible, the risk of
litigation against the fund and the risk of actual liability if a fund is
involved in litigation. No guarantee can be made, however, that litigation
against the fund will not be undertaken or liabilities incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options; Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures Margin
Payments, Limitations on Futures and Options Transactions, Liquidity of
Options and Futures Contracts, Options and Futures Relating to Foreign
Currencies, OTC Options, Purchasing put and Call Options, and Writing Put
and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. A fund will comply with
guidelines established by the SEC with respect to coverage of options and
futures strategies by mutual funds, and, if the guidelines so require, will
set aside appropriate liquid assets in a segregated custodial account in
the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of a fund's assets could impede
portfolio management or the fund's ability to meet redemption requests or
other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. A fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of a fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when a fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's Composite Index of 500
Stocks (S&P 500) or the Bond Buyer Municipal Bond Index. Futures can be
held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. Each fund intends to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the fund can
commit assets to initial margin deposits and option premiums.
In addition to the above limitations, a fund will not: (a) sell futures
contracts, purchase put options, or write call options if, as a result,
more than 25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or write
put options if, as a result, a fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options purchased by
a fund would exceed 5% of the fund's total assets. These limitations do not
apply to options attached to or acquired or traded together with their
underlying securities, and do not apply to securities that incorporate
features similar to options.
The above limitations on a fund's investments in futures contracts and
options, and a fund's policies regarding futures contracts and options
discussed elsewhere in this SAI, may be changed as regulatory agencies
permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, a
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. A fund
may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign
currencies. A fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
a fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a
fund against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates,
it may not be possible to match the amount of currency options and futures
to the value of a fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (OTC) (options not
traded on exchanges) generally are established through negotiation with the
other party to the option contract. While this type of arrangement allows a
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains
the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. A fund may
terminate its position in a put option it has purchased by allowing it to
expire or by exercising the option. If the option is allowed to expire, the
fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out in
the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures
contract, a fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option a fund has written, however, the fund
must continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features) and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by a fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, non-government-stripped fixed-rate
mortgage-backed securities, and over-the-counter options. Also, FMR may
determine some restricted securities, municipal lease obligations,
government-stripped fixed-rate mortgage-backed securities, loans and other
direct debt instruments, emerging market securities, and swap agreements to
be illiquid. However, with respect to over-the-counter options a fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option before
expiration.
In the absence of market quotations, illiquid investments are priced at
fair value as determined in good faith by a committee appointed by the
Board of Trustees. If, through a change in values, net assets or other
circumstances, a fund were in a position where more than 10% or 15% of its
net assets (see each fund's non-fundamental investment limitations) was
invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.
INDEXED SECURITIES. A fund may purchase securities whose prices are indexed
to the prices of other securities, securities indices, currencies, precious
metals or other commodities, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. Gold-indexed securities, for example, typically
provide for a maturity value that depends on the price of gold, resulting
in a security whose price tends to rise and fall together with gold prices.
Currency-indexed securities typically are short-term to intermediate-term
debt securities whose maturity values or interest rates are determined by
reference to the values of one or more specified foreign currencies, and
may offer higher yields than U.S. dollar-denominated securities of
equivalent issuers. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may increase when the
specified currency value increases, resulting in a security that performs
similarly to a foreign-denominated instrument, or their maturity value may
decline when foreign currencies increase, resulting in a security whose
price characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values
of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
United States and abroad. At the same time, indexed securities are subject
to the credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates. Recent issuers of indexed securities have included banks,
corporations, and certain U.S. government agencies. Indexed securities may
be more volatile than the underlying instruments.
INTERFUND BORROWING PROGRAM. Pursuant to an exemptive order issued by the
SEC, each fund has received permission to lend money to, and borrow money
from, other funds advised by FMR or its affiliates. High Income Municipal,
Limited Term Tax-Exempt, and Short-Intermediate Tax-Exempt each will
participate in the interfund borrowing program only as a borrower.
Interfund loans and borrowings normally extend overnight, but can have a
maximum duration of seven days. Loans may be called on one day's notice.
Each fund (except High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt) will lend through the program only when the
returns are higher than those available from other short-term instruments
(such as repurchase agreements). A fund will borrow through the program
only when the costs are equal to or lower than the cost of bank loans. A
fund may have to borrow from a bank at a higher interest rate if an
interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If a fund does not receive scheduled interest or
principal payments on such indebtedness, the fund's share price and yield
could be adversely affected. Loans that are fully secured offer a fund more
protections than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation
of collateral from a secured loan would satisfy the borrower's obligation,
or that the collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may be
highly speculative. Borrowers that are in bankruptcy or restructuring may
never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of developing countries also involves a
risk that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal when
due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the fund could be held
liable as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to a fund in the event of fraud or misrepresentation. In the
absence of definitive regulatory guidance, each fund relies on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, each fund has direct recourse against the borrower, it
may have to rely on the agent to apply appropriate credit remedies against
a borrower. If assets held by the agent for the benefit of a fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by a fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
A fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
Each fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see each fund's investment
limitations). For purposes of these limitations, a fund generally will
treat the borrower as the "issuer" of indebtedness held by the fund. In the
case of loan participations where a bank or other lending institution
serves as financial intermediary between the fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
LOWER-QUALITY DEBT SECURITIES. While the market for high-yield corporate
debt securities has been in existence for many years and has weathered
previous economic downturns, the 1980s brought a dramatic increase in the
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of the high-yield bond market, especially during
periods of economic recession. In fact, from 1989 to 1991, the percentage
of lower-quality debt securities that defaulted rose significantly above
prior levels, although the default rate decreased from 1992 and 1993.
The market for lower-quality debt securities may be thinner and less active
than that for higher-quality debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not
available, lower-quality debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-quality debt
securities and a fund's ability to sell these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering investments
for a fund, FMR will attempt to identify those issuers of high-yielding
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the fund's shareholders.
LOWER-QUALITY MUNICIPAL SECURITIES. While the market for municipals
is considered to be substantial, adverse publicity and changing investor
perceptions may affect the ability of outside pricing services used by a
fund to value its portfolio securities, and a fund's ability to dispose of
lower-quality bonds. The outside pricing services are monitored by FMR and
reported to the Board to determine whether the services are furnishing
prices that accurately reflect fair value. The impact of changing investor
perceptions may be especially pronounced in markets where municipal
securities are thinly traded.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security holder to
seek to protect the interests of security holders if it determines this to
be in the best interest of the fund's shareholders.
MARKET DISRUPTION RISK. The value of municipal securities may be
affected by uncertainties in the municipal market related to legislation or
litigation involving the taxation of municipal securities or the rights of
municipal securities holders in the event of a bankruptcy. Municipal
bankruptcies are relatively rare, and certain provisions of the U.S.
Bankruptcy Code governing such bankruptcies are unclear and remain
untested. Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of the
market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all
of the municipal securities held by a fund.
MORTGAGE-BACKED SECURITIES. A fund may purchase mortgage-backed securities
issued by government and non-government entities such as banks, mortgage
lenders, or other financial institutions. A mortgage-backed security is an
obligation of the issuer backed by a mortgage or pool of mortgages or a
direct interest in an underlying pool of mortgages. Some mortgage-backed
securities, such as collateralized mortgage obligations (CMOs), make
payments of both principal and interest at a variety of intervals; others
make semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed securities are
based on different types of mortgages including those on commercial real
estate or residential properties. Other types of mortgage-backed securities
will likely be developed in the future, and a fund may invest in them if
FMR determines they are consistent with the fund's investment objective and
policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
MUNICIPAL LEASES and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract, and are
issued by state and local governments and authorities to acquire land or a
wide variety of equipment and facilities. Generally, a fund will not hold
such obligations directly as a lessor of the property, but will purchase a
participation interest in a municipal obligation from a bank or other third
party. A participation interest gives the fund a specified, undivided
interest in the obligation in proportion to its purchased interest in the
total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
PHYSICAL COMMODITIES. As a practical matter, investments in physical
commodities can present concerns such as delivery, storage and maintenance,
possible illiquidity and the unavailability of accurate market valuations.
FMR, in addressing these concerns, currently intends to purchase only
readily marketable precious metals and to deliver and store them with a
qualified U.S. bank. Investments in bullion earn no investment income and
may involve higher custody and transaction costs than investments in
securities. Global Resources may receive no more than 10% of its yearly
income from gains resulting from selling metals or any other physical
commodity. Therefore, the fund may be required either to hold its metals or
to sell them at a loss, or to sell its portfolio securities at a gain,when
it would not otherwise do so for investment reasons.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as changes in real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the management
skill and creditworthiness of the issuer. Real estate-related instruments
may also be affected by tax and regulatory requirements, such as those
relating to the environment.
REFUNDING CONTRACTS. A fund may purchase securities on a when-issued basis
in connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and a fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that
may be several months or several years in the future. A fund generally will
not be obligated to pay the full purchase price if it fails to perform
under a refunding contract. Instead, refunding contracts generally provide
for payment of liquidated damages to the issuer (currently 15-20% of the
purchase price). A fund may secure its obligations under a refunding
contract by depositing collateral or a letter of credit equal to the
liquidated damages provisions of the refunding contract. When required by
SEC guidelines, a fund will place liquid assets in a segregated custodial
account equal in amount to its obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. The securities
purchased by a fund are used to collateralize the repurchase obligation. As
such, they are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental interest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility that the value of the underlying security will be less than the
resale price, as well as delays and costs to a fund in connection with
bankruptcy proceedings), it is each fund's (except Equity Portfolio
Growth's) current policy to engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found
satisfactory by FMR. Equity Portfolio Growth will engage in repurchase
agreement transactions only with banks of the Federal Reserve System and
primary dealers in U.S. g overnment securities.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. A fund will
enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
(NYSE) and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1) a
fund must receive 100% collateral in the form of cash or cash equivalents
(e.g., U.S. Treasury bills or notes) from the borrower; (2) the borrower
must increase the collateral whenever the market value of the securities
loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, a fund must be able to terminate the
loan at any time; (4) a fund must receive reasonable interest on the loan
or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) a fund may pay only reasonable custodian
fees in connection with the loan; and (6) the Board of Trustees must be
able to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES. A fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a convertible
security a fund holds, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value
of the convertible security. A fund currently intends to hedge no more than
15% of its total assets with short sales on equity securities underlying
its convertible security holdings under normal circumstances.
If a fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will be
required to hold such securities while the short sale is outstanding. A
fund will incur transaction costs, including interest expense, in
connection with opening, maintaining, and closing short sales.
SOVEREIGN DEBT OBLIGATIONS. A fund may purchase sovereign debt instruments
issued or guaranteed by foreign governments or their agencies, including
debt of Latin American nations or other developing countries. Sovereign
debt may be in the form of conventional securities or other types of debt
instruments such as loans or loan participations. Sovereign debt of
developing countries may involve a high degree of risk, and may be in
default or present the risk of default. Governmental entities responsible
for repayment of the debt may be unable or unwilling to repay principal and
interest when due, and may require renegotiation or rescheduling of debt
payments. In addition, prospects for repayment of principal and interest
may depend on political as well as economic factors.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. A fund may acquire
standby commitments to enhance the liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. A fund may purchase standby commitments separate from or in
conjunction with the purchase of securities subject to such commitments. In
the latter case, a fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
purchase an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by a fund; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of investments or market
factors. Depending on their structure, swap agreements may increase or
decrease a fund's exposure to long- or short-term interest rates (in the
United States or abroad), foreign currency values, mortgage securities,
corporate borrowing rates, or other factors such as security prices or
inflation rates. Swap agreements can take many different forms and are
known by a variety of names. A fund is not limited to any particular form
of swap agreement if FMR determines it is consistent with a fund's
investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
rights to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if a fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease a fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a fund's investments and its share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by a fund, the fund must be prepared to
make such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. A fund expects to be able to
reduce its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
A fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If a fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, a fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. In selecting tender option bonds for a fund, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value. In many instances,
bonds and participation interests have tender options or demand features
that permit a fund to tender (or put) the bonds to an institution at
periodic intervals and to receive the principal amount thereof. A fund
considers variable rate instruments structured in this way (Participating
VRDOs) to be essentially equivalent to other VRDOs it purchases. The
Internal Revenue Service (IRS) has not ruled whether the interest on
Participating VRDOs is tax-exempt and, accordingly, a fund intends to
purchase these instruments based on opinions of bond counsel. A fund may
invest in fixed-rate bonds that are subject to third party puts and in
participation interests in such bonds held by a bank in trust or otherwise.
WARRANTS are securities that give a fund the right to purchase equity
securities from the issuer at a specific price (the strike price) for a
limited period of time. The strike price of warrants typically is much
lower than the current market price of the underlying securities, yet they
are subject to similar price fluctuations. As a result, warrants may be
more volatile investments than the underlying securities and may offer
greater potential for capital appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with respect
to the underlying securities and do not represent any rights in the assets
of the issuing company. Also, the value of the warrant does not necessarily
change with the value of the underlying securities, and a warrant ceases to
have value if it is not exercised prior to expiration date. These factors
can make warrants more speculative than other types of investments.
ZERO COUPON BONDS do not make interest payments ; i nstead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its dividends, a fund takes into account as income a portion of
the difference between a zero coupon bond's purchase price and its face
value.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are
generally secured by the revenues derived from mortgages purchased with
the proceeds of the bond issue. It is extremely difficult to predict the
supply of available mortgages to be purchased with the proceeds of an issue
or the future cash flow from the underlying mortgages. Consequently, there
are risks that proceeds will exceed supply, resulting in early retirement
of bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment. Among the factors that may lead to declining
or insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general economic
conditions. Student loan revenue bonds are generally offered by state (or
substate) authorities or commissions and are backed by pools of student
loans. Underlying student loans may be guaranteed by state guarantee
agencies and may be subject to reimbursement by the United States
Department of Education through its guaranteed student loan program. Others
may be private, uninsured loans made to parents or students which are
supported by reserves or other forms of credit enhancement. Recoveries of
principal due to loan defaults may be applied to redemption of bonds or may
be used to re-lend, depending on program latitude and demand for loans.
Cash flows supporting student loan revenue bonds are impacted by numerous
factors, including the rate of student loan defaults, seasoning of the loan
portfolio, and student repayment deferral during periods of forbearance.
Other risks associated with student loan revenue bonds include potential
changes in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and other
program subsidies currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to
rate increases, costly environmental litigation , and federal
environmental mandates are challenges faced by issuers of water and sewer
bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads , highways or other transit
facilities . Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier that uses the
airport as a hub. Air traffic generally tracks broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of the
area. Fuel costs and availability also affect other transportation-related
securities, as does the presence of alternate forms of transportation, such
as public transportation.
The following paragraph restates fundamental policies previously disclosed
in the above descriptions of security types and investment practices.
FUNDAMENTAL POLICIES : It is the policy of Equity Portfolio
Growth to engage in repurchase agreement transactions
only with banks of the Federal Reserve System and primary dealers in
U.S. G overnment securities .
SPECIAL CONSIDERATIONS AFFECTING CANADA
Canada occupies the northern part of North America and is the second
largest country in the world (3.97 million square miles in area) extending
from the Atlantic Ocean to the Pacific Ocean. The companies in which the
funds may invest include those involved in the energy industry, industrial
materials (chemicals, base metals, timber and paper) and agricultural
materials (grain cereals). The economy of Canada is strongly influenced by
the activities of companies and industries involved in the production and
processing of natural resources. Canada is a major producer of
hydroelectricity, oil and gas. The business activities of companies in the
energy field may include the production, generation, transmission,
marketing, control or measurement of energy or energy fuels. The securities
of companies in the energy industry are subject to changes in value and
dividend yield which depend, to a large extent, on the price and supply of
energy fuels. Rapid price and supply fluctuations may be caused by events
relating to international politics, energy conservation and the success of
exploration products. Canada is one the world's leading industrial
countries and is rich in natural resources such as zinc, uranium, nickel,
gold, silver, aluminum, iron and copper. Forest covers over 44% of land
area, making Canada a leading world producer of newsprint. Canada is also a
major exporter of agricultural products.
Canada, the United States and Mexico began to implement the North American
Free Trade Agreement (NAFTA) in 1994, reducing trade barriers affecting
important sectors of each country's economy. This agreement is expected to
lead to increased trade among the three countries.
Many factors affect and could have an adverse impact on the financial
condition of Canada, including social, environmental and economic
conditions, factors which are not within the control of Canada. Although
the Canadian political system is generally more stable than that of many
other foreign countries, continued tension with respect to greater
independence for, or possible separation of, Quebec causes political
uncertainty. Moreover, while the Canadian dollar is generally less volatile
relative to the U.S. dollar than other foreign currencies, the value of the
Canadian dollar has decreased significantly in recent years. Continued
efforts to reduce the structural Canadian budget deficit will be required.
FMR is unable to predict what effect, if any, such factors would have on
instruments held in the fund's portfolio.
Securities of Canadian companies are not considered by FMR to have the same
level of risk as those of other non-U.S. companies. Canadian and U.S.
companies are generally subject to similar auditing and accounting
procedures, and similar government supervision and regulation. Canadian
markets are more liquid than many other foreign markets and share similar
characteristics with U.S. markets. A fund may elect to participate in new
equity issues or initial public offerings of Canadian companies.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America is a region rich in natural resources such as oil, copper,
tin, silver, iron ore, forestry, fishing, livestock, and agriculture. The
region has a large population (roughly 300 million) representing a large
number of markets. Economic growth was strong in the 1960s and 1970s, but
slowed dramatically in the 1980s as a result of poor economic policies,
higher international interest rates and the denial of access to new foreign
capital. Capital flight has proven a persistent problem and external debt
has been forcibly rescheduled. High inflation and low economic growth have
begun to give way to stable, manageable inflation rates and higher economic
growth, although political turmoil (including assassinations) continues in
some countries. Changes in political leadership and the implementation of
market oriented economic policies, such as privatization, trade reform, and
fiscal and monetary reform are among the recent steps taken to renew
economic growth. External debt is being restructured and flight capital
(domestic capital that has left the home country) has begun to return.
Various trade agreements have also been formed within the region, including
the Andean Pact, Mercosur, and NAFTA. NAFTA, which was implemented on
January 1, 1994, is the largest of these agreements.
Latin American equity markets can be extremely volatile and in the past
have shown little correlation with the United States market. Currencies
have typically been weak, given high inflation rates, but have stabilized
more recently. Most currencies are not free floating, but wide fluctuations
in value over relatively short periods of time can still occur due to
changes in the market.
Mexico's economy is a mixture of state-owned industrial plants (notably
oil), private manufacturing and services, and both large-scale and
traditional agriculture. Mexico's economy has been transformed
significantly over the last six to seven years. Large budget deficits and a
high level of state ownership in many productive and service areas have
given way to balanced budgets and privatization. In the last few years, the
government has sold the telephone company, the major steel companies, the
banks, and many others. The major state ownership remaining is in the oil
sector and the electricity sector. Economic policy transformation has led
to much reduced inflation and more stable economic growth in the last few
years. The recently implemented NAFTA will further cement the economic ties
between Mexico, Canada, and the United States.
Continued political unrest, particularly in southern Mexico, and
uncertainty as to the effectiveness of reforms have recently had an adverse
impact on economic development. In December 1994, Mexico reversed a
long-held currency policy by devaluing the Mexican peso and allowing it to
float freely. The value of the peso against the U.S. dollar and other
currencies declined sharply. As a result, Mexican stocks plunged while
interest rates soared, and other Latin America securities markets were also
adversely affected. Extension and continuance of financial aid to Mexico
from the U.S., including loan guarantees, is uncertain at this time.
Brazil is the sixth largest country in the world in population, with about
155 million people, and represents a huge domestic market. Brazil entered
the 1990s with declining real growth, runaway inflation, an unserviceable
foreign debt of $122 billion, and a lack of policy direction. Brazil's rate
of consumer-price inflation continues to accelerate while gross domestic
product (GDP) remains depressed. A major long-run strength is Brazil's
natural resources. Iron ore, bauxite, tin, gold, and forestry products make
up some o f Brazil's natural resource base, which includes some of
the largest mineral reserves in the world. The private sector has remained
efficient, mainly through export promotion. The government has recently
embarked on an ambitious reform program that seeks to modernize and
reinvigorate the economy by stabilizing prices, deregulating the economy,
and opening the economy to increased foreign competition. Privatization of
certain industries is proceeding slowly.
Chile, like Brazil, is endowed with considerable mineral resources,
particularly copper, which accounts for 40% of total exports. Export
production (especially in the forestry and mining sectors) continues to be
the main long-term engine of economic growth and modernization. Economic
reform has been ongoing in Chile for over 15 years, but political democracy
has only recently returned to Chile. Privatization of the public sector
beginning in the early 1980s has bolstered the equity market. A
well-organized pension system has created a long-term domestic investor
base.
Argentina is strong in wheat production and other foodstuffs and in
livestock ranching. A well-educated and skilled population boasts one of
the highest literacy rates in the region. The country has been ravaged by
decades of extremely high inflation and political instability. Like Mexico,
however, Argentina has had a dramatic transformation in its economy in the
last several years. Extremely high inflation rates and stagnant economic
growth have been replaced by low inflation and strong economic growth.
Massive privatization has occurred and continues, which should reduce the
amount of external debt outstanding.
Venezuela has substantial oil reserves. External debt is being
renegotiated, and the government is implementing economic reform in order
to reduce the size of the public sector, although these reform attempts
have recently met with political opposition. Internal gasoline prices,
which are one-third those of international prices, are being increased in
order to reduce subsidies. Price controls did not prevent annual inflation
from reaching at least 75% in 1994, compared to 45.9% in 1993. The official
target of 25-30% inflation for 1995 is improbable, with a continuation of
higher levels more likely. The failure of major banks adversely affected
the Venezuelan economy in 1994 and could continue to have a negative
impact. Plans for privatization and exchange and interest rate
liberalization are examples of recently introduced reforms. It is not clear
when the economic situation in Venezuela will improve and the country
remains extremely dependent on oil.
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND SOUTHEAST
ASIA
Many Asian countries may be subject to a greater degree of social,
political and economic instability than is the case in the United States
and Western European countries. Such instability may result from (i)
authoritarian governments or military involvement in political and economic
decision-making; (ii) popular unrest associated with demands for improved
political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; and (v) ethnic,
religious and racial disaffection.
The economies of most of the Asian countries are heavily dependent upon
international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners,
principally, the United States, Japan, China and the European Community.
The enactment by the United States or other principal trading partners of
protectionist trade legislation, reduction of foreign investment in the
local economies and general declines in the international securities
markets could have a significant adverse effect upon the securities markets
of the Asian countries.
Thailand has one of the fastest growing stock markets in the world. The
manufacturing sector is becoming increasingly sophisticated and is
benefiting from export-oriented investing. The manufacturing and service
sectors continue to account for the bulk of Thailand's economic growth. The
agricultural sector continues to become less important. The government has
followed fairly sound fiscal and monetary policies, aided by increased tax
receipts from a fast moving economy. The government also continues to move
ahead with new projects - especially telecommunications, roads and port
facilities - needed to refurbish the country's overtaxed infrastructure.
Nonetheless, political unrest has caused many international businesses to
question Thailand's political stability.
Hong Kong's economic growth which was vigorous in the 1980s has not been
positively affected by its impending return to Chinese dominion in 1997.
Although China has committed by treaty to preserve the economic and social
freedoms enjoyed in Hong Kong for 50 years after regaining control of Hong
Kong, the continuation of the current form of the economic system in Hong
Kong after the reversion will depend on the actions of the government of
China. Business confidence in Hong Kong, therefore, can be significantly
affected by developments, which in turn can affect markets and business
performance. In preparation for 1997, Hong Kong has continued to develop
trade with China, while also maintaining its long-standing export
relationship with the United States. Spending on infrastructure
improvements is a significant priority of the colonial government while the
private sector continues to diversify abroad based on its position as an
established international trade center in the Far East.
In terms of GDP, industrial standards and level of education, South Korea
is second only to Japan in Asia. It enjoys the benefits of a diversified
economy with well developed sectors in electronics, automobiles, textiles
and shoe manufacture, steel and shipbuilding among others. The driving
force behind the economy's dynamic growth has been the planned development
of an export-oriented economy in a vigorously entrepreneurial society.
Inflation rates, however, began to challenge South Korea's strong economic
performance in the early 1990s. Moreover, the international situation
between South Korea and North Korea continues to be uncertain.
Indonesia is a mixed economy with many socialist institutions and central
planning but with a recent emphasis on deregulation and private enterprise.
Like Thailand, Indonesia has extensive natural wealth, yet with a large and
rapidly increasingly population, it remains a poor country. Indonesia's
dependence on commodity exports makes it vulnerable to a fall in world
commodity prices.
Malaysia has one of the fastest growing economies in the Asian-Pacific
region. Malaysia has become the world's third-largest producer of
semiconductor devices (after the United States and Japan) and the world's
largest exporter of semiconductor devices. More remarkable is the country's
ability to achieve rapid economic growth with relative price stability as
the government followed prudent fiscal and monetary policies. Malaysia's
high export dependence level leaves it vulnerable to recession in the
countries with which it trades or to a fall in world commodity prices.
India is one of the world's top fifteen industrial nations and has
considerable natural resources. The government exercises significant
influence over many aspects of the economy. Accordingly, future government
actions could have a significant effect on private sector companies, market
conditions, and prices and yields of securities of Indian issuers held by a
fund. Policymakers in India actively encourage foreign direct investment,
particularly in labor intensive industries. In addition, Indian stock
exchanges rely entirely on delivery of physical share certificates and have
experienced operational difficulties. These problems have included the
existence of fraudulent shares in the market, failed trades, and delays in
the settlement and registration of securities transactions. Indian stock
exchanges have in the past been forced to close for political reasons; for
example, a brokers' strike closed the exchange for ten days in December
1993, and there is no assurance that the exchanges will not be forced to
close again.
Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived
from its history. During the 1970s and the early 1980s, the economy
expanded rapidly, achieving an average annual growth rate of 9%. Per capita
GDP is among the highest in Asia. Singapore holds a position as a major oil
refining and services center.
Japan currently has the second largest GDP in the world. The Japanese
economy has grown substantially over the last three decades. Its growth
rate averaged over 5% in the 1970s and 1980s. However, in the 1990s, the
growth rate in Japan has slowed. Despite small rallies and market gains,
Japan has been plagued with economic sluggishness. Economic conditions have
weakened considerably in Japan since October 1992. The boom in Japan's
equity and property markets during the expansion of the late 1980's
supported high rates of investment and consumer spending on durable goods,
but both of these components of demand have now retreated sharply following
the decline in asset prices. Profits have fallen sharply, the previously
tight labor market conditions have eased considerably, and consumer
confidence has waned. The banking sector has experienced a sharp rise in
non-performing loans, and strains in the financial system may continue.
Continued political uncertainty has resulted from numerous changes in
government, shifting government coalitions and the political and economic
problems associated with a large trade imbalance.
Although Japan's economic growth has declined significantly since 1990,
many Japanese companies seem capable of rebounding due to increased
investments, smaller borrowings, increased product development and
continued government support. Growth recovered slightly in 1994. Japan's
economic growth in the early 1980s was due in part to government
borrowings. Japan is heavily dependent upon international trade and,
accordingly, has been and may continue to be adversely affected by trade
barriers, and other protectionist or retaliatory measures of, as well as
economic conditions in, the United States and other countries with which it
trades. Industry, the most important sector of the economy, is heavily
dependent on imported raw materials and fuels. Japan's major industries are
in the engineering, electrical, textile, chemical, automobile, fishing, and
telecommunication fields. Japan imports iron ore, copper, and many forest
products. Only 19% of its land is suitable for cultivation. Japan's
agricultural economy is subsidized and protected. It is about 50%
self-sufficient in food production. Even though Japan produces a minute
rice surplus, it is dependent upon large imports of wheat, sorghum, and
soybeans from other countries. Japan's high volume of exports such as
automobiles, machine tools, and semiconductors have caused trade tensions
with other countries, particularly the United States. Attempts to approve
trading agreements between the countries may reduce the friction caused by
the current trade imbalance. In recent months, the Japanese markets have
also been adversely affected by the earthquake in Kobe, Japan, and the
bankruptcy of Barings Bank, Ltd., although the long-term effects of these
events are difficult to predict.
Australia has a prosperous Western-style capitalist economy, with a per
capita GDP comparable to levels in industrialized West European countries.
It is rich in natural resources and is the world's largest exporter of beef
and wool, second-largest exporter of mutton, and among the top wheat
exporters. Australia is also a major exporter of minerals, metals and
fossil fuels. Due to the nature of its exports, a downturn in world
commodity prices could have a significant negative impact on its economy.
SPECIAL CONSIDERATIONS AFFECTING EUROPE
New developments surrounding the creation of a unified common market in
Europe have helped to reduce physical and economic barriers promoting the
free flow of goods and services throughout Western Europe. These new
developments could make this new unified market one of the largest in the
world.
The European Community (EC) consists of Belgium, Denmark, France, Germany,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and the
United Kingdom (the member states). In 1986, the member states of the EC
signed the "Single European Act," an agreement committing these countries
to the establishment of a market among themselves, unimpeded by internal
barriers or hindrances to the free movement of goods, persons, services, or
capital. To meet this goal, a series of directives have been issued to the
member states. Compliance with these directives is designed to eliminate
three principal categories of barriers: 1) physical frontiers, such as
customs posts and border controls; 2) technical barriers (which include
restrictions operating within national territories) such as regulations and
norms for goods and services (product standards); discrimination against
foreign bids (bids by other EC members) on public purchases; or
restrictions on foreign requests to establish subsidiaries; and 3) fiscal
frontiers, notably the need to levy value-added taxes, tariffs, or
excise taxe s on goods or services imported from other EC states.
The ultimate goal of this project is to achieve a large unified domestic
European market in which available resources would be more efficiently
allocated through the elimination of the above-mentioned barriers and the
added costs associated with those barriers. Elimination of these barriers
would simplify product distribution networks, allow economies of scale to
be more readily achieved, and free the flow of capital and other resources.
The Maastricht Treaty on economic and monetary union (EMU) attempts to
provide its members with a stable monetary framework consistent with the
EC's broad economic goals. But until the EMU takes effect, which is
intended to occur between 1997 and 1999, the community will face the need
to reinforce monetary cooperation in order to reduce the risk of a
recurrence of tensions between domestic and external policy objectives.
The total European market, as represented by both EC and non-EC countries,
consists of over 328 million consumers, making it larger currently than
either the United States or Japanese markets. European businesses compete
nationally and internationally in a wide range of industries including:
telecommunications and information services, roads and transportation,
building materials, food and beverages, broadcast and media, financial
services, electronics, and textiles. Actual and anticipated actions on the
part of member states to conform to the unified Europe directives has
prompted interest and activity not only by European firms, but also by
foreign entities anxious to establish a presence in Europe that will result
from these changes. Indications of the effect of this response to a unified
Europe can be seen in the areas of mergers and acquisitions, corporate
expansion and development, GDP growth, and national stock market activity.
The early experience of the former centrally planned economies has already
demonstrated the crucially important link between structural reforms,
macroeconomic stabilization, and successful economic transformation. Among
the central European countries, the Czech Republic, Hungary, and Poland
have made the greatest progress in structural reform; inflationary
pressures in those countries have abated following price
liberalization, and output has begun to recover. These achievements will be
difficult to sustain, however, in the absence of strong efforts to contain
the large fiscal deficits that have accompanied the considerable losses of
output and tax revenue since the start of the reform process.
In the Baltic countries there are encouraging signs that reforms are taking
hold and are being supported by strong stabilization efforts. In most other
countries of the former Soviet Union, in contrast, inadequate stabilization
efforts now threaten to lead to hyper-inflation, which could derail the
reform process. Inflation, which had abated following the immediate impact
of price liberalization in early 1992, surged to extremely high levels. The
main reason for this development has been excessive credit expansion to the
government and to state enterprises. The transformation process is being
seriously hampered by the widespread subsidization of inefficient
enterprises and the resulting misallocation of resources. The lack of
effective economic and monetary cooperation among the countries of the
former Soviet Union exacerbates other problems by severely constraining
trade flows and impeding inflation control. Partly as a result of these
difficulties, some countries have decided that the introduction of separate
currencies offers the best scope for avoiding hyper-inflation and for
improving economic conditions. This development can facilitate the
implementation of stronger stabilization programs.
Economic conditions appear to have improved for some of the transition
economies of central Europe. Following three successive years of output
declines, there are preliminary indications of a turnaround in the Czech
Republic and the Slovak Republic, Hungary and Poland; growth in
private sector activity and strong exports, especially to Western Europe,
now appear to have contained the fall in output. Most central European
countries in transition, however, are expected to achieve positive real
growth in 1995 as market reforms deepen. The strength of the projected
output gains will depend crucially on the ability of the reforming
countries to contain fiscal deficits and inflation and on their continued
access to, and success in, export markets. Economic conditions in the
former Soviet Union have continued to deteriorate. Real GDP in Russia is
estimated to have fallen 19 percent in 1992, after a 9 percent decline in
1991. In many other countries of the region, output losses have been even
larger. These declines reflect the adjustment difficulties during the early
stages of the transition, high rates of inflation, the compression of
imports, disruption in trade among the countries of the former Soviet
Union, and uncertainties about the reform process itself. Large-scale
subsidies are delaying industrial restructuring and are exacerbating the
fiscal situation. A reversal of these adverse factors is not anticipated in
the near term, and output is expected to decline further in most of these
countries. A number of their governments, including those of Hungary and
Poland, are currently implementing or considering reforms directed at
political and economic liberalization, including efforts to foster
multi-party political systems, decentralize economic planning, and move
toward free market economies. At present, no Eastern European country has a
developed stock market, but Poland, Hungary and the Czech Republic have
small securities markets in operation. Ethnic and civil conflict s
currently rage throughout the former Yugoslavia. The outcome is uncertain.
Both the EC and Japan, among others, have made overtures to establish
trading arrangements and assist in the economic development of the Eastern
European nations. There is also an urgent need for positive steps to resist
protectionist pressures, especially by bringing the multilateral trade
negotiations under the Uruguay Round of the General Agreement on Trade and
Tariffs to a successful conclusion. Determined action to alleviate
short-term difficulties and to achieve key medium-term objectives would
unquestionably strengthen consumer and business confidence. Interest rates
generally have declined somewhat with the easing of tensions in the
Exchange Rate Mechanism, but for most countries tight monetary conditions
remain an obstacle to stronger growth and a threat to exchange market
stability. However, in the long-term, reunification could prove to be an
engine for domestic and international growth.
The conditions that have given rise to these developments are changeable,
and there is no assurance that reforms will continue or that their goals
will be achieved.
Portugal is a genuinely emerging market which has experienced rapid growth
since the mid-1980s, except for a brief period of stagnation over 1990-91.
Portugal's government remains committed to privatization of the financial
system away from one dependent upon the banking system to a more balanced
structure appropriate for the requirements of a modern economy.
Economic reforms launched in the 1980s continue to benefit Turkey in the
1990s. Turkey's economy has grown since the 1980s. Agriculture remains the
most important economic sector, employing over half of the labor force, and
accounting for significant portions of GDP and exports. Inflation and
interest rates remain high, and a large budget deficit will continue to
cause difficulties in Turkey's continuing transformation from a
centrally controlled to a free market economy.
Like many other Western economies, Greece suffered severely from the global
oil price hikes of the 1970s, with annual GDP growth plunging from 8% to 2%
in the 1980s, and inflation, unemployment, and budget deficits rising
sharply. The fall of the socialist government in 1989 and the inability of
the conservative opposition to obtain a clear majority led to business
uncertainty and the prospect for continued flat economic performance. Once
Greece has sorted out its political situation, it will have to face the
challenges posed by the steadily increasing integration of the EU,
including the progressive lowering of trade and investment barriers.
Tourism continues as a major industry, providing a vital offset to a
sizable commodity trade deficit.
REAL GDP ANNUAL RATE OF GROWTH
1993
Denmark 1.2 %
France -1.0 %
Germany -1.1 %
Italy -0.7 %
Netherlands -1.0 %
Spain -0.6 %
Switzerland 2.0 %
United Kingdom 2.0%
Source: World Economic Outlook October 1994
(Figures are quoted based on each country's domestic currency.)
NATIONAL INDICES (WITHOUT DIVIDENDS) OCTOBER 1994
GROWTH IN U.S. DOLLARS
EUROPE
6 Months 12 Months 5 Years
Greece -10.22 5.56 2.71
Portugal .65 7.68 -5.53
Turkey 48.77 -45.261 -7.386
SPECIAL CONSIDERATIONS AFFECTING AFRICA
Africa is a continent of roughly 50 countries with a total population of
approximately 840 million people. Literacy rates (the percentage of people
who are over 15 years of age and who can read and write) are relatively
low, ranging from 20% to 60%. The primary industries include crude oil,
natural gas, manganese ore, phosphate, bauxite, copper, iron, diamonds,
cotton, coffee, cocoa, timber, tobacco, sugar, tourism, and cattle. Many
African countries are fraught with political instability. However, there
has been a trend over the past several years toward democratization. Many
countries are moving from a military style, Marxist, or single party
government to a multi-party system. Still, there remain many countries that
do not have a stable political process. Many countries have been enmeshed
in civil , ethnic or border wars. Ethnic, religious, cultural and
linguistic differences divide the African peoples. Economically, the
Northern Rim countries (including Morocco, Egypt, and Algeria) ,
Nigeria, Zimbabwe and South Africa are the wealthier countries on the
continent due to their strong ties with the European nations. The market
capitalization of these countries has been growing recently as more
international companies invest in Africa and as local companies start to
list on the exchanges. However, religious strife has been a significant
source of instability in the Northern Rim countries. Although racial
discord in South Africa may be reduced by constitutional and political
changes that are in progress, as well as increased foreign investments, the
long-term future of South Africa remains uncertain.
On the other end of the economic spectrum are countries, such as
Burkina-Faso, Madagascar, and Malawi, that are considered to be among the
poorest or least developed in the world. These countries are generally
landlocked or have poor natural resources. The economies of many African
countries are heavily dependent on international oil prices. Of all the
African industries, oil has been the most lucrative, accounting for 40% to
60% of many countries' GDP. However, the general decline in oil prices has
had an adverse impact on many economies.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to the
sub-advisers (see the section entitled "Management Contracts"), the
sub-advisers are authorized to place orders for the purchase and sale of
portfolio securities, and will do so in accordance with the policies
described below. FMR is also responsible for the placement of transaction
orders for other investment companies and accounts for which it or its
affiliates act as investment adviser. In selecting broker-dealers, subject
to applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to: the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions; and, for equity funds, arrangements for
payment of fund expenses. Generally, commissions for foreign investments
traded on foreign exchanges will be higher than for U.S. investments and
may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; and the
availability of securities or the purchasers or sellers of securities .
In addition, such broker-dealers may furnish analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts; and effect securities
transactions and perform functions incidental thereto (such as clearance
and settlement). Generally, FMR selects such broker-dealers (to the extent
possible consistent with execution considerations) in accordance with a
ranking of broker-dealers determined periodically by FMR's investment staff
(for equity funds), based upon the quality of research and execution
services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by, and to place
portfolio transactions with, brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with FBSI and Fidelity
Brokerage Services ( FBS ) , subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. From
September 1992 through December 1994, FBS operated under the name Fidelity
Brokerage Services Limited, Inc. (FBSL). As of January 1995, FBSL was
converted into a limited liability company and assumed the name FBS.
Prior to September 4, 1992, FBSL operated under the name Fidelity
Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr.
Johnson 3d, Johnson family members, and various trusts for the benefit of
the Johnson family own, directly or indirectly, more than 25% of the voting
common stock of FIL.
FMR may allocate brokerage transactions to broker-dealers who have entered
into arrangements with FMR under which the broker-dealer allocates a
portion of the commissions paid by Overseas, Equity Portfolio Growth,
Global Resources, Growth Opportunities, Strategic Opportunities, Equity
Income, and Income & Growth toward payment of that fund's expenses, such as
transfer agent fees or custodian fees. The transaction quality must,
however, be comparable to those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
The funds' Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of each fund and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For the fiscal periods ended 1993 and 1994, respectively, each fund's
portfolio turnover rates are shown in the chart below. Because a high
turnover rate increases transaction costs and may increase taxable gains,
FMR carefully weighs the anticipated benefits of short-term investing
against these consequences. An increased turnover rate is due to a greater
volume of shareholder purchase orders, short-term interest rate volatility
and other special market conditions.
Fund Fiscal Period Ended 1993 1994
Overseas October 31 42% 34%
Equity Portfolio Growth November 30 160% 137%
Global Resources October 31 208% 125%
Growth Opportunities October 31 69% 43%
Strategic Opportunities September 30+ 183% 159%
Equity Income November 30 120% 140%
Income & Growth October 31 200% 202%
Emerging Markets Income December 31 N/A* 354%**
High Yield October 31 79% 118%
Strategic Income December 31 N/A* 104%**
Government Investment October 31 333% 313%
Limited Term Bond November 30 59% 68%
Short Fixed-Income October 31 58% 108%
High Income Municipal October 31 27% 38%
Limited Term Tax-Exempt November 30 46% 53%
Short-Intermediate Tax-Exempt November 30 N/A* 111%**
* Emerging Markets Income, Strategic Income, and Short-Intermediate
Tax-Exempt commenced operations on March 10, 1994, October 31, 1994, and
March 16, 1994, respectively.
** Annualized. Portfolio turnover rates shown are from commencement of
operations to the end of the fiscal period, as indicated.
+ As of November 9, 1994, t he fiscal year end for Strategic
Opportunities changed from September 30 to December 31.
The brokerage commissions paid by Overseas, Equity Portfolio Growth,
Global Resources, Growth Opportunities, Strategic Opportunities, Equity
Income, and Income & Growth , the p ortion of this amount paid to
firms providing research and the fees paid to FBSI and FBS (formerly
FBSL) for the past three fiscal years are listed in the following
table. The second table shows the approximate dollar amount of the
transactions on which brokerage commissions were paid for fiscal 1994.
The third table shows the percentage of brokerage commissions
paid to, and the amount of transactions effected through, FBSI and FBS for
fiscal 1994. Each fund pays both commissions and spreads in connection with
the placement of portfolio transactions; FBSI and FBS are paid on a
commission basis. The difference between the percentage of brokerage
commissions paid and the percentage of the dollar amount of transactions
effected through FBSI and FBS is a result of the low commission
rates charged by FBSI and FBS . The other funds paid no brokerage
commissions for the fiscal years 1992 through 1994.
<TABLE>
<CAPTION>
FISCAL TOTAL AMOUNT PAID TO FBSI TO FBS
PERIOD AMOUNT TO FIRMS
ENDED PAID PROVIDING
RESEARCH *
<S> <C> <C> <C> <C> <C> <C>
OVERSEAS October 31
1994 $ 1,601,660 $ 1,358,208 $ 685 $ 0
1993 500,186 435,162 800 0
1992 119,400 106,266 30 1,179
EQUITY PORTFOLIO
GROWTH November 30
1994 2,086,370 1,224,699 729,903 0
1993 915,767 503,672 362,158 0
1992 424,364 233,400 148,571 0
GLOBAL RESOURCES October 31
1994 630,752 401,789 195,272 0
1993 147,017 97,472 41,286 0
1992 58,180 42,471 13,864 0
GROWTH
OPPORTUNITIES October 31
199 4 3,589,080 1,970,405 1,368,574 0
1993 2,583,165 1,529,234 899,767 0
1992 1,147,967 747,327 334,189 925
STRATEGIC
OPPORTUNITIES December 31
10/1/94 - 12/31/94 403,617 295,089 70,46 5 0
10/1/93 - 9/30/94 1,1 66,854 974,489 151,233 96
1993 1,068,788 876,406 103,206 0
1992 1,087,115 851,211 126,298 0
EQUITY INCOME November 30
1994 827,499 489,052 290,182 0
1993 557,493 382,440 126,832 0
1992 342,397 205,781 107,503 441
INCOME & GROWTH October 31
1994 7,338,038 5,584,247 1,104,577 0
1993 2,998,137 1,945,791 796,821 0
1992 767,720 483,664 143,974 0
</TABLE>
* The provision of research services was not necessarily a factor in
the placement of all this business with such firms.
The table below depicts the total amount of transactions on which
brokerage commissions were paid for the fiscal periods ending 1994:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL PERIOD TOTAL AMOUNT OF
ENDED TRANSACTIONS
Overseas October 31 $ 593,714,765
Equity Portfolio Growth November 30 1,928,842,370
Global Resources October 31 306,587,110
Growth Opportunities October 31 3,131,464,670
Strategic Opportunities December 31* 302,116,639
September 30** 772,540,571
Equity Income November 30 632,935,142
Income & Growth October 31 4,083,654,796
</TABLE>
* Period of October 1, 1994 through December 31, 1994.
** Period of October 1, 1993 through September 30, 1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FISCAL PERIOD % OF % OF % OF % OF
ENDED COMMISSIONS COMMISSIONS TRANSACTIONS TRANSACTIONS
PAID TO FBSI PAID TO FBS EFFECTED EFFECTED
1994 1994 THROUGH THROUGH FBS
TO FBSI 1994
1994
Overseas October 31 .04 0 17.46 0
Equity Portfolio Growth November 30 35.0 0 49.2 0
Global Resources October 31 31.0 0 52.7 0
Growth Opportunities October 31 38.1 0 50.1 0
Strategic Opportunities December 31 17.5 0 2 9.9 0
Equity Income November 30 35.1 0 45.6 0
Income & Growth October 31 15.1 0 20.7 0
</TABLE>
From time to time, the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds or accounts are simultaneously engaged in the
purchase or sale of the same security, the prices and amounts are allocated
in accordance with procedures believed to be appropriate and equitable for
each fund and account. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to participate
in volume transactions will produce better executions and prices for the
funds. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to each fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Most equity securities for which
the primary market is the United States are valued at last sale price or,
if no sale has occurred, at the closing bid price. Most equity securities
for which the primary market is outside the United States are valued using
the official closing price or the last sale price in the principal market
in which they are traded. If the last sale price (on the local exchange) is
unavailable, the last evaluated quote or last bid price normally is used.
Fixed-income securities and other assets for which market quotations are
readily available may be valued at market values determined by such
securities' most recent bid prices (sales prices if the principal market is
an exchange) in the principal market in which they normally are traded, as
furnished by recognized dealers in such securities or assets. Short-term
securities are valued either at amortized cost or at original cost plus
accrued interest, both of which approximate current value.
Fixed-income and convertible securities may also be valued on the basis of
information furnished by a pricing service that uses a valuation matrix
which incorporates both dealer-supplied valuations and electronic data
processing techniques. Use of pricing services has been approved by the
Board of Trustees. A number of pricing services are available, and the
Trustees, on the basis of an on-going evaluation of these services, may use
various pricing services or discontinue the use of any pricing service.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. Fidelity Service Company (FSC) gathers all exchange
rates daily at the close of the New York Stock Exchange
( NYSE ) using the last quoted price on the local currency and
then translates the value of foreign securities from their local currencies
into U.S. dollars. If an extraordinary event that is expected to materially
affect the value of a portfolio security occurs after the close of an
exchange on which that security is traded, then that security will be
valued as determined in good faith by a committee appointed by the Board of
Trustees.
Futures contracts and options are valued on the basis of market quotations,
if available.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by a fund if, in the opinion of a committee appointed
by the Board of Trustees, some other method (e.g., closing over-the-counter
bid prices in the case of debt instruments traded on an exchange) would
more accurately reflect the fair market value of such securities.
PERFORMANCE
Each class of shares may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Share price, yield, and total return
fluctuate in response to market conditions and other factors, and the value
of shares when redeemed may be more or less than their original cost.
YIELD CALCULATIONS. Yields for a class are computed by dividing the class's
pro rata share of the applicable interest and dividend income, if any, for
a given 30-day or one-month period, net of expenses, by the average number
of shares of that class entitled to receive distributions during the
period, dividing this figure by the class's net asset value (NAV) or
offering price, as appropriate, at the end of the period, and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. Dividends from equity investments are treated as if they were
accrued on a daily basis, solely for the purposes of yield calculations. In
general, interest income is reduced with respect to bonds trading at a
premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at
a discount by adding a portion of the discount to daily income. For a
fund's investments denominated in foreign currencies, income and expenses
are calculated first in their respective currencies, and are then converted
to U.S. dollars, either when they are actually converted or at the end of
the 30-day or one month period, whichever is earlier. Capital gains and
losses generally are excluded from the calculation as are gains and losses
from currency exchange rate fluctuations.
Income calculated for the purposes of calculating a class's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a class's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
In calculating a class's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in order
to reflect the risk premium on that security. This practice will have the
effect of reducing a class's yield.
Yield information may be useful in reviewing a class's performance and in
providing a basis for comparison with other investment alternatives.
However, each class's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates, a
class's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the class's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the class's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
Tax-equivalent yield is the rate an investor would have to earn from a
fully taxable investment to equal a class's tax-free yield. Tax-equivalent
yields are calculated by dividing a class's yield by the result of one
minus a stated federal or combined federal and state tax rate. If any
portion of a class's yield is tax-exempt, only that portion is adjusted in
the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1995. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2.00% to 8.00%. Of course, no
assurance can be given that a class will achieve any specific tax-exempt
yield. While the tax-exempt funds invest principally in obligations whose
interest is exempt from federal income tax, other income received by the
funds may be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 TAX RATES AND TAX-EQUIVALENT YIELDS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Income
</TABLE>
Tax 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single
Return * Joint Return* Bracket ** Then t axable equivalent yield is:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 23,351 - $ 36,001 - 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
$ 56,500 $ 94,250
$ 56,551 - $ 94,251 - 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59%
$117,950 $143,600
$117,951 - $143,601 - 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50%
$256,500 $256,500
$256,501 - $256,501 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
A tax-exempt fund may invest a portion of its assets in obligations that
are subject to federal income tax. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a class's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in a class's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment over
a stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative total return of 100% over ten years would produce an average
annual return of 7.18%, which is the steady annual rate of return that
would equal 100% growth on a compounded basis in ten years. Average annual
returns covering periods of less than one year are calculated by
determining the class's total return for the period, extending that return
for a full year (assuming that return remains constant over the year), and
quoting the result as an annual return. While average annual returns are a
convenient means of comparing investment alternatives, investors should
realize that performance is not constant over time, but changes from year
to year, and that average annual returns represent averaged figures as
opposed to the actual year-to-year performance.
In addition to average annual total returns, unaveraged or cumulative total
returns reflecting the simple change in value of an investment over a
stated period may be quoted. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount, and may be calculated
for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis and may be quoted with or without taking a
class's maximum sales charge into account. Excluding a sales charge
from a total return calculation produces a higher total return figure.
Total returns, yield, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using NAVs, adjusted NAVs, and benchmark
indices may be used to exhibit performance. An adjusted NAV includes any
distributions paid and reflects all elements of its return. Unless
otherwise indicated, adjusted NAVs are not adjusted for sales charges, if
any.
MOVING AVERAGES. A growth or growth and income fund may illustrate
performance using moving averages. A long-term moving average is the
average of each week's adjusted closing NAV for a specified period. A
short-term moving average is the average of each day's adjusted closing NAV
for a specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving averages
for a specified period to produce indicators showing when a NAV has
crossed, stayed above, or stayed below its moving average.
The 13-week and 39-week long-term moving averages are shown below:*
Fund As of 13-Week 39-Week
Overseas 10/28/94 $14.01 $13.88
Equity Portfolio Growth - Class A 11/25/94 28.83 28.55
Equity Portfolio Growth - Institutional 11/25/94 29.17 28.84
Global Resources 10/28/94 17.65 17.17
Growth Opportunities 10/28/94 26.30 25.87
Strategic Opportunities - Class A 12/30/94 18.79 19.08
Strategic Opportunities - Class B 12/30/94 18.65 18.96
Equity Income - Class A 11/25/94 16.24 15.65
Equity Income - Class B 11/25/94 16.23 15.64
Equity Income - Institutional 11/25/94 16.33 15.70
Income & Growth 10/28/94 14.77 14.84
* Moving averages are shown for those classes that had commenced operations
prior to June 30, 1995 (the date of this SAI).
The follow tables and charts show performance for each class of shares of
each fund, and reflect the following information.
INSTITUTIONAL CLASS CHARTS. Institutional Class shares are sold to eligible
investors without a sales charge or a 12b-1 fee. The initial offering of
Institutional Class shares for all funds except Equity Portfolio Growth,
Equity Income, Limited Term Bond, and Limited Term Tax-Exempt was July 3,
1995.
CLASS A CHARTS. Class A shares are sold to eligible investors with a
maximum 4.75% (1.50% for Short Fixed-Income and Short-Intermediate
Tax-Exempt) front-end sales charge, which is reflected in the figures set
forth in the charts below. On September 10, 1992, a 0.65% (for equity
funds) or a 0.25% (for fixed-income funds, except Short Fixed-Income and
Short-Intermediate Tax-Exempt, which have a 0.15% 12b-1 fee) 12b-1 fee for
all Class A shares was imposed. The initial offering of Class A shares for
Equity Portfolio Growth, Equity Income, Limited Term Tax-Exempt, and
Limited Term Bond was September 10, 1992.
CLASS B CHARTS. Class B shares are sold to eligible investors with a 1.00%
12b-1 fee and may be subject to the contingent deferred sales charge upon
redemption (maximum 4.00%). For all funds except Overseas, Global
Resources, Short Fixed-Income, and Short-Intermediate Tax-Exempt, the
initial offering date of Class B shares was June 30, 1994. The initial
offering of Class B shares for Overseas and Global Resources was July 3,
1995.
HISTORICAL BOND FUND RESULTS. The following tables show yields,
tax-equivalent yields (for tax-exempt funds), and total returns for each
class of each fixed-income fund for the 1994 fiscal periods ended as
indicated. The tax-equivalent yield is based on a 31% federal income tax
rate. Note that each fund may invest in securities whose income is subject
to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C>
FISCAL PERIOD ENDED: Average Annual Total Returns 1 Cumulative Total Returns 2
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/31 - * Tax- Ten Ten Years/
11/30 - ** Equiva- One Five Years/Life One Five Life of
12/31 - *** Yield3 lent Yield Year Years of Fund+ Year Years F und+
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Emerging Markets
Income-Class A*** 8.71% N/A N/A N/A N/A N/A N/A 2.47%
Emerging Markets
Income-Class B*** 8.19% N/A N/A N/A N/A N/A N/A 1.96%
Emerging Markets
Income-Institutional 8.71% N/A N/A N/A N/A N/A N/A 2.47%
Class***
High Yield- Class A* 7.33% N/A -2.23% 15.75% 12.99% 2.64% 118.17% 1 73.14%
High Yield-Class B* 7.04% N/A -1.60% 16.66% 13.63% 2.14% 117.09% 171.80%
High
Yield-Institutional 7.33% N/A 2.64% 16.88% 13.70% 2.64% 118.17% 173.14%
Class*
Strategic Income-
Class A 4 7.61% N/A N/A N/A N/A N/A N/A 13.24 %
Strategic Income-
Class B 4 7.27% N/A N/A N/A N/A N/A N/A 12.86 %
Strategic Income-
Institutional Class4 7.61% N/A N/A N/A N/A N/A N/A 13.24%
Government
Investment-Class A* 6.46% N/A -9.77% 5.73% 5.77% -5.27% 38.71% 62.83%
Government
Investment-Class B* 6.02% N/A -9.20% 6.53% 6.37% -5.66% 38.13% 62.15%
Government Investment
Institutional Class* 6.46% N/A -5.27% 6.76% 6.43% -5.27% 38.71% 62.83%
Limited
Term Bond-Class A** 5.98% N/A -7.07% 6.59% 8.90% -2.44% 44.42% 146.17%
Limited
Term Bond-Class B** 5.47% N/A -6.59% 7.38% 9.37% -2.91% 43.72% 144.98%
Limited
Term Bond-Institutional
Class** 6.53% N/A -2.10% 7.86% 9.55% -2.10% 46.01% 148.89%
Short Fixed
Income-Class A* 6.10% N/A -1.72% 6.82% 7.32% -0.22% 41.17% 68.00%
Short Fixed Income-
Institutional Class* 6.10% N/A -0.22% 7.14% 7.55% -0.22% 41.17% 68.00%
High Income
Municipal-Class A* 5.99% 8.68% -10.49% 7.15% 8.56% -6.03% 48.27% 88.65%
High Income
Municipal-Class B* 5.30% 7.68% -10.00% 7.95% 9.23% -6.47% 47.57% 87.76%
High Income Municipal
Institutional Class* 5.99% N/A -6.03% 8.20% 9.31% -6.03% 48.27% 88.65%
Limited Term Tax-
Exempt-Class A** 4.97% 7.20% -10.25% 4.05% 5.93% -5.78% 28.03% 78.39%
Limited Term Tax-
Exempt-Class B** 4.35% 6.30% -9.74% 4.84% 6.44% -6.15% 27.53% 77.69%
Limited Term Tax-
Exempt-Institutional
Class** 5.47% 7.93% -5.43% 5.21% 6.57% -5.43% 28.90% 79.59%
Short Intermediate
Tax-Exempt-Class A** 4.83% 7.00% N/A N/A N/A N/A N/A 0.27%
Short Intermediate
Tax-Exempt-Institutiona
l Class** 4.83% N/A N/A N/A N/A N/A N/A 0.27%
</TABLE>
+ Life of fund figures are from commencement of operations (March 10, 1994
for Emerging Markets Income; January 5, 1987 for High Yield; January 7,
1987 for Government Investment; September 16, 1987 for Short Fixed-Income
and High Income Municipal; September 19, 1985 for Limited Term Tax-Exempt;
and March 16, 1994 for Short-Intermediate Tax-Exempt) through the 1994
fiscal year end.
1 Average annual total return figures include the effect of Class
A' s maximum 4.75% front-end sales charge (1.50% for Short
Fixed-Income and Short-Intermediate Tax-Exempt) in effect for the
periods shown. Average annual total return figures include the effect of
Class B's maximum 4.00% contingent deferred sales charge. The figures for
Institutional Class shares of all funds except Limited Term Bond and
Limited Term Tax-Exempt reflect Class A data, including the applicable
Class A 12b-1 fee but not the Class A front-end sales charge. The figures
for Class B shares of all other funds prior to June 30, 1994, and for Short
Fixed-Income and Short-Intermediate Tax-Exempt prior to June 30, 1995,
reflect Class A data, including the applicable Class A 12b-1 fee but not
the Class A front-end sales charge. However, the Class B contingent
deferred sales charge applicable at the end of each stated period is
included for Class B shares. Figures for Institutional Class shares of
these funds would have been higher and figures for Class B shares would
have been lower if the Class A 12b-1 fee had not be included.
2 The figures for each new class of shares of each fund reflect the
performance of Class A shares of that fund, including the Class A 12b-1 fee
but not including any applicable sales charge. Figures would have been
higher for Institutional Class shares and lower for Class B shares if the
Class A 12b-1 fee had not been included.
3 The yields shown for each new class reflect the performance of Class A
shares, including the Class A 12b-1 fee but not the front-end sales charge.
Yields for Institutional Class shares would have been higher and yields for
Class B shares lower if the Class A 12b-1 fee had not been included.
4 For each class of Strategic Income Fund, the yield is for the 30-day
period ended May 31, 1995 and the total returns are from October 31, 1994
(commencement of operations) through May 31, 1995.
Note: If FMR had not reimbursed certain fund expenses during certain of
these periods, the yields and total returns for those periods for Emerging
Markets Income, High Yield, Strategic Income, Government Investment,
Limited Term Bond, Short Fixed-Income, High Income Municipal, Limited Term
Tax-Exempt, and Short-Intermediate Tax-Exempt would have been lower. If the
following funds had not been in reimbursement, their yields and
tax-equivalent yields (if applicable) would have been as follows: Emerging
Markets Income - Class A and Class B (8.06% and 7.84%); Strategic Income -
Class A and Class B ( 7.38 % and 7.05 %); Limited Term Bond -
Class A and Class B (5.91% and 4.71%); Government Investment - Class A and
Class B (5.73% and 5.10%); Limited Term Tax-Exempt - Class A, Class B, and
Institutional Class (4.83%/7.00%, 3.64%/5.28%, and 5.36%/7.77%); and
Short-Intermediate Tax Exempt - Class A (4.04%/5.86%).
HISTORICAL EQUITY FUND RESULTS. The following table shows the total returns
for 1994 fiscal periods ended as indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual Total Returns 1 Cumulative Total Returns 2
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal One Five Ten Years/ One Five Ten Years/
Period Year Years Life of F und+ Year Years Life of F und+
Ended
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Overseas -
Class A 10/31 3.74% N/A 7.50% 8.91% N/A 45.67%
Overseas -
Class B 4.91% N/A 8.16% 8.91% N/A 45.67%
Overseas -
Institutional Class 8.91% N/A 8.66% 8.91% N/A 45.67%
E quity Portfolio
Growth - Class 11/30 -3.24% 16.55% 19.14% 1.58% 125.75% 504.83%
A
E quity Portfolio Growth -
Institutional Class 2.46% 18.10% 19.93% 2.46% 129.70% 515.42%
Global Resources -
Class A 10/31 -0.97% 13.48% 14.86% 3.97% 97.54% 171.05%
Global Resources -
Class B -0.02% 15.08% 14.47% 3.97% 97.54% 171.05%
Global Resources -
Institutional Class 3.97% 14.59% 15.68% 3.97% 97.54% 171.05%
Growth Opportunities -
Class A 10/31 3.55% 15.15% 19.94% 8.71% 112.51% 272.05%
Global Opportunities -
Institutional Class 8.71% 16.27% 20.78% 8.71% 112.51% 272.05%
Strategic Opportunities
- Class A 12/31 -11.58% 6.55% 13.88% -7.17% 44.18% 285.19%
Strategic Opportunities
- - Class B -10.79% 7.44% 14.43% -7.22% 44.11% 285.00%
Strategic Opportunities -
Institutional Class -6.35 % 8.25 % 14.94 % -6.35 % 48.64% 302.39%
Equity Income -
Class A 11/30 3.67% 9.10% 12.68% 8.84% 62.28% 246.39%
Equity Income - Class B 4.77% 10.02% 13.22% 8.77% 62.17% 246.17%
Equity Income -
Institutional Class 9.82% 10.56% 13.43% 9.82% 65.21% 252.65%
Income & Growth -
Class A 10/31 -7.31% 9.99% 11.34% -2.69% 68.98% 143.26%
Income & Growth -
Institutional Class -2.69% 11.06% 12.03% -2.69% 68.98% 143.26%
</TABLE>
+ Life of fund figures are from commencement of operations (April 23, 1990
for Overseas; December 29, 1987 for Global Resources; November 18, 1987 for
Growth Opportunities; and January 6, 1987 for Income & Growth) through the
1994 fiscal year end.
1 Average annual total return figures include the effect of Class
A's maximum 4.75% front-end sales charge in effect for the periods
shown. Average annual total return figures include the effect of Class
B's maximum 4.00% contingent deferred sales charge. The figures for
Institutional Class shares of all funds except Equity Income and Equity
Portfolio Growth reflect Class A data, including the applicable Class A
12b-1 fee but not the Class A front-end sales charge. The figures for Class
B shares of all other funds prior to June 30, 1994, and for Overseas and
Global Resources prior to June 30, 1995, reflect Class A data, including
the applicable Class A 12b-1 fee but not the Class A front-end charge.
However, the Class B contingent deferred sales charge applicable at the end
of each stated period is included for Class B shares. Figures would have
been higher for Institutional Class shares and lower for Class B shares if
the Class A 12b-1 fee had not been included.
2 The figures for each new class of shares of each fund reflect the
performance of Class A shares of that fund, including the Class A 12b-1 fee
but not including any applicable sales charge. Figures would have been
higher for Institutional Class shares and lower for Class B shares if the
Class A 12b-1 fee had not been included.
Note: If FMR had not reimbursed certain fund expenses during certain of
these periods, the total returns for those periods for Overseas, Global
Resources, Equity Income, and Growth Opportunities would have been lower.
The following charts show the growth of a hypothetical $10,000
investment in each class, assuming all distributions were reinvested. This
was a period of fluctuating interest rates, bond prices, and stock prices
and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in the class today. Tax consequences of different investments
have not been factored into the figures.
INSTITUTIONAL CHARTS. The figures for Institutional Class shares of each
fund except Equity Portfolio Growth, Equity Income, and Limited Term
Tax-Exempt reflect the performance of Class A shares from the fund's
commencement of operations, including the applicable Class A 12b-1 fee but
not the front-end sales charge. The figures would have been higher if the
Class A 12b-1 fee were not included.
CLASS A CHARTS. The figures for Class A shares after September 10, 1992
reflect Class A's maximum 4.75% front-end sales charge (1.50% for Short
Fixed-Income and Short-Intermediate Tax-Exempt) and the applicable Class A
12b-1 fee. Prior to September 10, 1992, the figures for Equity Portfolio
Growth, Equity Income, Limited Term Tax-Exempt, and Limited Term Bond
reflect Institutional Class performance (i.e., no sales charge or 12b-1
fee), and the figures for Strategic Opportunities reflect Initial Class
performance (i.e., a 4.75% front-end sales charge and no 12b-1 fee).
CLASS B CHARTS. The figures for Class B shares of all funds except
Overseas, Global Resources, Short Fixed-Income and Short-Intermediate
Tax-Exempt prior to June 30, 1994, and for Overseas, Global Resources,
Short Fixed-Income and Short-Intermediate Tax-Exempt prior to June 30,
1995, reflect the performance of Class A shares of each fund, including the
applicable Class A 12b-1 fee but not the Class A front-end charge. The
figures would have been lower if Class B's higher 12b-1 fee had been
included.
DOMESTIC FUND RETURNS. The following tables show the income and capital
elements of the cumulative total return for each class of each fund. The
table compares each class's return to the record of the S&P 500, the Dow
Jones Industrial Average (DJIA), and the cost of living (measured by the
Consumer Price Index or CPI) over the same period. The CPI
information is as of the month-end closest to the initial investment date
for each fund. The S&P 500 and DJIA comparisons are provided to show how
each class's total return compared to the record of a broad average of
common stock prices and a narrower set of stocks of major industrial
companies, respectively, over the same period. Of course, since bond funds
invest in fixed-income securities, common stocks represent a different type
of investment from those funds. Common stocks generally offer greater
growth potential than bonds, but generally experience greater price
volatility, which means greater potential for loss. In addition, common
stocks generally provide lower income than a fixed-income investment such
as the bond funds. Each fund has the ability to invest in securities not
included in either index, and its investment portfolio may or may not be
similar in composition to the indices. Figures for the S&P 500 and DJIA are
based on the prices of unmanaged groups of stocks and, unlike the classes'
returns, do not include the effect of paying brokerage commissions or other
costs of investing. Each class of the fixed-income funds may compare its
performance to the Aggregate Bond Index Portfolio. These comparisons show a
class's total returns compared to the record of a broad average of debt
security prices. The Aggregate Bond Index is a total return index that
measures both the capital price changes and the income underlying the
universe of debt securities weighted by market value outstanding, and
unlike a class's returns, its returns do not include the effect of paying
brokerage commissions and other costs of investing.
In addition, certain funds may compare the performance of each class of
their shares to the performance of specific indices of securities of the
same class as those in which a fund invests. The following tables show the
performance of each class of Strategic Income and High Yield compared to
the Merrill Lynch High Yield Master Index; each class of Government
Investment compared to the Salomon Treasury/Agency Index; each class of
Limited Term Bond compared to the Lehman Intermediate Government/Corporate
Index;and each class of Short Fixed-Income compared to the Lehman 1-3
Government/Corporate Index. Each class of Strategic Income may also compare
its performance to a customized composite index equally comprised of the
J.P. Morgan Index ex-United States, a broad measure of bond performance in
foreign countries; the Merrill Lynch High Yield Master Index, a broad
measure of higher yielding bonds; and the Lehman Brothers Government
Treasury Long Term Index, a broad measure of the performance of long-term
U.S. government bonds.
EQUITY PORTFOLIO GROWTH - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 13,155 $ 0 $ 0 $ 13,155 $ 12,899 $ 12,966 $ 10,351
1986 15,634 28 459 16,121 16,469 17,477 10,484
1987 11,767 31 1,564 13,362 15,699 17,258 10,959
1988 14,258 52 3,029 17,339 19,361 20,628 11,425
1989 20,545 611 4,364 25,520 25,333 27,398 11,956
1990 18,445 674 7,102 26,221 24,451 26,939 12,707
1991 28,800 1,052 11,089 40,941 29,428 31,509 13,086
1992 31,232 1,199 17,090 49,521 34,872 37,054 13,485
1993 34,992 1,512 20,207 56,711 38,394 42,501 13,846
1994 33,830 1,462 22,318 57,610 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
EQUITY PORTFOLIO GROWTH - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 13,811 $ 0 $ 0 $ 13,811 $ 12,899 $ 12,966 $ 10,351
1986 16,413 29 482 16,924 16,469 17,477 10,484
1987 12,354 32 1,641 14,027 15,699 17,258 10,959
1988 14,969 55 3,180 18,204 19,361 20,628 11,425
1989 21,569 642 4,582 26,793 25,333 27,398 11,956
1990 19,365 707 7,456 27,528 24,451 26,939 12,707
1991 30,237 1,104 11,642 42,983 29,428 31,509 13,086
1992 32,839 1,261 17,970 52,070 34,872 37,054 13,485
1993 37,036 1,645 21,386 60,067 38,394 42,501 13,846
1994 35,990 1,822 23,731 61,543 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
GLOBAL RESOURCES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 10,925 $ 0 $ 0 $ 10,925 $ 11,702 $ 11,395 $ 10,416
1989 12,002 0 1,068 13,070 14,791 14,557 10,884
1990 11,716 81 2,106 13,903 13,683 13,970 11,568
1991 13,440 93 3,081 16,614 18,268 18,172 11,906
1992 13,221 91 4,293 17,605 20,090 19,672 12,288
1993 16,754 116 7,961 24,831 23,093 23,104 12,626
1994 16,726 116 8,975 25,817 23,986 25,207 12,955
</TABLE>
* From December 29, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GLOBAL RESOURCES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested
Reinvested Cost
Period $10,000 Dividend
Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions
Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 11,470 $ 0 $ 0 $ 11,470 $ 11,702 $ 11,395 $ 10,416
1989 12,600 0 1,121 13,721 14,791 14,557 10,884
1990 12,300 85 2,211 14,596 13,683 13,970 11,568
1991 14,110 98 3,235 17,443 18,268 18,172 11,906
1992 13,880 96 4,508 18,484 20,090 19,672 12,288
1993 17,590 122 8,358 26,070 23,093 23,104 12,626
1994 17,560 121 9,424 27,105 23,986 25,207 12,955
</TABLE>
* From December 29, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GLOBAL RESOURCES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 11,470 $ 0 $ 0 $ 11,470 $ 11,702 $ 11,395 $ 10,416
1989 12,600 0 1,121 13,721 14,791 14,557 10,884
1990 12,300 85 2,211 14,596 13,683 13,970 11,568
1991 14,110 98 3,235 17,443 18,268 18,172 11,906
1992 13,880 96 4,508 18,484 20,090 19,672 12,288
1993 17,590 122 8,358 26,070 23,093 23,104 12,626
1994 17,560 121 9,424 27,105 23,986 25,207 12,955
</TABLE>
* From December 29, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GROWTH OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 13,592 $ 0 $ 0 $ 13,592 $ 11,872 $ 11,566 $ 10,416
1989 15,745 35 896 16,676 15,006 14,775 10,884
1990 12,373 71 1,721 14,165 13,882 14,179 11,568
1991 19,602 371 2,727 22,700 18,534 18,444 11,906
1992 20,136 499 4,810 25,445 20,383 19,966 12,288
1993 24,184 790 7,623 32,597 23,430 23,449 12,626
1994 25,356 925 9,157 35,438 24,336 25,585 12,955
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 14,270 $ 0 $ 0 $ 14,270 $ 11,872 $ 11,566 $ 10,416
1989 16,530 37 940 17,507 15,006 14,775 10,884
1990 12,990 75 1,807 14,872 13,882 14,179 11,568
1991 20,580 390 2,863 23,833 18,534 18,444 11,906
1992 21,140 524 5,050 26,714 20,383 19,966 12,288
1993 25,390 830 8,003 34,223 23,430 23,449 12,626
1994 26,620 972 9,614 37,205 24,336 25,585 12,955
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
STRATEGIC OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Dec. 31 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,799 $ 233 $ 1,079 $ 13,101 $ 13,175 $ 13,356 $ 10,380
1986 14,178 355 2,227 16,760 15,636 16,967 10,494
1987 11,388 535 3,776 15,699 16,459 17,889 10,959
1988 13,435 1,302 4,454 19,191 19,193 20,737 11,443
1989 17,327 2,375 5,745 25,447 25,274 27,323 11,975
1990 15,429 3,078 5,116 23,623 24,486 27,176 12,707
1991 16,172 4,106 8,796 29,074 31,951 33,791 13,096
1992 16,662 5,147 11,008 32,817 34,393 36,257 13,476
1993 18,193 6,361 14,969 39,523 37,859 42,418 13,846
1994 16,356 6,383 13,951 36,690 38,358 44,527 14,217
</TABLE>
* From month-end closest to initial investment date.
STRATEGIC OPPORTUNITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Dec. 31 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 12,388 $ 234 $ 1,133 $ 13,755 $ 13,175 $ 13,356 $ 10,380
1986 14,885 372 2,338 17,595 15,636 16,967 10,494
1987 11,956 561 3,964 16,481 16,459 17,889 10,959
1988 14,105 1,367 4,677 20,149 19,193 20,737 11,443
1989 18,191 2,493 6,031 26,715 25,274 27,323 11,975
1990 16,198 3,231 5,371 24,800 24,486 27,176 12,707
1991 16,979 4,311 9,235 30,525 31,951 33,791 13,096
1992 17,493 5,403 11,557 34,453 34,393 36,257 13,476
1993 19,100 6,678 15,716 41,494 37,859 42,418 13,846
1994 17,052 6,899 14,549 38,500 38,358 44,527 14,217
</TABLE>
* From month-end closest to initial investment date.
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Dec. 31 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 12,388 $ 234 $ 1,133 $ 13,755 $ 13,175 $ 13,356 $ 10,380
1986 14,885 372 2,338 17,595 15,636 16,967 10,494
1987 12,039 574 3,977 16,590 16,459 17,889 10,959
1988 14,224 1,434 4,699 20,357 19,193 20,737 11,443
1989 18,255 2,785 6,031 27,071 25,274 27,323 11,975
1990 16,272 3,638 5,375 25,285 24,486 27,176 12,707
1991 17,071 4,906 9,299 31,276 31,951 33,791 13,096
1992 17,576 6,256 11,658 35,490 34,393 36,257 13,476
1993 19,238 7,795 15,936 42,969 37,859 42,418 13,846
1994 17,319 8,042 14,879 40,239 38,358 44,527 14,217
</TABLE>
* From month-end closest to initial investment date.
EQUITY INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,116 $ 777 $ 0 $ 11,893 $ 12,899 $ 12,966 $ 10,351
1986 12,595 1,711 380 14,686 16,469 17,477 10,484
1987 10,167 2,077 1,373 13,617 15,699 17,258 10,959
1988 10,325 3,242 3,725 17,292 19,361 20,628 11,425
1989 11,413 4,801 4,118 20,332 25,333 27,398 11,956
1990 8,855 4,848 3,598 17,301 24,451 26,939 12,707
1991 10,306 6,782 4,188 21,276 29,428 31,509 13,086
1992 11,962 8,862 4,860 25,684 34,872 37,054 13,485
1993 13,822 10,876 5,616 30,314 38,394 42,501 13,846
1994 14,846 12,116 6,032 32,994 38,795 44,332 14,236
</TABLE>
** From month-end closest to initial investment date.
EQUITY INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,670 $ 816 $ 0 $ 12,486 $ 12,899 $ 12,966 $ 10,351
1986 13,223 1,797 398 15,418 16,469 17,477 10,484
1987 10,674 2,180 1,441 14,295 15,699 17,258 10,959
1988 10,840 3,403 3,911 18,154 19,361 20,628 11,425
1989 11,982 5,040 4,323 21,345 25,333 27,398 11,956
1990 9,297 5,090 3,777 18,164 24,451 26,939 12,707
1991 10,820 7,120 4,396 22,336 29,428 31,509 13,086
1992 12,559 9,304 5,103 26,966 34,872 37,054 13,485
1993 14,512 11,418 5,896 31,826 38,394 42,501 13,846
1994 15,566 12,725 6,325 34,616 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
EQUITY INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,670 $ 816 $ 0 $ 12,486 $ 12,899 $ 12,966 $ 10,351
1986 13,223 1,797 398 15,418 16,469 17,477 10,484
1987 10,674 2,180 1,441 14,295 15,699 17,258 10,959
1988 10,840 3,403 3,911 18,154 19,361 20,628 11,425
1989 11,982 5,040 4,323 21,345 25,333 27,398 11,956
1990 9,297 5,090 3,777 18,164 24,451 26,939 12,707
1991 10,820 7,120 4,396 22,336 29,428 31,509 13,086
1992 12,578 9,318 5,111 27,007 34,872 37,504 13,485
1993 14,580 11,608 5,924 32,112 38,394 42,501 13,846
1994 15,693 13,195 6,376 35,264 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
INCOME & GROWTH - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987 $ 8,992 $ 161 $ 0 $ 9,153 $ 10,232 $ 10,358 $ 10,434
1988 10,544 774 0 11,318 11,747 11,572 10,878
1989 12,163 1,549 0 13,712 14,849 14,782 11,367
1990 9,916 2,328 488 12,732 13,736 14,187 12,081
1991 13,459 3,924 663 18,046 18,339 18,454 12,434
1992 13,726 4,641 1,532 19,899 20,169 19,977 12,833
1993 15,154 6,002 2,653 23,809 23,183 23,462 13,186
1994 13,973 6,056 3,141 23,170 24,080 25,598 13,529
</TABLE>
* From January 6, 1987 (commencement of operations).
** From month-end closest to initial investment date.
INCOME & GROWTH - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987 $ 9,440 $ 170 $ 0 $ 9,610 $ 10,232 $ 10,358 $ 10,434
1988 11,070 813 0 11,883 11,747 11,572 10,878
1989 12,770 1,626 0 14,396 14,849 14,782 11,367
1990 10,410 2,445 513 13,367 13,736 14,187 12,081
1991 14,130 4,119 696 18,945 18,339 18,454 12,434
1992 14,410 4,872 1,608 20,891 20,169 19,977 12,833
1993 15,910 6,302 2,786 24,998 23,183 23,462 13,186
1994 14,670 6,358 3,298 24,326 24,080 25,598 13,529
</TABLE>
* From January 6, 1987 (commencement of operations).
** From month-end closest to initial investment date.
HIGH YIELD - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Oct. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 8,658 $ 790 $ 0 $ 9,448 $ 9,798 $ 9,917 $ 10,434
1988 9,392 2,148 0 11,540 11,459 11,054 10,878
1989 8,544 3,381 0 11,925 12,023 12,369 11,367
1990 7,763 4,589 0 12,352 11,257 13,150 12,081
1991 9,639 7,613 0 17,252 15,144 15,229 12,434
1992 10,544 10,496 0 21,040 17,826 16,727 12,833
1993 11,440 13,420 488 25,348 21,130 18,712 13,186
1994 10,687 14,350 980 26,017 21,542 18,025 13,529
</TABLE>
* From January 5, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH YIELD - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Oct. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,090 $ 829 $ 0 $ 9,919 $ 9,798 $ 9,917 $ 10,434
1988 9,860 2,256 0 12,116 11,459 11,054 10,878
1989 8,970 3,550 0 12,520 12,023 12,369 11,367
1990 8,150 4,818 0 12,968 11,257 13,150 12,081
1991 10,120 7,992 0 18,112 15,144 15,229 12,434
1992 11,070 11,020 0 22,090 17,826 16,727 12,833
1993 12,010 14,089 512 26,611 21,130 18,712 13,186
1994 11,210 14,942 1,028 27,180 21,542 18,025 13,529
</TABLE>
* From January 5, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH YIELD - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Oct. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,090 $ 829 $ 0 $ 9,919 $ 9,798 $ 9,917 $ 10,434
1988 9,860 2,256 0 12,116 11,459 11,054 10,878
1989 8,970 3,550 0 12,520 12,023 12,369 11,367
1990 8,150 4,818 0 12,968 11,257 13,150 12,081
1991 10,120 7,992 0 18,112 15,144 15,229 12,434
1992 11,070 11,020 0 22,090 17,826 16,727 12,833
1993 12,010 14,089 512 26,611 21,130 18,712 13,186
1994 11,220 15,065 1,029 27,314 21,542 18,025 13,529
</TABLE>
* From January 5, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
STRATEGIC INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Dec. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,449 $ 93 $ 0 $ 9,542 $ 9,845 $ 10,047 $ 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
STRATEGIC INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Dec. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,910 $ 84 $ 0 $ 9,994 $ 9,845 $ 10,047 $ 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
STRATEGIC INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Dec. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,920 $ 97 $ 0 $ 10,017 $ 9,845 $ 10,047 $ 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
GOVERNMENT INVESTMENT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Salomon
Period Initial Reinvested Reinvested Treasury/ Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Agency Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 8,763 $ 587 $ 0 $ 9,350 $ 9,948 $ 9,917 $ 10,434
1988 8,820 1,403 0 10,223 10,908 11,054 10,878
1989 8,868 2,313 0 11,181 12,230 12,369 11,367
1990 8,715 3,190 0 11,905 12,960 13,150 12,081
1991 9,134 4,277 0 13,411 14,839 15,229 12,434
1992 9,268 5,281 0 14,549 16,383 16,727 12,833
1993 9,658 6,395 318 16,371 18,538 18,712 13,186
1994 8,534 6,472 503 15,509 17,707 18,025 13,529
</TABLE>
* From January 7, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
GOVERNMENT INVESTMENT - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Salomon
Period Initial Reinvested Reinvested Treasury/ Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Agency Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,200 $ 616 $ 0 $ 9,816 $ 9,948 $ 9,917 $ 10,434
1988 9,260 1,473 0 10,733 10,908 11,054 10,878
1989 9,310 2,429 0 11,739 12,230 12,369 11,367
1990 9,150 3,349 0 12,499 12,960 13,150 12,081
1991 9,590 4,490 0 14,080 14,839 15,229 12,434
1992 9,730 5,545 0 15,275 16,383 16,727 12,833
1993 10,140 6,714 334 17,189 18,538 18,712 13,186
1994 8,950 6,737 528 16,215 17,707 18,025 13,529
</TABLE>
* From January 7, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Salomon
Period Initial Reinvested Reinvested Treasury/ Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Agency Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,200 $ 616 $ 0 $ 9,816 $ 9,948 $ 9,917 $ 10,434
1988 9,260 1,473 0 10,733 10,908 11,054 10,878
1989 9,310 2,429 0 11,739 12,230 12,369 11,367
1990 9,150 3,349 0 12,499 12,960 13,150 12,081
1991 9,590 4,490 0 14,080 14,839 15,229 12,434
1992 9,730 5,545 0 15,275 16,383 16,727 12,833
1993 10,140 6,714 334 17,189 18,538 18,712 13,186
1994 8,960 6,794 528 16,283 17,707 18,025 13,529
</TABLE>
* From January 7, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM BOND - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested Intermediate Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Nov. 30 Investment Distributions Distributions Value Index Index+ Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 10,089 $ 1,093 $ 0 $ 11,182 $ 12,988 $ 13,436 $ 10 , 351
1986 10,749 2,315 22 13,086 14,983 15,900 10,484
1987 9,802 3,257 260 13,319 15,422 16,180 10,959
1988 9,735 4,499 258 14,492 16,611 17,674 11,425
1989 9,955 6,016 264 16,235 18,696 20,211 11,956
1990 9,697 7,330 257 17,284 20,191 21,741 12,707
1991 10,089 9,235 268 19,592 22,902 24,875 13,086
1992 10,175 10,919 270 21,364 24,811 27,079 13,485
1993 10,653 13,098 283 24,034 27,226 30,029 13,846
1994 9,812 13,376 260 23,448 26,730 29,110 14,236
</TABLE>
* From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM BOND - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested Intermediate Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Nov. 30 Investment Distributions Distributions Value Index Index+ Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 10,592 $ 1,147 $ 0 $ 11,739 $ 12,988 $ 13,436 $ 10,351
1986 11,285 2,431 24 13,740 14,983 15,900 10,484
1987 10,291 3,419 273 13,983 15,422 16,180 10,959
1988 10,221 4,723 271 15,215 16,611 17,674 11,425
1989 10,452 6,316 277 17,045 18,696 20,211 11,956
1990 10,181 7,696 270 18,147 20,191 21,741 12,707
1991 10,592 9,695 281 20,568 22,902 24,875 13,086
1992 10,683 11,463 283 22,429 24,811 27,079 13,485
1993 11,185 13,751 297 25,233 27,226 30,029 13,846
1994 10,291 13,934 273 24,498 26,730 29,110 14,236
</TABLE>
* From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM BOND - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested Intermediate Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Nov. 30 Investment Distributions Distributions Value Index Index+ Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 10,592 $ 1,147 $ 0 $ 11,739 $ 12,988 $ 13,436 $ 10,351
1986 11,285 2,431 24 13,7 4 0 14,983 15,900 10,484
1987 10,291 3,419 273 13,983 15,422 16,180 10,959
1988 10,221 4,723 271 15,215 16,611 17,674 11,425
1989 10,452 6,316 277 17,045 18,696 20,211 11,956
1990 10,181 7,696 270 18,147 20,191 21,741 12,707
1991 10,592 9,695 281 20,568 22,902 24,875 13,086
1992 10,683 11, 498 283 22, 464 24,811 27,079 13,485
1993 11, 205 13, 920 297 25, 422 27,226 30,029 13,846
1994 10, 311 14, 304 273 24, 889 26,730 29,110 14,236
</TABLE>
* From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT FIXED-INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested 1 - 3 Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,909 $ 100 $ 0 $ 10,009 $ 10,198 $ 10,356 $ 10,026
1988 9,791 974 0 10,765 10,993 11,543 10,452
1989 9,801 1,921 0 11,722 12,040 12,917 10,922
1990 9,476 2,902 0 12,378 13,097 13,732 11,609
1991 9,722 4,165 0 13,887 14,594 15,903 11,948
1992 9,801 5,397 0 15,198 15,789 17,467 12,330
1993 9,939 6,645 0 16,584 16,726 19,540 12,670
1994 9,338 7,211 0 16,549 16,931 18,823 13,000
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT FIXED-INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested 1 - 3 Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 10,060 $ 101 $ 0 $ 10,161 $ 10,198 $ 10,356 $ 10,026
1988 9,940 989 0 10,929 10,993 11,543 10,452
1989 9,950 1,951 0 11,901 12,040 12,917 10,922
1990 9,620 2,946 0 12,566 13,097 13,732 11,609
1991 9,870 4,228 0 14,098 14,594 15,903 11,948
1992 9,950 5,479 0 15,429 15,789 17,467 12,330
1993 10,090 6,748 0 16,838 16,726 19,540 12,670
1994 9,480 7,320 0 16,800 16,931 18,823 13,000
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH INCOME MUNICIPAL - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Oct. 31 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1987* $ 9,382 $ 87 $ 0 $ 9,469 $ 10,356 $ 10,026
1988 9,963 852 0 10,815 11,543 10,452
1989 10,306 1,759 54 12,119 12,917 10,922
1990 10,354 2,722 168 13,244 13,732 11,609
1991 10,868 3,903 330 15,101 15,903 11,948
1992 11,097 5,044 351 16,492 17,467 12,330
1993 12,116 6,577 429 19,122 19,540 12,670
1994 10,687 6,808 473 17,968 18,823 13,000
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH INCOME MUNICIPAL - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Oct. 31 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1987* $ 9,850 $ 92 $ 0 $ 9,942 $ 10,356 $ 10,026
1988 10,460 895 0 11,355 11,543 10,452
1989 10,820 1,847 57 12,724 12,917 10,922
1990 10,870 2,858 176 13,904 13,732 11,609
1991 11,410 4,097 347 15,854 15,903 11,948
1992 11,650 5,296 368 17,314 17,467 12,330
1993 12,720 6,905 450 20,075 19,540 12,670
1994 11,210 7,069 496 18,775 18,823 13,000
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH INCOME MUNICIPAL - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Oct. 31 Investment Distributions Distributions Value Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1987* $ 9,850 $ 92 $ 0 $ 9,942 $ 10,356 $ 10,026
1988 10,460 895 0 11,355 11,543 10,452
1989 10,820 1,847 57 12,724 12,917 10,922
1990 10,870 2,858 176 13,904 13,732 11,609
1991 11,410 4,097 347 15,854 15,903 11,948
1992 11,650 5,296 368 17,314 17,467 12,330
1993 12,720 6,905 450 20,075 19,540 12,670
1994 11,220 7,148 497 18,865 18,823 13,000
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM TAX-EXEMPT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1985* $ 9,792 $ 126 $ 0 $ 9,918 $ 10,455 $ 10,065
1986 10,468 826 51 11,345 12,372 10,194
1987 9,887 1,451 117 11,455 12,590 10,656
1988 10,020 2,207 118 12,345 13,752 11,108
1989 10,106 3,046 119 13,271 15,726 11,625
1990 10,135 3,951 120 14,206 16,917 12,355
1991 10,287 4,955 122 15,364 19,356 12,724
1992 10,554 6,062 125 16,741 21,071 13,112
1993 9,963 6,581 1,489 18,033 23,366 13,463
1994 8,954 6,669 1,369 16,992 22,651 13,841
* From September 19, 1985 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM TAX-EXEMPT - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1985* $ 10,280 $ 132 $ 0 $ 10,412 $ 10,455 $ 10,065
1986 10,990 867 53 11,910 12,372 10,194
1987 10,380 1,524 123 12,027 12,590 10,656
1988 10,520 2,317 124 12,961 13,752 11,108
1989 10,610 3,198 125 13,933 15,726 11,625
1990 10,640 4,148 126 14,914 16,917 12,355
1991 10,800 5,202 128 16,130 19,356 12,724
1992 11,080 6,365 131 17,576 21,071 13,112
1993 10,460 6,909 1,564 18,933 23,366 13,463
1994 9,400 6,931 1,437 17,768 22,651 13,841
* From September 19, 1985 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM TAX-EXEMPT-INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1985* $ 10,280 $ 132 $ 0 $ 10,412 $ 10,455 $ 10,065
1986 10,990 867 53 11,910 12,372 10,194
1987 10,380 1,524 123 12,027 12,590 10,656
1988 10,520 2,317 124 12,961 13,752 11,108
1989 10,610 3,198 125 13,933 15,726 11,625
1990 10,640 4,148 126 14,914 16,917 12,355
1991 10,800 5,202 128 16,130 19,356 12,724
1992 11,080 6,371 131 17,582 21,071 13,112
1993 10,460 6,967 1,564 18,991 23,366 13,463
1994 9,410 7,110 1,440 17,960 22,651 13,841
* From September 19, 1985 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT-INTERMEDIATE TAX-EXEMPT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1994 $ 9,623 $ 254 $ 0 $ 9,877 $ 9,926 $ 10,183
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT-INTERMEDIATE TAX-EXEMPT - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1994 $ 9,770 $ 257 $ 0 $ 10,027 $ 9,926 $ 10,183
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
The yield for the S&P 500 for the year ended December 31, 1994 was 2.93%,
calculated by dividing the dollar value of dividends paid by the S&P 500
stocks during the period by the average value of the S&P 500 on December
31, 1994. The S&P 500 yield is calculated differently from each class's
yield. For example, a class's yield calculation treats dividends as accrued
in anticipation of payment, rather than recording them when paid.
INTERNATIONAL FUND RETURNS. The following tables show the income and
capital elements of the total return for each class of Overseas and
Emerging Markets Income from the date each fund commenced operations
through the 1994 fiscal period, ended as indicated. The classes may compare
their total returns to the record of the following Morgan Stanley Capital
International indices: the World Index; EAFE Index; the Europe Index; the
Pacific Index, the Combined Far East ex-Japan Free Index; and the Latin
America Free Index. The EAFE Index combines the Europe and Pacific indices.
The addition of Canada, the United States, and South African Gold Mines to
the EAFE index compiles the World Index which includes over 1400 companies.
The Europe Index and Pacific Index are subsets of the Morgan Stanley
Capital International World Index, which is also published by Morgan
Stanley Capital International, S.A. The Europe and Pacific Indices are
weighted by the market value of each country's stock exchange(s). The
companies included in the indices change only in the event of mergers,
takeovers, failures and the like, and minor adjustments may be made when
Morgan Stanley Capital International, S.A. reviews the companies covered as
to suitability every three or four years.
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Comparative Index Description of Index
Overseas Morgan Stanley Capital International An unmanaged index of 900 foreign common
Europe, Australia, Far East Index stocks
(EAFE)
Emerging Markets J.P. Morgan Emerging An unmanaged index of fixed income securities
Income Market Bond Index from developing nations
</TABLE>
Each table below compares the returns for each class of Overseas and
Emerging Markets Income to the record of the S&P 500, the DJIA, a foreign
stock market index as described above, and the cost of living (measured by
the CPI) over the same period. The CPI information is as of the month-end
closest to the initial investment date for each fund. The S&P 500 and DJIA
comparisons are provided to show how each class's total return compared to
the record of a broad range of U.S. common stocks and a narrower set of
stocks of major U.S. industrial companies, respectively, over the same
period. The funds have the ability to invest in securities not included in
the indices, and their investment portfolios may or may not be similar in
composition to the indices. The EAFE Index, Emerging Market Bond Index, S&P
500, and DJIA are based on the prices of unmanaged groups of stocks and,
unlike each class's returns, their returns do not include the effect of
paying brokerage commissions and other costs of investing.
The following charts show the growth of a hypothetical $10,000 investment
in each class, assuming all distributions were reinvested. This was a
period of fluctuating interest rates, bond prices, and stock prices and the
figures below should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the class today. Tax consequences of different investments have not been
factored into the figures.
OVERSEAS-CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total EAFE S&P of
Ended Oct. 31 Investment Distributions Distributions Value Index 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990* $ 9,096 $ 0 $ 0 $ 9,096 $ 9,968 $ 9,246 $ 9,246 $ 10,357
1991 9,315 77 0 9,392 10,661 12,344 12,027 10,659
1992 8,639 200 0 8,839 9,252 13,575 13,020 11,001
1993 12,316 424 0 12,740 12,717 15,604 15,291 11,303
1994 13,392 483 0 13,875 14,002 16,208 16,684 11,598
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
OVERSEAS-CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total EAFE S&P of
Ended Oct. 31 Investment Distributions Distributions Value Index 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990* $ 9,550 $ 0 $ 0 $ 9,550 $ 9,968 $ 9,246 $ 9,246 $ 10,357
1991 9,780 80 0 9,860 10,661 12,344 12,027 10,659
1992 9,070 210 0 9,280 9,252 13,575 13,020 11,001
1993 12,930 445 0 13,375 12,717 15,604 15,291 11,303
1994 14,060 507 0 14,567 14,002 16,208 16,684 11,598
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
OVERSEAS-INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total EAFE S&P of
Ended Oct. 31 Investment Distributions Distributions Value Index 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990* $ 9,550 $ 0 $ 0 $ 9,550 $ 9,968 $ 9,246 $ 9,246 $ 10,357
1991 9,780 80 0 9,860 10,661 12,344 12,027 10,659
1992 9,070 210 0 9,280 9,252 13,575 13,020 11,001
1993 12,930 445 0 13,375 12,717 15,604 15,291 11,303
1994 14,060 507 0 14,567 14,002 16,208 16,684 11,598
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
EMERGING MARKETS INCOME-CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of J.P. Morgan
Initial Reinvested Reinvested Emerging Cost
Period $10,000 Dividend Capital Gain Total Market Bond S&P of
Ended Dec. Investment Distributions Distributions Value Index 500 DJIA Living**
31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,068 $ 457 $ 235 $ 9,760 $ 9,989 $ 10,067 $ 10,173 $ 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
EMERGING MARKETS INCOME-CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of J.P. Morgan
Initial Reinvested Reinvested Emerging Cost
Period $10,000 Dividend Capital Gain Total Market Bond S&P of
Ended Dec. Investment Distributions Distributions Value Index 500 DJIA Living**
31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,068 $ 457 $ 235 $ 9,760 $ 9,989 $ 10,067 $ 10,173 $ 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
EMERGING MARKETS INCOME- INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of J.P. Morgan
Initial Reinvested Reinvested Emerging Cost
Period $10,000 Dividend Capital Gain Total Market Bond S&P of
Ended Dec. Investment Distributions Distributions Value Index 500 DJIA Living**
31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,520 $ 480 $ 247 $ 10,247 $ 9,989 $ 10,067 $ 10,173 $ 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
The following table reflects the cost of the initial $10,000 investment in
each of the classes, together with the aggregate cost of reinvested
dividends and capital gain distributions, if any, for the period covered.
If distributions had not been reinvested, the amount of distributions
earned from the applicable class over time would have been smaller and the
cash payments from these classes for the periods noted would have come to
the amounts shown in column (A) for capital gain distributions, and the
amounts shown in column (B) for income dividends. Tax consequences of
different investments (with the exception of foreign tax withholdings) have
not been factored into the figures below.
(A) (B)
CAPITAL GAIN INCOME
FUND COST DISTRIBUTIONS DIVIDENDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Overseas-A $ 24,857 $ 10,557 $ 581
Equity Portfolio Growth-A 25,863 11,083 772
Equity Portfolio Growth-Institutional 16,456 5,229 76
Global Resources-A 16,797 5,296 514
Growth Opportunities-A 28,518 8,432 3,848
Strategic Opportunities-A 29,681 8,852 4,151
Strategic Opportunities-B 23,178 3,191 5,609
Equity Income-A 23,857 3,350 5,898
Equity Income-B 24,205 3,350 6,055
Equity Income-Institutional 18,033 2,105 4,086
Income & Growth-A 10,750 248 479
Emerging Markets Income-A 10,731 260 451
Emerging Markets Income-B 23,956 467 8,089
High Yield-A 25,541 490 8,447
High Yield-B 10,093 0 93
Strategic Income-A 10,084 0 84
Strategic Income-B 17,342 333 5,038
Government Investment-A 17,657 350 5,261
Government Investment-B 23,973 230 8,552
Limited Term Bond-A 24,573 241 8,938
Limited Term Bond-B 24,933 241 9,089
Limited Term Bond-Institutional 17,505 0 5,582
Short Fixed-Income-A 17,299 362 5,171
High Income Municipal-A 17,588 380 5,384
High Income Municipal-B 18,965 972 5,489
Limited Term Tax-Exempt-A 19,339 1,020 5,724
Limited Term Tax-Exempt-B 19,522 1,020 5,820
Limited Term Tax-Exempt-Institutional 10,258 0 255
Short-Intermediate Tax-Exempt-A 10,328 0 324
</TABLE>
INTERNATIONAL INDICES, MARKET CAPITALIZATION, AND NATIONAL STOCK MARKET
RETURN. The following tables show the indexed market capitalization of
certain countries included in the Morgan Stanley Capital International
Indices (MSCI) database as of December 31, 1994 and the performance of
national stock markets as measured in U.S. dollars and in local currency by
the Morgan Stanley Capital International stock market indices for the
twelve months ended October 31, 1994. Of course, these results are not
indicative of future stock market performance or the classes' performance.
Market conditions during the periods measured fluctuated widely. Brokerage
commissions and other fees are not factored into the values of the indices.
MARKET CAPITALIZATION. Companies outside the United States now make up
nearly two-thirds of the world's stock market capitalization. According to
Morgan Stanley Capital International, the size of the markets as measured
in U.S. dollars grew from $2,011 billion in 1982 to $7,659 billion in
1994.The following table measures the indexed market capitalization of
certain countries according to the Morgan Stanley Capital International
Indices database. The value of the markets are measured in billions of U.S.
dollars as of December 31, 1994.
MSCI INDEX MARKET CAPITALIZATION
Australia $125.10 Japan $2,145.70
Austria 18.00 Netherlands 167.90
Belgium 49.30 Norway 19.90
Canada 171.10 Singapore/Malaysia 175.00
Denmark 35.30 Spain 74.30
France 265.60 Sweden 76.10
Germany 300.10 Switzerland 215.00
Hong Kong 196.50 United Kingdom 731.00
Italy 102.90 United States 2,784.70
The following table measures the total market capitalization of certain
Latin American countries according to the MSCI Index database. The value of
the markets is measured in billions of U.S. dollars as of December 31,
1994.
MSCI INDEX MARKET CAPITALIZATION - LATIN AMERICA
Argentina $ 23,742
Brazil 95,841
Chile 38,160
Colombia 7,764
Mexico 70,281
Venezuela 3,328
Total Latin America $ 239,116
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents the
performance of national stock markets as measured in U.S. dollars by the
Morgan Stanley Capital International stock market indices for the twelve
months ended October 31, 1994. The second table shows the same performance
as measured in local currency. Each table measures total return based on
the period's change in price, dividends paid on stocks in the index, and
the effect of reinvesting dividends net of any applicable foreign taxes.
These are unmanaged indices composed of a sampling of selected companies
representing an approximation of the market structure of the designated
country.
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN U.S. DOLLARS
Australia 2.932% Japan 8.122%
Austria -5.91 Netherlands 14.089
Belgium 13.47 Norway 15.120
Canada 1.173 Singapore/Malaysia 33.750/7.946
Denmark 7.285 Spain -1.426
France 2.592 Sweden 19.165
Germany 8.752 Switzerland 11.086
Hong Kong 2.047 United Kingdom 7.843
Italy 17.332 United States 1.679
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN LOCAL CURRENCY
Australia -2.232% Japan -3.213%
Austria -15.340 Netherlands 2.517
Belgium -3.057 Norway 3.208
Canada 3.599 Singapore/Malaysia 23.794/7.963
Denmark -6.058 Spain -7.860
France -9.690 Sweden 5.680
Germany -2.090 Switzerland 5.573
Hong Kong 2.034 United Kingdom -1.884
Italy 11.405 United States 1.679
The following table shows the average annualized stock market returns as of
October 31, 1994.
STOCK MARKET PERFORMANCE MEASURED IN U.S. DOLLARS
Five Years Ended Ten Years Ended
Germany 11.01% 18.19%
Hong Kong 31.98 30.82
Japan -1.87 17.68
Spain 1.52 19.61
United Kingdom 12.81 18.64
United States 9.51 13.60
Performance may be compared to the performance of other mutual funds in
general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service located in
Summit, New Jersey that monitors the performance of mutual funds. Lipper
generally ranks funds on the basis of total return, assuming reinvestment
of distributions, but does not take sales charges or redemption fees into
consideration, and is prepared without regard to tax consequences. Lipper
may also rank bond funds based on yield. In addition to mutual fund
rankings, performance may be compared to stock, bond, and money market
mutual fund performance indices prepared by Lipper or other organizations.
When comparing these indices, it is important to remember the risk and
return characteristics of each type of investment. For example, while stock
mutual funds may offer higher potential returns, they also carry the
highest degree of share price volatility. Likewise, money market funds may
offer greater stability of principal, but generally do not offer the higher
potential returns available from stock mutual funds.
From time to time, performance may also be compared to other mutual funds
tracked by financial or business publications and periodicals. For example,
a class may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare the
performance of Fidelity funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
A class may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC-insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to assess savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the classes.
Performance comparisons may also be made to other compilations or indices
that may be developed and made available in the future.
Each class of a fixed-income fund may compare its performance or the
performance of securities in which that fixed-income fund may invest to
averages published by IBC USA (Publications), Inc. of Ashland,
Massachusetts. These averages assume reinvestment of distributions. The
Bond Fund Report Averages TM /All Taxable (Strategic Income,
Government Investment, Limited Term Bond, High Yield, Short-Fixed Income)
covers over 488 taxable bond funds and The Bond Fund Report
Averages TM /Municipal (Limited Term Tax-Exempt, High Income
Municipal, Short-Intermediate Tax-Exempt) covers over 433 tax-exempt bond
funds. The averages are reported in the BOND FUND REPORT(Registered
trademark). Each class of a fixed-income fund may also compare its
performance or the performance of securities in which it may invest to the
IBC/Donohgue's Money Fund Averages, reported in the MONEY FUND
REPORT(Registered trademark), which monitor the performance of money market
funds. When evaluating comparisons to money market funds, investors should
consider the relevant differences in investment objectives and policies.
Specifically, money market funds invest in short-term, high-quality
instruments and seek to maintain a stable $1.00 share price. A bond fund,
however, invests in longer-term instruments and its share price changes
daily in response to a variety of factors.
A tax-exempt fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual municipal
bond. Unlike tax-exempt mutual funds, individual municipal bonds offer a
stated rate of interest and, if held to maturity, repayment of principal.
Although some individual municipal bonds might offer a higher return, they
do not offer the reduced risk of a mutual fund that invests in many
different securities. The initial investment requirements and sales charges
of many tax-exempt mutual funds are lower than the purchase cost of
individual municipal bonds, which are generally issued in $5,000
denominations and are subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
model portfolios or allocations ; and saving for college or other
goals. In addition, Fidelity may quote or reprint financial or business
publications or periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products.
Each fund may present its fund number, Quotron number and CUSIP number, and
discuss or quote its current portfolio manager.
Each fund may be advertised as part of certain asset allocation programs
involving other Fidelity or non-Fidelity mutual funds. These asset
allocation programs may advertise a model portfolio and its performance
results.
Each fund may be advertised as part of a no transaction fee (NTF) program
in which Fidelity and non-Fidelity mutual funds are offered. A NTF program
may advertise performance results.
VOLATILITY. Various measures of volatility and benchmark correlation may be
quoted in advertising. In addition, a fund may compare these measures to
those of other funds. Measures of volatility seek to compare a class'
historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data. In advertising, a fund
may also discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a class's price movements over specific
periods of time. Each point on the momentum indicator represents the
class's percentage change in price movements over that period.
Examples of the effects of periodic investment plans, including the
principle of dollar cost averaging may be advertised. In such a program, an
investor invests a fixed dollar amount in a class at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of December 31, 1994, FMR advised over $25 billion in tax-free fund
assets, $55 billion in money market fund assets, $165 billion in equity
fund assets, and $19 billion in international fund assets. The funds may
reference the growth and variety of money market mutual funds and the
adviser's innovation and participation in the industry. The "equity funds
under management" figure represents the largest amount of equity fund
assets under management by a mutual fund investment adviser in the United
States, making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each class of each fixed-income
fund may compare its total expense ratio to the average total expense ratio
of similar funds tracked by Lipper. A class's total expense ratio is a
significant factor in comparing bond and money market investments because
of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE, AND REDEMPTION INFORMATION
CLASS A SHARES ONLY
Pursuant to Rule 22d-1 under the 1940 Act , FDC exercises its right
to waive Class A' s maximum 4.75% (all funds except Short
Fixed - Income and Short-Intermediate Tax-Exempt) or 1.50%
(Short Fixed - Income and Short-Intermediate Tax-Exempt)
front-end sales charge in connection with the fund's merger with or
acquisition of any investment company or trust. In addition, FDC has chosen
to waive Class A ' s front-end sales charge in certain instances
because of efficiencies involved in those sales of shares. The sales charge
will not apply:
1. to shares purchased by a bank trust officer, registered representative,
or other employee (and their immediate families) of Investment
Professionals under special arrangements in connection with FDC's sales
activities;
2. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity
Trustee or employee), the spouse of a Fidelity Trustee or employee, a
Fidelity Trustee or employee acting as custodian for a minor child, or a
person acting as trustee of a trust for the sole benefit of the minor child
of a Fidelity Trustee or employee;
3. to shares purchased by a charitable organization (as defined in Section
501(c)(3) of the Internal Revenue Code) investing $100,000 or more;
4. to shares purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined by
Section 501(c)(3) of the Internal Revenue Code);
5 . to shares in a Fidelity IRA or Fidelity Advisor IRA account
purchased (including purchases by exchange) with the proceeds of a
distribution from an employee benefit plan having more than 200 eligible
employees or a minimum of $3,000,000 in plan assets invested in Fidelity
mutual funds or $1,000,000 invested in Fidelity Advisor mutual funds;
6 . to shares purchased by an insurance company separate account used
to fund annuity contracts purchased by employee benefit plans (including
403(b) programs, but otherwise as defined in ERISA)), which, in the
aggregate, have either more than 200 eligible employees or a minimum of
$1,000,000 in assets invested in Fidelity Advisor funds;
7 . to shares purchased by any state, county, city, or government
instrumentality, department or authority or agency; or
8 . to shares purchased with redemption proceeds from other mutual
fund complexes on which the investor has paid a front-end or contingent
deferred sales charge;
9. to shares purchased by a trust institution or bank trust department,
excluding assets described in (11) and (12) below, that has executed a
Participation Agreement with FDC specifying certain asset minimums and
qualifications, and marketing program restrictions. Assets managed by third
parties do not qualify for this waiver.
10. to shares purchased for use in a broker-dealer managed account program,
provided the broker-dealer has executed a participation agreement with FDC
specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions. Employee benefit plan assets do not
qualify for this waiver.
11. to shares purchased as part of an employee benefit plan having more
than (i) 200 eligible employees or a minimum or $1 million in plan assets
invested in the Advisor funds, or (ii) 25 eligible employees or $250,000 in
plan assets invested in Fidelity Advisor Funds that subscribes to Fidelity
Advisor Retirement Connection or similar program sponsored by Fidelity
Investments Institutional Services Company, Inc.
12. to shares purchased as part of an employee benefit plan through an
intermediary that has signed a participation agreement with FDC specifying
certain asset minimums and qualifications, and marketing, program and
trading restrictions.
13. to shares purchased on a discretionary basis by a registered
investment adviser which is not part of an organization primarily engaged
in the brokerage business, that has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions. Employee benefit plan assets do not
qualify for this waiver.
In order to qualify for waivers (9), (10) and (13). eligible investors with
existing Class A accounts will be required to sign and comply with a
participation agreement. eligible investors that do not meet revised asset
requirements specified in the participation agreement will be allowed to
continue investing in Class A shares under the terms of their current
relationship until June 30, 1997, after which they will be prevented from
making new or subsequent purchases in Class A load waived, except that
employee benefit plans will be permitted to make additional purchases of
Class A shares load waived.
CLASS B SHARES ONLY
The contingent deferred sales charge (CDSC) on Class B shares may be waived
in the case of (1) disability or death, provided that the redemption is
made within one year following the death or initial determination of
disability, or (2) in connection with a total or partial redemption made in
connection with distributions from retirement plan accounts at age 70 1/2,
which are permitted without penalty pursuant to t he Internal Revenue
Code.
A sales load waiver form must accompany these transactions.
CLASS A AND CLASS B SHARES ONLY
QUANTITY DISCOUNTS. To obtain a reduction of the front-end sales charge on
Class A shares, you or your Investment Professional must notify the
transfer agent at the time of purchase whenever a quantity discount is
applicable to your purchase. Upon such notification, you will receive the
lowest applicable front-end sales charge.
For purposes of qualifying for a reduction in front-end sales charges under
the Combined Purchase, Rights of Accumulation or Letter of Intent programs,
the following may qualify as an individual or a "company" as defined in
Section 2(a)(8) of the 1940 Act: an individual, spouse, and their children
under age 21 purchasing for his, her, or their own account; a trustee,
administrator or other fiduciary purchasing for a single trust estate or a
single fiduciary account or for a single or a parent-subsidiary group of
"employee benefits plans" (as defined in Section 3(3) of ERISA); and
tax-exempt organizations as defined under Section 501(c)(3) of the Internal
Revenue Code.
RIGHTS OF ACCUMULATION permit reduced front-end sales charges on any future
purchases of Class A shares after you have reached a new breakpoint in a
fund's sales charge schedule. The value of currently held Fidelity Advisor
Fund Class A and Class B shares, Initial Class shares and Class B shares of
Daily Money Fund: U.S. Treasury Portfolio , and shares of Daily Money
Fund: Money Market Portfolio and Daily Tax-Exempt Money Fund acquired by
exchange from any Fidelity Advisor fund, is determined at the current day's
NAV at the close of business, and is added to the amount of your new
purchase valued at the current offering price to determine your reduced
front-end sales charge.
LETTER OF INTENT. You may obtain Class A shares at the same reduced
front-end sales charge by filing a non-binding Letter of Intent (the
Letter) within 90 days of the start of Class A purchases. Each Class A
investment you make after signing the Letter will be entitled to the
front-end sales charge applicable to the total investment indicated in the
Letter. For example, a $2,500 purchase of Class A shares toward a $50,000
Letter would receive the same reduced sales charge as if the $50,000
($1,000,000 for Short Fixed-Income or Short-Intermediate Tax-Exempt) had
been invested at one time. To ensure that the reduced front-end sales
charge will be received on future purchases, you or your Investment
Professional must inform the transfer agent that the Letter is in effect
each time Class A shares are purchased. Neither income nor capital gain
distributions taken in additional Class A or Class B shares will apply
toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you plan to
invest. Out of the initial purchase, 5% of the dollar amount specified in
the Letter will be registered in your name and held in escrow. The Class A
shares held in escrow cannot be redeemed or exchanged until the Letter is
satisfied or the additional sales charges have been paid. You will earn
income dividends and capital gain distributions on escrowed Class A shares.
The escrow will be released when your purchase of the total amount has been
completed. You are not obligated to complete the Letter
If you purchase more than the amount specified in the Letter and qualify
for a future front-end sales charge reduction, the front-end sales charge
will be adjusted to reflect your total purchase at the end of 13 months.
Surplus funds will be applied to the purchase of additional Class A shares
at the then - current offering price applicable to the total
purchase.
If you do not complete your purchase under the Letter within the 13-month
period, 30 days' written notice will be provided for you to pay the
increased front-end sales charges due. Otherwise, sufficient escrowed Class
A shares will be redeemed to pay such charges.
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM. You can make regular
investments in Class A or Class B shares of the funds with the Systematic
Investment Program by completing the appropriate section of the account
application and attaching a voided personal check with your bank's magnetic
ink coding number across the front. If your bank account is jointly owned,
be sure that all owners sign.
Your account will be drafted on or about the first business day of every
month. You may cancel your participation in the Systematic Investment
Program at any time without payment of a cancellation fee. You will receive
a confirmation from the transfer agent for every transaction, and a debit
entry will appear on your bank statement.
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM. If you own Class A shares
worth $10,000 or more, you can have monthly, quarterly or semiannual checks
sent from your account to you, to a person named by you, or to your bank
checking account. Your Systematic Withdrawal Program payments are drawn
from Class A share redemptions. If Systematic Withdrawal Plan redemptions
exceed income dividends earned on your shares, your account eventually may
be exhausted.
CLASS A, CLASS B, AND INSTITUTIONAL CLASS SHARES
Each fund is open for business and the NAV and, where applicable, the
offering price, for each class is calculated each day the New York
Stock Exchange (NYSE) is open for trading. The NYSE has designated the
following holiday closings for 1995: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Although FMR expects the same holiday schedule to be
observed in the future, the NYSE may modify its holiday schedule at any
time. Each class's NAV is calculated as of the close of the NYSE (normally
4:00 p.m. Eastern time). However, NAV may be calculated earlier if trading
on the NYSE is restricted or as permitted by the SEC. To the extent that
portfolio securities are traded in other markets on days when the NYSE is
closed, a class's NAV may be affected on days when investors do not have
access to the fund to purchase or redeem shares. In addition, trading in
some of a fund's portfolio securities may not occur on days when the fund
is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund suspends
the redemption of the shares to be exchanged as permitted under the 1940
Act or the rules and regulations thereunder, or the fund to be acquired
suspends the sale of its shares because it is unable to invest amounts
effectively in accordance with its investment objective and policies.
In the p rospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest effectively in accordance with its investment objective
and policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of each fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that a fund's income is derived from qualifying dividends. For any
fund that invests significantly in foreign securities, corporate
shareholders should not expect fund dividends to qualify for the
dividend s -received deduction . F or those funds that may also
earn other types of income, such as interest, income from securities loans,
non-qualifying dividends and short-term capital gains, the percentage of
dividends from the funds that qualify for the deduction will generally be
less than 100%. A fund will notify corporate shareholders annually of the
percentage of fund dividends which qualify for the dividends-received
deduction. A portion of a fund's dividends derived from certain U.S.
Government obligations may be exempt from state and local taxation. Gains
(losses) attributable to foreign currency fluctuations are generally
taxable as ordinary income and , therefore , will increase
(decrease) dividend distributions. As a consequence, FMR may adjust a
fund's income distributions to reflect the effect of currency fluctuations.
However, if foreign currency losses exceed a fund's net investment income
during a taxable year, all or a portion of the distributions made in the
same taxable year would be recharacterized as a return of capital to
shareholders, thereby reducing each shareholder's cost basis in his or her
fund. Short-term capital gains are distributed as dividend income.
For those funds whose income is primarily derived from interest, dividends
will not qualify for the dividends-received deduction available to
corporate shareholders. Mortgage security paydown gains (losses) are
generally taxable as ordinary income and, therefore, increase (decrease)
taxable dividend distributions. Gains (losses) attributable to foreign
currency fluctuations are generally taxable as ordinary income and
therefore will increase (decrease) dividend distributions.
To the extent that a fund's income is designated as federally tax-exempt
interest, the daily dividends declared by the fund are also federally
tax-exempt. Short-term capital gains are distributed as dividend
income, but do not qualify for the dividends-received deduction. These
gains will be taxed as ordinary income.
Each fund will send each of its shareholders a notice in January describing
the tax status of dividends and capital gain distributions, if any, for the
prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to 85% of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
E ach tax-exempt fund purchases securities that are free of
federal income tax based on opinions of counsel regarding the tax status.
These opinions will generally be based on covenants by the issuers or other
parties regarding continuing compliance with federal tax requirements. If
at any time the covenants are not complied with, distribution to
shareholders of interest on a security could become federally taxable
retroactive to the date the security was issued. For certain types of
structured securities, opinions of counsel may also be based on the effect
of the structure on the federal tax treatment of the income .
As a result of The Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities will be
considered tax-exempt for purposes of Limited Term Tax-Exempt's ,
Short-Intermediate Tax-Exempt's and High Income Municipal's policies of
investing so that 80% of each fund's net assets are invested in securities
whose interest is free from federal income tax. Interest from private
activity securities is a tax preference item for the purpose of determining
whether a taxpayer is subject to the AMT and the amount of AMT tax to be
paid, if any. Private activity securities issued after August 7, 1986 to
benefit a private or industrial user or to finance a private facility are
affected by this rule.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by a fund are
federally taxable to shareholders as dividends, not as capital gains.
Dividend distributions resulting from a recharacterization of gain from the
sale of bonds purchased at a discount after April 30, 1993 are not
considered income for the purposes of Limited Term Tax-Exempt's ,
Short-Intermediate Tax-Exempt's and High Income Municipal's policies of
investing so that 80% of each fund's net assets are invested in securities
whose interest is free from federal income tax.
Corporate investors should note that a tax preference item for purposes of
the corporate AMT is 75% of the amount by which adjusted current earnings
(which include tax-exempt interest) exceed the alternative minimum taxable
income of the corporation. If a shareholder receives an exempt interest
dividend and sells shares at a loss after holding them for a period of six
months or less, the loss will be disallowed to the extent of the amount of
the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by a fund on the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains , regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund, and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes. Short-term capital gains distributed by
each fund are taxable to shareholders as dividends, not as capital gains.
As of December 31, 1994, Strategic Opportunities had a capital loss
carry forward aggregating approximately $1,141,000 . This loss
carryforward, of which $1,141,000 will expire on December 31, 2002 ,
is available to offset future capital gains.
As of October 31, 1994, Income & Growth had a capital loss carryforward
aggregating approximately $18,212,000 . This loss carryforward, of
which $18,212,000 will expire on October 31, 2002 , is
available to offset future capital gains .
As of October 31, 1994, High Yield had a capital loss carryforward
aggregating approximately $9,447,000 . This loss carryforward, of
which $9,447,000 will expire on October 31, 2002 , is available to
offset future capital gains .
As of October 31, 1994, Government Investment had a capital loss
carryforward aggregating approximately $4,569,000 . This loss
carryforward, of which $4,569,000 will expire on October 31, 2002 ,
is available to offset future capital gains .
As of November 30, 1994, Limited Term Bond had a capital loss
carryforward aggregating approximately $6,852,000 . This loss
carryforward, of which $5,673,000, $1,034,000, and $145,000 will expire
on November 30, 1998, 1999, and 2002, respectively , is available to
offset future capital gains .
As of October 31, 1994, Short Fixed-Income had a capital loss
carryforward aggregating approximately $18,238,000 . This loss
carryforward, of which $1,000, $19,000, $128,000, $63,000, $286,000,
$38,000, $336,000, and $17,367,000 will expire between October 31, 1995 to
October 31, 2002 , is available to offset future capital gains .
As of October 31, 1994, High Income Municipal had a capital loss
carryforward aggregating approximately $3,173,000 . This loss
carryforward, of which $3,173,000 will expire on October 31,
2002 , is available to offset future capital gains .
As of November 30, 1994, Limited Term Tax-Exempt had a capital loss
carryforward aggregating approximately $627,000 . This loss
carryforward, of which $627,000 will expire on November 30,
2002 , is available to offset future capital gains .
As of November 30, 1994, Short-Intermediate Tax-Exempt had a capital loss
carryforward aggregating approximately $8,000 . This loss
carryforward, of which $8,000 will expire on November 30,
2002 , is available to offset future capital gains .
STATE AND LOCAL TAXES. For mutual funds organized as business trusts, state
law provides for a pass-through of the state and local income tax exemption
afforded to direct owners of U.S. government securities. Some states limit
this pass-through to mutual funds that invest a certain amount in U.S.
government securities, and some types of securities, such as repurchase
agreements and some agency-backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
government securities in each fund's portfolio. Because the income earned
on most U.S. government securities in which a fund invests is exempt from
state and local income taxes, the portion of your dividends from the fund
attributable to these securities will also be free from income taxes. The
exemption from state and local income taxation does not preclude states
from assessing other taxes on the ownership of U.S. government securities.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. government securities, whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes, so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and realized capital gains within each calendar year as well as on a
fiscal year basis. Each fund also intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held for less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some forward currency contracts, futures contracts, and options
are included in this 30% calculation, which may limit a fund's investments
in such instruments.
If a fund purchases shares in certain foreign investment entities, defined
as passive foreign investment companies (PFICs ) in the Internal
Revenue Code, it may be subject to U.S. federal income tax on a portion of
any excess distribution or gain from the disposition of such shares.
Interest charges may also be imposed on the fund with respect to deferred
taxes arising from such distributions or gains. Generally, a fund will
elect to mark - to - market any PFIC shares. Unrealized gains
will be recognized as income for tax purposes and must be distributed to
shareholders as dividends.
Each fund is treated as a separate entity from the other funds in its
Trust, if any, for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of a fund may be subject to
state and local personal property taxes. Investors should consult their tax
advisers to determine whether a fund is suitable for their particular tax
situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent company organized
in 1972. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Board of Trustees and executive officers of the Trusts are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. All persons
named as Trustees and officers also serve in similar capacities for other
funds advised by FMR. Unless otherwise noted, the business address of each
Trustee and officer is 82 Devonshire Street, Boston, Massachusetts 02109,
which is also the address of FMR. Those Trustees who are "interested
persons" (as defined in the 1940 Act) by virtue of their affiliation with
either a fund or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
a consultant to Western Mining Corporation (1994). Prior to February 1994,
he was President of Greenhill Petroleum Corporation (petroleum exploration
and production, 1990). 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) and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (63), P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and she 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.
RICHARD J. FLYNN (71), 77 Fiske Hill, Sturbridge, MA, Trustee, is a
financial consultant. Prior to September 1986, Mr. Flynn was Vice Chairman
and a Director of the Norton Company (manufacturer of industrial devices).
He is currently a Trustee of College of the Holy Cross and Old Sturbridge
Village, Inc. , and he previously served as a Director of Mechanics Bank
(1971-1995).
E. BRADLEY JONES (67), 3881-2 Lander Road, Chagrin Falls, OH, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. He is a Director of TRW Inc.
(original equipment and replacement products), Cleveland-Cliffs Inc.
(mining), Consolidated Rail Corporation, Birmingham Steel Corporation, and
RPM, Inc. (manufacturer of chemical products, 1990) , and he previously
served as a Director of NACCO Industries, Inc. (mining and marketing,
1985-1995) and Hyster-Yale Materials Handling, Inc. In addition, he
serves as a Trustee of First Union Real Estate Investments, a Trustee and
member of the Executive Committee of the Cleveland Clinic Foundation, a
Trustee and member of the Executive Committee of University School
(Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (62), One Harborside, 680 Steamboat Road, Greenwich, CT,
Trustee, is Executive-in-Residence (1995) 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 Vice Chairman of the Board of Directors of the National Arts
Stabilization Fund, Vice Chairman of the Board of Trustees of the Greenwich
Hospital Association, and as a Member of the Public Oversight Board of the
American Institute of Certified Public Accountants' SEC Practice Section
(1995).
*PETER S. LYNCH (52), Trustee (1990) is Vice Chairman and Director of 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 and Society for the
Preservation of New England Antiquities, and as an Overseer of the Museum
of Fine Arts of Boston (1990).
GERALD C. McDONOUGH (66), 135 Aspenwood Drive, Cleveland, OH, Trustee, is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration),
Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE (70), 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts,
and Rensselaer Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
MARVIN L. MANN (62), 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director 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
(1990).
THOMAS R. WILLIAMS (66), 21st Floor, 191 Peachtree Street, N.E., Atlanta,
GA, Trustee, is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), 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).
WILLIAM J. HAYES (61), Vice President (1994), is Vice President of
Fidelity's equity funds; Senior Vice President of FMR; and Managing
Director of FMR Corp.
ROBERT H. MORRISON (55), Manager of Security Transactions of Fidelity's
equity funds, is Vice President of FMR.
ROBERT A. LAWRENCE ( 42 ), Vice President (1994), is Vice President of
Fidelity's high income funds and Senior Vice President of FMR (1993). Prior
to joining FMR, Mr. Lawrence was Managing Director of the High Yield
Department for Citicorp (1984-1991).
MARGARET L. EAGLE (45), is Vice President of High Yield and an employee of
FMR.
DANIEL R. FRANK (38), is Vice President of Strategic Opportunities and an
employee of FMR.
MICHAEL S. GRAY (38), is Vice President of Limited Term Bond (1989)
and an employee of FMR.
ROBERT E. HABER (37), is Vice President of Income & Growth (1989)
and an employee of FMR.
ROBERT LAWRENCE ( 42 ) is Vice President of Emerging Markets Income
(1995) and an employee of FMR.
MALCOLM W. MacNAUGHT II (61), is Vice President of Global Resources (1991)
and an employee of FMR.
ROBERT STANSKY (39), is Vice President of Equity Portfolio Growth (1991)
and of other funds advised by FMR, and an employee of FMR.
GEORGE A. VANDERHEIDEN (49), is Vice President of Growth Opportunities
(1990) and an employee of FMR.
GUY E. WICKWIRE ( 48 ), is Vice President of High Income Municipal
(1994) and an employee of FMR.
ARTHUR S. LORING (47), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
STEPHEN P. JONAS (42), Treasurer (1995) is Treasurer and Vice President of
FMR (1993). Mr. Jonas is also Treasurer of FMR Texas Inc. (1994), Fidelity
Management & Research (U.K.) Inc. (1994), and Fidelity Management &
Research (Far East) Inc. (1994). Prior to becoming Treasurer of FMR, Mr.
Jonas was Senior Vice President, Finance - Fidelity Brokerage Services,
Inc. (1991-1992) and Senior Vice President, Strategic Business Systems -
Fidelity Investments Retail Marketing Company (1989-1991).
JOHN H. COSTELLO (48), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994); Chief Financial
Officer of Fidelity Brokerage Services, Inc. (1990-1993); and Vice
President, Assistant Controller, and Director of the Accounting Department
- - First Boston Corp. (1986-1990).
The following table sets forth information describing the compensation of
each current Trustee of each fund for his or her services as trustee for
the 1994 fiscal year ended as indicated.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal
Period Ended: J. Gary Ralph F. Phyllis Richard E. Edward Donald Gerald C. Peter S. Edward Marvin Thomas
10/31 - * Burkhe Cox Burke J. Flynn Bradley C. J. Kirk McDonoug Lynch(dagger) H. L. R.
11/30 - ** ad(dagger) Davis Jones Johnson h Malone Mann Williams
12/31 - *** 3rd(dagger)
Overseas* $ 0 $ 190 $ 187 $ 229 $ 185 $ 0 $ 187 $ 191 $ 0 $ 194 $ 187 $ 188
Equity
Portfolio 0 473 460 569 462 0 467 473 0 479 474 469
Growth**
Global
Resources* 0 49 48 59 47 0 48 49 0 50 48 48
Growth 0 1,467 1,446 1,766 1,432 0 1,448 1,480 0 1,501 1,447 1,453
Opportunities*
Strategic 0 183 179 227 181 0 181 183 0 188 183 185
Opportunities***
Equity Income
** 0 126 123 152 123 0 125 126 0 128 127 125
Income &
Growth* 0 1,201 1,185 1,447 1,173 0 1,186 1,213 0 1,230 1,186 1,191
Emerging
Markets 0 11 8 11 9 0 9 9 0 9 10 9
Income***+
High Yield* 0 296 292 356 288 0 292 299 0 303 292 292
Strategic
Income***+ 0 3 2 3 3 0 2 2 0 3 2 3
Government 0 43 42 52 42 0 42 43 0 44 42 42
Investment*
Limited Term
Bond** 0 139 136 168 136 0 138 139 0 141 139 138
Short Fixed-
Income* 0 400 395 481 391 0 396 405 0 410 395 396
High Income 0 275 271 330 268 0 271 278 0 281 271 271
Municipal*
Limited Term 0 34 33 41 33 0 33 34 0 34 34 33
Tax-Exempt**
Short-
Intermediate 0 5 4 6 5 0 5 5 0 5 5 5
Tax-Exempt**+
</TABLE>
+ Estimated
(dagger) Interested trustees of each fund are compensated by FMR
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gary Burkhead(dagger) $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 125,000
Phyllis Burke Davis 5,200 52,000 122,000
Richard J. Flynn 0 52,000 154,500
Edward C. Johnson 3d(dagger) 0 0 0
E. Bradley Jones 5,200 49,400 123,500
Donald J. Kirk 5,200 52,000 125,000
Peter S. Lynch(dagger) 0 0 0
Gerald C. McDonough 5,200 52,000 125,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 125,000
Thomas R. Williams 5,200 52,000 126,500
</TABLE>
* Information is as of December 31, 1994 for 206 funds in the complex.
(dagger) Interested trustees of each fund are compensated by FMR
Under a retirement program that was adopted in July 1988 , the
non-interested Trustees, upon reaching age 72, become eligible to
participate in a retirement program under which they receive payments
during their lifetime from a fund based on their basic trustee fees and
length of service. The obligation of a fund to make such payments is
not secured or funded. Trustees become eligible if, at the time of
retirement, they have served on the Board for at least five years.
Currently, Messrs. Ralph S. Saul, William R. Spaulding, Bertram H. Witham,
and David L. Yunich, all former non-interested Trustees, receive retirement
benefits under the program.
On January 31, 1995 the trustees and officers owned in the aggregate less
than 1% of each fund's outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each 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 each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
the transfer agent and the pricing and bookkeeping agent, each fund pays
all of its expenses, without limitation, that are not assumed by those
parties. Each fund pays for the typesetting, printing, and mailing of its
proxy materials to shareholders, legal expenses, and the fees of the
custodian, auditor and non-interested Trustees. Although each fund's
current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices and reports to shareholders, each Trust, on behalf of
each of its funds , has entered into a revised transfer agent
agreement, pursuant to which the transfer agent bears the costs of
providing these services to existing shareholders. Other expenses paid by
each fund include interest, taxes, brokerage commissions, each fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each 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.
FMR is each fund's manager pursuant to management contracts approved by
shareholders on the dates shown in the table below.
Fund Date of Management Contract Date of Shareholder Approval
Overseas 1/1/93 12/1/92
Equity Portfolio Growth 12/1/90 11/14/90
Global Resources 12/ 1 / 94 11/16/94
Growth Opportunities 1/1/95 12/14/94
Strategic Opportunities 11/29/90 9 /19/90
Equity Income 8/1/86 7/23/86
Income & Growth 1/1/95 12/14/94
Emerging Markets Income 1/20/94 2/10/94
High Yield 1/1/95 12/14/94
Strategic Income 9/16/94 10/14/94
Government Investment 1/1/95 1 2/14/94
Limited Term Bond 1/1/95 12/14/94
Short Fixed - Income 1 /195 1 2/14/94
High Income Municipal 12/ 1/94 1 1/16/94
Limited Term Tax-Exempt 7/1/95 6/14/95
Short-Intermediate Tax-Exempt 1/1/9 5 6/14/95
For the services of FMR under its contract, Equity Income pays FMR a
monthly management fee at the annual rate of .50% of its average net assets
throughout the month. For the fiscal years ended November 30, 1994, 1993,
and 1992, FMR received $1,392,206, $933,830 and $736,344, respectively.
For the services of FMR under each contract, Equity Portfolio Growth,
Global Resources, Income & Growth, Emerging Markets Income, High Yield,
Strategic Income, Government Investment, Limited Term Bond, Short
Fixed-Income, High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt each pay FMR a monthly management fee
composed of the sum of two elements: a group fee rate and an individual
fund fee rate (together, the basic fee rate) .
For the services of FMR under each contract, Overseas, Growth
Opportunities, and Strategic Opportunities pay FMR a monthly management fee
composed of the sum of two elements: a basic fee and a performance
adjustment based on a comparison of Overseas ' and Strategic
Opportunities' performance to that of the S&P 500 and Growth
Opportunities' performance to that of EAFE
COMPUTING THE BASIC FEE. The basic fee rate for each fund (except Equity
Income) 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 and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown below on the left. The schedule below on the right shows the
effective annual group fee rate at various asset levels, which is the
result of cumulatively applying the annualized rates on the left. For
example, the effective annual fee rate at $273 billion of group net assets
- - the approximate level for October 1994 - was 0.3191% for equity funds and
0.1561% for fixed - income funds, which is the weighted average of the
respective fee rates for each level of group net assets up $273 billion.
FIXED-INCOME FUNDS
The following fee schedule is the current fee schedule for all fixed-income
funds.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate
0 - $ 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200
This fee schedule has been approved by the shareholders of all the
fixed-income funds.
EQUITY FUNDS
The following fee schedule is the current fee schedule for all equity funds
(except Equity Income).
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
Over 390 .2700
This fee schedule was approved by shareholders of all equity funds except
Overseas, Equity Portfolio Growth, Strategic Opportunities, and Equity
Income (see chart indicating date of management contract and date of
shareholder approval.)
Under the current management contracts for Overseas and Strategic
Opportunities', the group fee rate is based on a schedule with breakpoints
ending at .3000% for average group net assets in excess of $174 billion.
Under the current management contract for Equity Portfolio Growth, the
group fee rate is based on a schedule with breakpoints ending at .3100% for
average group net assets in excess of $102 billion.
The following fee schedule is the fee schedule which was in effect through
August 1, 1994, and was either approved by shareholders or voluntarily
adopted by FMR.
Group fee rate breakpoints shown for average group net assets in excess of
$138 billion and under $228 billion were voluntarily adopted by FMR, and
went into effect on January 1, 1992. Additional breakpoints for average
group net assets in excess of $228 billion were voluntarily adopted by FMR
on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints.
Each revised group fee rate schedule provides for lower management fee
rates as FMR's assets under management increase.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
The individual fund fee rates for each fund (except Equity Income) are set
forth in the following chart. Based on the average group net assets of the
funds advised by FMR for December 1994, the annual basic fee rate would be
calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
Overseas .3193% + .45% = .7693%
Equity Portfolio Growth .3193% + .30%* = .6193%
Global Resources .3193% + .45% = .7693%
Growth Opportunities .3193% + .30% = .6193%
Strategic Opportunities .3193% + .30% = .6193%
Income & Growth .3193% + .20% = .5193%
Emerging Markets Income .1563% + .55% = .7063%
High Yield .1563% + .45% = .6063%
Strategic Income .1563% + .45% = .6063%
Government Investment .1563% + .30% = .4563%
Limited Term Bond .1563% + .30%** = .4563%
Short Fixed-Income .1563% + .30% = .4563%
High Income Municipal .1563% + .25% = .4063%
Limited Term Tax-Exempt .1563% + .25% = .4063%
Short-Intermediate Tax-Exempt .1563% + .25% = .4063%
* Effective August 1, 1994, FMR voluntarily agreed to reduce the individual
fund fee rate from 0.33% to 0.30%. If this reduction were not in effect
during fiscal 1994, the total management fee would have been 0.65%.
** On December 14, 1994, shareholders of the fund approved an increase for
the individual fund fee rate from 0.25% to 0.30% effective January
1 , 1995.
One-twelfth (1/12) of this annual basic fee or management fee, as
applicable, rate is applied to each fund's net assets averaged for the most
recent month, giving a dollar amount, which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Strategic
Opportunities, Overseas, and Growth Opportunities is subject to upward or
downward adjustment, depending upon whether, and to what extent, the
investment performance of Strategic Opportunities, Overseas, and Growth
Opportunities' for the performance period exceeds, or is exceeded by, the
record of the S&P 500, EAFE, and S&P 500, respectively (the
Indices) , 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
most recent 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 .02%. Thus,
the maximum annualized adjustment rate is +/- .20%. For each fund,
investment performance will be measured separately for each class
and the least of the results obtained will be 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 each 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.
Each class'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 each class are treated as if reinvested
in that class's shares at the net asset value as of the record date for
payment. The record of the each 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 each class's
performance compared to the investment record of the applicable Index, the
controlling factor is not whether each class'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 performance of each class is based solely
on the relevant performance period without regard to the cumulative
performance over a longer or shorter period of time.
The table below shows the management fees received by FMR for its services
as investment adviser to the funds as of the end of each fund's three most
recent fiscal years. The fees were equivalent to the percentage of the
average net assets of each fund, as indicated.
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED MANAGEMENT FEE AS
PERFORMANCE
A PERCENTAGE OF
MANAGEMENT FEE + ADJUSTMENT AVERAGE NET ASSETS
<S> <C> <C> <C> <C>
OVERSEAS 10/31
1994 $3,435,695 $133,032 (upward) .80%
1993 503,110 3,885 (downward) .77
1992 139,234 6,062 (downward) .75
EQUITY PORTFOLIO GROWTH 11/30
1994 6,567,305 N/A .64
1993 2,646,631 N/A .66
1992 860,709 N/A .67
GLOBAL RESOURCES 10/31
1994 890,892 N/A .77
1993 111,465 N/A .77
1992 49,323 N/A .79
GROWTH OPPORTUNITIES 10/31
1994 22,087,985 2,130,192 (upward) .69
1993 8,250,306 709,376 (upward) .68
1992 2,747,645 240,501 (upward) .69
STRATEGIC OPPORTUNITIES +++ 12/31
10/1/94 - 12/31/94 682,856 37,843 (upward) .67
(annualize
d)
10/1/93 - 9/30/94 2,582,584 359,674 (upward) .72
1993 1,291,906 81,040 (upward) .54
1992 1,087,250 268,871 (downward) .51
EQUITY INCOME 11/30
1994 1,392,206 N/A .50
1993 933,830 N/A .50
1992 ++++ 736,344 N/A .50
INCOME & GROWTH 10/31
1994 13,325,884 N/A .52
1993 4,578,813 N/A .53
1992 1,291,531 N/A .53
EMERGING MARKETS INCOME 12/31
1994 ++ 122,088 N/A .70
HIGH YIELD 11/30
1994 3,737,959 N/A .60
1993 1,539,682 N/A .51
1992 397,638 N/A .52
STRATEGIC INCOME 12/31
1994 ++ 10,348 N/A .60
GOVERNMENT INVESTMENT 11/30
1994 422,255 N/A .46
1993 186,973 N/A .46
1992 78,107 N/A .47
LIMITED TERM BOND 11/30
1994 1,180,785 N/A .41
1993 818,426 N/A .42
1992 963,611 N/A .42
SHORT FIXED - INCOME 10/31
1994 $3,713,144 N/A .46%
1993 1,674,841 N/A .47
1992 368,993 N/A .47
HIGH INCOME MUNICIPAL 11/30
1994 2,257,113 N/A .41
1993 1,314,060 N/A .42
1992 439,804 N/A .42
LIMITED TERM TAX-EXEMPT 11/30
1994 286,027 N/A .41
1993 156,087 N/A .42
1992 268,825 N/A .42
SHORT - INTERMEDIATE TAX-EXEMPT 11/30
1994++ 31,109 N/A .41
</TABLE>
+ Management fee includes performance adjustments for Overseas, Growth
Opportunities, and Strategic Opportunities.
++ Emerging Markets Income, Strategic Income, and
Short - Intermediate Tax-Exempt commenced operations on March 10,
1994, October 31, 1994, and March 16, 1994, respectively. Management fee
percentages for these funds are annualized.
+++ Strategic Opportunities' fiscal year end changed from September
30 to December 31 as of November 9, 1994 .
++++ Management fee does not include a voluntary reimbursement of 0.10% of
average net assets for the period December 1, 1991 to September 10, 1992.
FMR may, from time to time, voluntarily reimburse all or a portion of a
class' operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses) above a specified percentage of
average net assets. 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 reimbursement by FMR will increase each
class' total returns and yield and reimbursement by each class will lower
its total returns and yield.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that each fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISERS. On behalf of Equity Portfolio Growth, Global
Resources, Growth Opportunities, Strategic Opportunities, Equity Income,
Income & Growth, High Yield, Limited Term Bond, and Short Fixed-Income, FMR
has entered into sub-advisory agreements with FMR U.K. and FMR Far East. On
behalf of Overseas, 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. On behalf of Emerging Markets Income
and Strategic Income, FMR has entered into sub-advisory agreements with FMR
U.K., FMR Far East, FIJ, 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 Global Resources, Growth Opportunities, Strategic Income,
Income & Growth, High Yield, Limited Term Bond, Emerging Markets Income,
and Short Fixed-Income, FMR may also grant FMR U.K. and FMR Far East
investment management authority as well as the authority to buy and sell
securities if FMR believes it would be beneficial to the funds.
Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIAL U.K. each focuses
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. FIJ and FIIA are wholly owned subsidiaries 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. FIJ was organized in Japan in
1986. 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, FIJ, 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:
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.
FMR pays FIIA and FIJ 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.
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 Global Resources, Growth Opportunities, Income & Growth,
Emerging Markets Income, High Yield, Short Fixed-Income, and Limited Term
Bond, for providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50% of its
monthly management fee (including any performance adjustment, if
applicable) with respect to the fund's average net assets managed by the
sub-adviser on a discretionary basis.
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.
The table below shows the fees paid by FMR to FMR U.K., FMR Far East, FIIA,
and FIJ, and by FIIA to FIIAL U.K. for providing investment advice and
research services with respect to certain of the funds for the fiscal
periods ended 1994, 1993, and 1992.
The other funds paid no investment sub-advisory fees for the fiscal
periods ended 1992-1994.
FEES PAID TO FOREIGN SUB-ADVISERS
FUND FEES PAID BY FMR TO FMR U.K. FEES PAID BY FMR TO FMR FAR EAST
1994 1993 1992 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C>
Overseas $ 153,288 $ 14,363 $ 13,189 $ 174,129 $ 22,357 $ 16,736
Equity Portfolio Growth 13,191 3,144 2,425 15,192 5,021 2,126
Global Resources 2,598 N/A N/A 2,932 N/A N/A
Growth Opportunities 67,818 N/A N/A 82,741 N/A N/A
Strategic Opportunities 7,794 N/A N/A 7,712 N/A N/A
(10/1/93 - 9/30/94)
Strategic Opportunities 7,352 4,560 88 7,701 11,267 117
(10/1/94 - 12/31/94)
Equity Income 12,197 4,669 5,237 13,970 7,199 6,544
Income & Growth 248,936 N/A N/A 299,094 N/A N/A
TOTAL $ 513,174 $ 26,736 $ 20,939 $603,471 $ 45,844 $ 25,523
</TABLE>
CONTRACTS WITH FMR AFFILIATES
State Street is transfer and shareholders' servicing agent for Class A
shares of the taxable funds. FIIOC is transfer and shareholders' servicing
agent for Class B and Institutional Class shares of the taxable funds. UMB
is the transfer and shareholders' servicing agent for Class A, Class B and
Institutional Class shares of the tax-exempt funds. On behalf of Class A
shares of the tax-exempt funds, UMB has entered into sub-arrangements with
State Street pursuant to which State Street performs as transfer and
shareholders' servicing agent. State Street has further delegated certain
transfer and shareholders' services for Class A shares of the tax-exempt
funds to FIIOC. On behalf of Class B and Institutional Class shares
of the tax-exempt funds, UMB has entered into sub-arrangements with
FIIOC pursuant to which FIIOC performs as transfer and shareholders'
servicing agent. For every account, Class A, Class B and Institutional
Class of each fund pay an annual fee and an asset-based fee based on
account size. The asset-based fees of the equity and growth and income
funds are subject to adjustment if the year-to-date total return of the
Standard & Poor's Composite Index of 500 Stocks is greater than positive or
negative 15%.
For accounts that State Street maintains on behalf of UMB, State Street
receives all such fees. For accounts that FIIOC maintains on behalf of UMB
or State Street, FIIOC receives all such fees. For accounts for which FIIOC
provides limited services, FIIOC receives a portion of related account fees
and asset-based fees, less applicable charges and expenses of State Street
for account maintenance and transactions.
State Street and FIIOC, as applicable, pay out-of-pocket expenses
associated with providing transfer agent services. In addition, FIIOC bears
the expense of typesetting, printing, and mailing prospectuses, statements
of additional information, and all other reports, notices, and statements
to shareholders, with the exception of proxy statements.
FSC performs the calculations necessary to determine NAV and dividends for
Class A, Class B, and Institutional Class of each taxable fund, maintains
each taxable fund's accounting records and administers each taxable fund's
securities lending program. UMB has sub-arrangements with FSC pursuant to
which FSC performs the calculations necessary to determine the NAV and
dividends for the Class A, Class B, and Institutional Class of each
tax-exempt fund, and maintains the accounting records for each tax-exempt
fund. The fee rates for pricing and bookkeeping services are based on each
fund's average net assets, specifically, 0.06% (equity funds) or 0.04%
(bond funds) for the first $500 million of average net assets and
0.03% (equity funds) or 0.02% (bond funds) for average net assets in
excess of $500 million. The fee is limited to a minimum of $45,000 and a
maximum of $750,000 per year. Pricing and bookkeeping fees, including
related out-of-pocket expenses, paid by the funds for the past three fiscal
years were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND 1994 1993 1992
Overseas $ 251,241 $ 57,711 $ 48,617
Equity Portfolio Growth $ 461,039 $ 234,813 $ 79,601
Global Resources $ 73,164 $ 45,425 $ 46,390
Growth Opportunities $ 758,343 $ 513,950 $ 236,689
Strategic Opportunities (10/1/94 - 12/31/94) $ 61,356 $ 145,494 $ 129,183
Strategic Opportunities (10/1/93 - 9/30/94) $ 215,648 N/A N/A
Equity Income $ 168,364 $ 113,026 $ 91,899
Income & Growth $ 750,743 $ 410,561 $ 148,775
Emerging Markets Income $ 36,412* N/A N/A
High Yield $ 223,567 $ 121,204 $ 46,036
Strategic Income $ 7,500* N/A N/A
Government Investment $ 46,218 $ 46,457 $ 45,676
Limited Term Bond $ 118,125 $ 81,106 $ 97,683
Short Fixed-Income $ 264,455 $ 143,813 $ 47,624
High Income Municipal $ 220,222 $ 157,559 $ 65,541
Limited Term Tax-Exempt $ 48,062 $ 45,724 $ 59,094
Short-Intermediate Tax-Exempt $ 31,953* N/A N/A
</TABLE>
* Emerging Markets Income, Strategic Income, and Short - Intermediate
Tax-Exempt commenced operations on March 10, 1994, October 31, 1994, and
March 16, 1994, respectively.
FSC also receives fees for administering Limited Term Bond's securities
lending program. Securities lending fees are based on the number and
duration of individual securities loans. For the fiscal years ended 1994,
1993, and 1992, Limited Term Bond incurred securities lending fees of $0,
$0, and $25, respectively.
For the tax-exempt funds, the transfer agent fees and charges, and pricing
and bookkeeping fees described above are paid to FIIOC and FSC,
respectively, by UMB, which is entitled to reimbursement from the fund for
these expenses.
Each fund has a d istribution a greement 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 National Association of Securities Dealers, Inc.
The distribution agreement s call for FDC to use all reasonable
efforts, consistent with its other business, to secure purchasers for
shares of e a ch fund, which are continuously offered.
Promotional and administrative expenses in connection with the offer and
sale of shares are paid by FDC. The table below shows the sales charge
revenue paid to FDC, and retained by FDC, for the following fiscal
periods.
<TABLE>
<CAPTION>
SALES CHARGE REVENUE CDSC REVENUE
FISCAL YEAR AMOUNT PAID TO AMOUNT RETAINED AMOUNT PAID AMOUNT
ENDED FDC BY FDC TO FDC RETAINED BY
FDC
<S> <C> <C> <C> <C> <C>
OVERSEAS Oct. 31, 1994 $ 9,596,831 $ 1,436,765 $ N/A $ N/A
1993 3,895,423 567,983 N/A N/A
1992 176,786 25,976 N/A N/A
EQUITY PORTFOLIO
GROWTH Nov. 30, 1994 9,353,000 1,397,000 N/A N/A
1993 10,102,208 1,523,036 N/A N/A
1992 393,717 59,902 N/A N/A
GLOBAL
RESOURCES Oct. 31, 1994 3,854,629 567,671 N/A N/A
1993 890,154 130,927 N/A N/A
1992 81,257 13,361 N/A N/A
GROWTH
OPPORTUNITIES Oct. 31, 1994 47,564,000 7,108,000 N/A N/A
1993 27,663,060 4,141,156 N/A N/A
1992 10,628,462 1,504,730 N/A N/A
STRATEGIC
OPPORTUNITIES Dec. 31, 1994 553,970* 231,911 12,307 12,307
2,986,131** 447,011 409 409
Sept. 30, 1993 1,299,291 196,365 N/A N/A
1992 438,508 49,558 N/A N/A
INCOME &
GROWTH Oct. 31, 1994 37,018,000 6,291,000 N/A N/A
1993 28,877,882 4,215,606 N/A N/A
1992 7,728,127 1,103,118 N/A N/A
EMERGING
MARKETS INCOME Dec. 31, 1994 406,046 59,134 2,877 2,877
1993 N/A N/A N/A N/A
1992 N/A N/A N/A N/A
HIGH YIELD Oct. 31, 1994 8,980,127 1,342,482 15,765 15,765
1993 10,465,950 1,524,348 N/A N/A
1992 3,752,490 352,707 N/A N/A
STRATEGIC
INCOME Dec. 31, 1994 197,904 0 9,542 9,542
1993 N/A N/A N/A N/A
1992 N/A N/A N/A N/A
GOVERNMENT
INVESTMENT Oct. 31, 1994 996,242 168,939 978 978
1993 993,386 145,628 N/A N/A
1992 398,144 42,904 N/A N/A
SHORT
FIXED-INCOME Oct. 31, 1994 4,396,909 877,639 N/A N/A
1993 5,308,796 968,759 N/A N/A
1992 2,084,097 269,245 N/A N/A
HIGH INCOME
MUNICIPAL Oct. 31, 1994 6,327,614 1,038,989 0 0
1993 9,918,856 1,417,733 N/A N/A
1992 3,334,908 286,876 N/A N/A
SHORT
INTERMEDIATE Nov. 30, 1994 122,128 13,369 N/A N/A
TAX-EXEMPT
1993 N/A N/A N/A N/A
1992 N/A N/A N/A N/A
EQUITY INCOME Nov. 30, 1994 2,450,544 352,678 30,093 30,093
1993 792,962 117,757 N/A N/A
1992 18,875 1,069 N/A N/A
LIMITED TERM
BOND Nov. 30, 1994 1,598,883 237,647 1,279 1,279
1993 1,436,859 210,713 N/A N/A
1992 55,144 10,346 N/A N/A
LIMITED TERM
TAX-EXEMPT Nov. 30, 1994 635,031 96,813 0 0
1993 669,395 97,441 N/A N/A
1992 9,846 3,808 N/A N/A
</TABLE>
* For the fiscal period October 1, 1994 through December 31, 1994.
** For the fiscal period October 1, 1993 through September 30, 1994.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of each
class of shares of the funds (the Plans) pursuant to Rule 12b-1 under the
1940 Act (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of a fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class A, Class B, and
Institutional Class shares of each fund and FMR to incur certain expenses
that might be considered to constitute direct or indirect payment by the
funds of distribution expenses.
Pursuant to the Class A Plans, FDC is paid a distribution fee as a
percentage of Class A's average net assets at an annual rate of up to 0.75%
for Equity Portfolio Growth and Strategic Opportunities; up to 0.40% for
each of Emerging Markets Income, High Yield, Strategic Income, Limited Term
Bond, Government Investment, High Income Municipal, and Limited Term
Tax-Exempt; up to 0.65% for each of Overseas, Growth Opportunities, Global
Resources, Equity Income, and Income & Growth; and up to 0.15% for Short
Fixed-Income and Short-Intermediate Tax-Exempt. Pursuant to the Class B
Plans, FDC is paid a distribution fee as a percentage of Class B's average
net assets at an annual rate of 0.75% for each fund with Class B shares.
For the purpose of calculating the distribution fees, average net assets
are determined as of the close of business on each day throughout the
month, but excluding assets attributable to Class A shares of Equity
Portfolio Growth, Equity Income, Emerging Markets Income, Strategic Income,
Strategic Opportunities, Short-Intermediate Tax-Exempt, Limited Term
Tax-Exempt, and Overseas purchased more than 144 months prior to such day.
Currently, the Trustees have approved a distribution fee for Class A of
Equity Portfolio Growth and Strategic Opportunities at an annual rate of
0.65%; and for Class A of Emerging Markets Income, Government Investment,
High Yield, High Income Municipal, Limited Term Bond, Limited Term
Tax-Exempt, and Strategic Income at an annual rate of 0.25%. This fee may
be increased only when, in the opinion of the Trustees, it is in the best
interests of the shareholders of Class A to do so. Class B of each fund
also pays Investment Professionals a service fee at an annual rate of 0.25%
of its average daily net assets determined as of the close of business on
each day throughout the month for personal service and/or the maintenance
of shareholder accounts.
The tables below show the distribution fees paid for Class A shares for the
fiscal years ended 1994, 1993, and 1992, and for Class B shares for the
fiscal periods ended 1994. (Class B shares commenced operations on June 30,
1994.)
CLASS A DISTRIBUTION FEES
1992 1993 1994
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Paid to Paid to Paid to
Investment Investment Investment
Professionals Retained Professionals Retained Professionals Retained
By FDC Total Fees by FDC Total Fees by FDC Total Fees
FUND
Overseas
$ 93,132 $ 27,492 $ 120,624 $ 325,181 $ 97,554 $ 422,735 $2,139,864 $ 641,958 $ 2,781,822
Equity Portfolio Growth
9,477 2,843 12,320 258,713 883,141 1,141,854 3,312,525 999,987 4,312,512
Global Resources
31,323 9,198 40,521 69,457 23,643 93,100 577,607 173,281 750,888
Growth Opportunities
2,004,271 559,131 2,563,402 5,996,770 1,799,030 7,795,800 16,056,714 4,817,016 20,873,730
Strategic Opportunities
993,375 273,263 1,266,638 1,092,965 330,491 1,423,456 470,225 141,067 611,292
Equity Income
614 136 750 94,623 28,435 123,058 441,208 132,362 573,570
Income & Growth
1,252,622 314,506 1,567,128 4,330,092 1,299,026 5,629,118 13,406,000 3,203,000 16,609,000
Emerging Markets Income
N/A N/A N/A N/A N/A N/A 31,604 8,331 39,935
High Yield
190,342 0 190,342 745,985 0 745,985 1,526,214 0 1,526,214
Strategic Income
N/A N/A N/A N/A N/A N/A 1,626 488 2,144
Government Investment
41,048 0 41,048 101,981 0 101,981 227,532 0 227,532
Limited Term Bond
549 0 549 56,220 0 56,220 264,949 0 264,949
Short Fixed-Income
117,265 0 117,265 538,933 0 538,933 1,212,008 0 1,212,008
High Income Municipal
41,048 0 41,048 101,981 0 101,981 1,374,438 0 1,374,438
Limited Term Tax-
Exempt
576 0 576 38,552 0 38,552 138,512 0 138,512
Short-Intermediate
Tax-Exempt
N/A N/A N/A N/A N/A N/A 11,446 0 11,446
</TABLE>
CLASS B DISTRIBUTION FEES
1994
FUND SHAREHOLDER RETAINED TOTAL FEES
SERVICE BY FDC
FEES
Strategic Opportunities $ 7,964 $ 23,892 $ 31,856
Equity Income 16,215 54,580 70,795
Emerging Markets Income 3,215 9,771 12,986
High Yield 7,052 21,157 28,209
Strategic Income 2,155 6,465 8,620
Government Investment 817 2,449 3,266
Limited Term Bond 1,689 5,070 6,759
High Income Municipal 3,238 9,713 12,951
Limited Term Tax-Exempt 965 2,893 3,858
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan also
specifically recognizes that FMR, either directly or through FDC, may use
its management fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection
with the offer and sale of shares of the applicable class of each fund. In
addition, each Plan provides that FMR may use its resources, including its
management fee revenues, to make payments to third parties that assist in
selling shares of the applicable class of each fund or to third parties,
including banks that render shareholder support services.
No third party payments were made by FMR in fiscal 1994, 1993, and 1992
under the Institutional Class Plan on behalf of the funds, and the Trustees
have not authorized such payments to date for any funds except
Institutional Class of Limited Term Bond, Equity Income, and Equity
Portfolio Growth.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of each Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
the applicable class and its shareholders. In particular, the Trustees
noted that the Institutional Class Plans do not authorize payments by the
Institutional Class of each fund other than those made to FMR under its
management contract with the fund. To the extent that each Plan gives FMR
and FDC greater flexibility in connection with the distribution of shares
of the applicable class of each fund, additional sales of fund shares may
result. Furthermore, certain shareholder support services may be provided
more effectively under the Plans by local entities with whom shareholders
have other relationships.
The Class A and Class B Plans do not provide for specific payments by the
applicable class of any of the expenses of FDC, or obligate FDC or FMR to
perform any specific type or level of distribution activities or incur any
specific level of expense in connection with distribution activities. After
payments by FDC for advertising, marketing and distribution, and payments
to third parties, the amounts remaining, if any, may be used as FDC may
elect.
The Plans were approved by the shareholders of each class on the dates
shown in the table below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DATE OF SHAREHOLDER APPROVAL
FUND CLASS A CLASS B INSTITUTIONAL
Overseas 10/90 0 6 /26/94 06/26/95
Equity Portfolio Growth 0 9/25/86 N/A 09/25/86
Global Resources 12/01/94 06/26/95 06/26/95
Growth Opportunities 0 1/ 0 1/95 N/A 06/26/95
Strategic Opportunities 0 8/25/87 0 6 /26/94 06/26/95
Equity Income 0 7/23/86 0 6 /26/94 07/23/86
Income & Growth 0 1/ 0 1/95 N/A 06/26/95
Emerging Markets Income 0 2/10/94 05/26/95 06/26/95
High Yield 0 1/ 0 1/95 0 1/ 0 1/95 06/26/95
Strategic Income 10/14/94 10/14/94 06/26/95
Government Investment 0 1/ 0 1/95 0 1/ 0 1/95 12/23/87
Limited Term Bond 0 1/ 0 1/95 0 1/ 0 1/95 12/23/87
Short Fixed - Income 0 1/ 0 1/95 N/A 06/26/95
High Income Municipal 12/ 0 1/94 12/ 0 1/94 06/26/95
Limited Term Tax-Exempt 07/01/95 06 /26/94 10/21/87
Short-Intermediate Tax-Exempt 07/01/95 N/A 06/26/95
</TABLE>
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Equity Portfolio Growth is a fund of Fidelity
Advisor Series I, an open-end management investment company organized as a
Massachusetts business trust by a Declaration of Trust dated June 24, 1983,
as amended and restated July 18, 1991, and as supplemented April 15, 1993.
On July 18, 1991, the name was changed from Equity Portfolio Growth to
Fidelity Broad Street Trust. On April 15, 1993, its name was changed by an
amendment to the Declaration of Trust from Fidelity Broad Street Trust:
Growth to Fidelity Advisor Series I.
Short Fixed - Income Fund, Government Investment Fund, High
Yield Fund, Growth Opportunities Fund, and Income & Growth Fund are
fund s of Fidelity Advisor Series II, an open-end management
investment company organized as a Massachusetts business trust by a
Declaration of Trust dated April 24, 1986. On April 7, 1993, the Board of
Trustees voted to change the name of the Trust from Fidelity Diversified
Trust to Fidelity Advisor Series II.
Equity Income Fund is a fund of Fidelity Advisor Series III, an
open-end management investment company organized as a Massachusetts
business trust by a Declaration of Trust dated May 17, 1982. On January 29,
1986, the name was changed from Equity Portfolio: Income to Fidelity
Franklin Street Trust. On April 15, 1993 the Trust's name was again changed
to Fidelity Advisor Series III.
Limited Term Bond Fund is a fund of Fidelity Advisor Series IV, an
open-end management investment company organized as a Massachusetts
business trust by a Declaration of Trust dated May 6, 1983. On January 29,
1992 the name of the Trust was changed from Income Portfolios to Fidelity
Income Trust, and on April 15, 1993, the Board of Trustees voted to change
the Trust's name to Fidelity Advisor Series IV. An amended and restated
Declaration of Trust, dated March 16, 1995, was filed on April 12,
1995.
Global Resources Fund and High Income Municipal Fund are fund s of
Fidelity Advisor Series V, an open-end management investment company
organized as a Massachusetts business trust by a Declaration of Trust dated
April 23, 1986, as amended and restated July 18, 1991, and as supplemented
April 15, 1993. On July 18, 1991, the Board of Trustees voted to change the
name of the Trust from Plymouth Investment Series to Fidelity Investment
Series, and on April 15, 1993, the Board voted to change the Trust's name
to Fidelity Advisor Series V. An amended and restated Declaration of Trust
dated March 16, 1995 was filed on April 12, 1995 .
Short-Intermediate Tax-Exempt Fund and Limited Term Tax-Exempt Fund are
fund s of Fidelity Advisor Series VI, an open-end management
investment company organized as a Massachusetts business trust by a
Declaration of Trust dated June 1, 1983, as amended and restated May 5,
1993. On January 29, 1992, the name of the Trust was changed from
Tax-Exempt Funds to Fidelity Oliver Street Trust and on April 15, 1993 the
Board of Trustees voted to change the name of the Trust to Fidelity Advisor
Series VI.
Overseas Fund is a fund of Fidelity Advisor Series VII, an open-end
management investment company organized as a Massachusetts business trust
by a Declaration of Trust dated March 21, 1980 as amended and restated July
18, 1991 and as supplemented April 15, 1993. On July 18, 1991, the Board of
Trustees voted to change the name of the Trust from Plymouth Securities
Trust to Fidelity Securities Trust, and on April 15, 1993 the Board of
Trustees voted to change the name of the Trust to Advisor Series VII.
Strategic Opportunities Fund, Strategic Income Fund, and Emerging Markets
Income Fund are fund s of Fidelity Advisor Series VIII, an open-end
management investment company organized as a Massachusetts business trust
by a Declaration of Trust dated September 23, 1983, as amended and restated
October 1, 1986 and as supplemented November 29, 1990. On April 15, 1993
the name of the Trust was changed from Fidelity Special Situations Fund to
Fidelity Advisor Series VIII.
Each Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the Trust or fund to use the identifying name "Fidelity" may be
withdrawn.
The assets of a Trust received for the issue or sale of shares of each fund
and all income, earnings, profits, and proceeds thereof, subject only to
the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the Trust. Expenses with respect to the Trust are to be
allocated in proportion to the asset value of the respective fund, except
where allocations of direct expense can otherwise be fairly made. The
officers of the Trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the Trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each Trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the Trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
Trust or the Trustees include a provision limiting the obligations created
thereby to the Trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholders held
personally liable for the obligations of the fund. The Declaration of Trust
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for neglect or wrongdoing,
but nothing in the Declaration of Trust protects Trustees against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties in the conduct of their office. Claims asserted against one class of
shares may subject the shareholders of any other class to certain
liabilities.
VOTING RIGHTS. A fund's capital consists of shares of beneficial interest.
The shares have no preemptive rights, and Class A and Institutional Class
shares have no conversion rights; the voting and dividend rights, the
conversion rights of Class B shares, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shareholders of
Global Resources, Growth Opportunities, Equity Income, Income & Growth,
High Yield, High Income Municipal, Government Investment, Limited Term
Bond, Limited Term Tax-Exempt, Short Fixed-Income, and Short-Intermediate
Tax-Exempt receive one vote for each dollar of net asset value owned.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a Trust, a fund, or class of a fund may, as set
forth in the Declaration of Trust, call meetings of the Trust, fund or
class, as applicable, for any purpose, related to the Trust, fund, or
class, as the case may be, including , in the case of meeting of the
Trust, the purpose of voting on removal of one or more Trustees. The Trust
or any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the outstanding shares of the funds of Advisor Series I, III,
VI, VII, and VIII, or, as determined by the current value of each
shareholder's investment in the funds of Advisor Series II, IV, and V. If
not so terminated, the Trust and funds will continue indefinitely. Global
Resources, Growth Opportunities, Income & Growth, Emerging Markets
Income, Strategic Opportunities, High Yield, Strategic Income,
Government Investment, Limited Term Bond, Short Fixed-Income, High
Income Municipal , and Limited Term Tax-Exempt may invest all of
their assets in another investment company.
As of April 30, 1995, the following owned of record or beneficially more
than 5% of the outstanding shares of the classes of the following Fidelity
Advisor funds:
EQUITY INCOME - INSTITUTIONAL CLASS: First National Bank of Ohio, Akron, OH
(18.99%); First National Bank, Gainesville, Gainesville, GA (9.25%);
Financial Advisor Services, San Francisco, CA (7.54%); First Interstate
Bank of Washington, Seattle, WA (5.34%).
EQUITY INCOME - CLASS A: Smith, Barney, Lehman, New York, NY (7.75%); Royal
Alliance Associates Inc., Birmingham, AL (5.35%).
EQUITY INCOME - CLASS B: Smith, Barney, Lehman, New York, NY (7.37%);
Donaldson, Lufkin & Jenrette, New York, NY (6.19%); NFSC, New York, NY
(5.19%); Merrill, Lynch, Pierce, Fenner & Smith, Jacksonville, FL (5.12%).
EQUITY PORTFOLIO GROWTH - INSTITUTIONAL CLASS: Integra Financial
Corporation, Pittsburgh, PA (6.33%).
EQUITY PORTFOLIO GROWTH - CLASS A: Cigna Securities, Hartford, CT (9.13%);
Smith, Barney, Lehman, New York, NY (7.18%); Merrill, Lynch, Pierce, Fenner
& Smith, Jacksonville, FL (6.60%).
LIMITED TERM BOND - INSTITUTIONAL CLASS: First National Bank of Ohio,
Akron, OH (13.07%); Amivest Corporation, New York, NY (7.46%); Hawkeye Bank
& Trust, Des Moines, IA (7.35%); First National Bank of Commerce, New
Orleans, LA (7.26%); Homeland Bank, N.A., Waterloo, IA (5.54%).
LIMITED TERM BOND - CLASS A: PaineWebber Inc., Weehawken, NJ (10.10%);
Smith, Barney, Lehman, New York, NY (6.62%); First Hawaiian Bank, Honolulu,
HI (5.60%).
LIMITED TERM BOND - CLASS B: Donaldson, Lufkin & Jenrette, New York, NY
(10.65%); Royal Alliance Associates Inc., Birmingham, AL (7.94%); NFSC, New
York, NY (7.45%); Smith, Barney, Lehman, New York, NY (7.32%).
LIMITED TERM TAX-EXEMPT - INSTITUTIONAL CLASS: Laird Norton Co., Seattle WA
(30.45%); Citizens State Bank, Corpus Christi TX (11.18%); First Interstate
Bank of Texas, Houston, TX (10.06%); First Union National Bank, Charlotte,
NC (7.23%); South Holland Bancorp, South Holland, IL (6.56%); Citizens
National Bank of Evansville, Evansville, IN (5.82%).
LIMITED TERM TAX-EXEMPT - CLASS A: Royal Alliance Associates Inc.,
Birmingham AL (10.20%); Merrill, Lynch, Pierce, Fenner & Smith,
Jacksonville, FL (8.60%); Smith, Barney, Lehman, New York, NY (7.55%);
Donaldson, Lufkin & Jenrette, New York, NY (6.43%).
LIMITED TERM TAX-EXEMPT - CLASS B: Donaldson, Lufkin & Jenrette, New York,
NY (15.79%); Royal Alliance Associates Inc., Birmingham AL (10.47%); A.G.
Edwards & Sons, St. Louis, MO (8.14%); NFSC, New York, NY (7.18%); Vestex
Securities, Hudson, OH (5.01%).
HIGH YIELD - CLASS A: Smith, Barney, Lehman, New York, NY (10.76%);
Donaldson, Lufkin & Jenrette, New York, NY (6.00%); NFSC, New York, NY
(5.17%).
HIGH YIELD - CLASS B: Walnut Street Securities, St. Louis, MO (16.38%);
NFSC, New York NY (8.02%); Donaldson, Lufkin & Jenrette, New York, NY
(5.68%); Smith, Barney, Lehman, New York, NY (5.04%).
GLOBAL RESOURCES - CLASS A: Smith, Barney, Lehman, New York, NY (9.19%);
NFSC, New York, NY (6.85%); Royal Alliance Associates Inc., Birmingham, AL
(5.39%).
GOVERNMENT INVESTMENT - CLASS A: Commonwealth Equity, Waltham, MA (6.53%);
NFSC, New York, NY (6.41%); First Hawaiian Bank, Honolulu, HI (5.80%).
GOVERNMENT INVESTMENT - CLASS B: NFSC, New York, NY (9.96%); Southwest
Securities Inc., Dallas, TX (9.13%); Royal Alliance Associates Inc.,
Birmingham, AL (7.37%); Dain Bosworth Inc., Minneapolis, MN (5.65%); Smith,
Barney, Lehman, New York NY (5.53%).
GROWTH OPPORTUNITIES - CLASS A: Cigna Securities Inc., Hartford, CT
(21.18%); Smith, Barney, Lehman, New York, NY (8.49%); A.G. Edwards & Sons,
St. Louis, MO (6.15%).
HIGH INCOME MUNICIPAL - CLASS A: Smith, Barney, Lehman, New York, NY
(16.39%); A.G. Edwards & Sons, St. Louis, MO (7.17%); Royal Alliance
Associates Inc., Birmingham, AL (5.23%); Cigna Securities Inc., Hartford,
CT (5.11%).
HIGH INCOME MUNICIPAL - CLASS B: Donaldson, Lufkin & Jenrette, New York, NY
(15.66%); NFSC, New York, NY (8.88%).
INCOME & GROWTH - CLASS A: Cigna Securities Inc., Hartford, CT (20.25%);
Smith, Barney, Lehman, New York, NY (6.13%).
SHORT FIXED-INCOME - CLASS A: Smith, Barney, Lehman, New York, NY (9.83%);
NFSC, New York, NY (7.15%).
STRATEGIC OPPORTUNITIES - CLASS A: Merrill, Lynch, Pierce, Fenner & Smith,
Jacksonville, FL (19.30%); Cigna Securities Inc., Hartford, CT (7.59%);
A.G. Edwards & Sons, St. Louis, MO (7.39%); Smith, Barney, Lehman, New
York, NY (5.82%); Prudential Securities, New York, NY (5.09%).
STRATEGIC OPPORTUNITIES - CLASS B: Smith, Barney, Lehman, New York, NY
(5.38%); Donaldson, Lufkin & Jenrette, New York, NY (5.16%); Royal Alliance
Associates Inc., Birmingham AL (5.05%).
OVERSEAS - CLASS A: Smith, Barney, Lehman, New York NY (10.65%); A.G.
Edwards & Sons, St. Louis, MO (5.81%); Royal Alliance Associates Inc.,
Birmingham, AL (5.54%); Merrill, Lynch, Pierce, Fenner & Smith,
Jacksonville, FL (5.09%).
EMERGING MARKETS INCOME - CLASS A: First Trust Company, Denver, CO
(13.84%); FMR Corp., Boston, MA (11.58%); NFSC, New York, NY (8.30%).
EMERGING MARKETS INCOME - CLASS B: NFSC, New York, NY (10.38%); Donaldson,
Lufkin & Jenrette, New York, NY (8.89%); PaineWebber Inc., Weehawken, NJ
(8.76%).
SHORT-INTERMEDIATE TAX-EXEMPT - CLASS A: NFSC, New York NY (16.10%);
Sunamerica Securities Inc., Phoenix, AZ (6.05%).
STRATEGIC INCOME - CLASS A: NFSC, New York, NY (8.14%); FMR Corp., Boston
MA (7.29%); Royal Alliance Associates Inc., Birmingham, AL (6.55%).
STRATEGIC INCOME - CLASS B: G.W. Wade, Wellesley, MA (63.37%); FMR Corp.,
Boston, MA (9.05%).
CUSTODIANS. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of Global Resources, Growth
Opportunities, and Strategic Opportunities. The Chase Manhattan Bank, N.A.,
1211 Avenue of the Americas, New York, New York, is custodian of the assets
of Overseas, Equity Portfolio Growth, Equity Income, Income & Growth, and
Emerging Markets Income. The Bank of New York, 110 Washington Street, New
York, New York, is custodian of the assets of High Yield, Strategic Income,
Government Investment, Limited Term Bond, and Short Fixed - Income.
U MB Bank , n.a. , 1010 Grand Avenue, Kansas City, Missouri, is
custodian of the assets of High Income Municipal, Limited Term Tax-Exempt,
and Short-Intermediate Tax-Exempt. The custodian is responsible for the
safekeeping of the fund's assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
investment policies of the fund or in deciding which securities are
purchased or sold by a fund. A fund may, however, invest in obligations of
the custodian and may purchase securities from or sell securities to the
custodian. Morgan Guaranty Trust Company of New York, The Bank of New
York, and Chemical Bank, each headquartered in New York, may also serve as
a special purpose custodian of certain assets in connection with pooled
repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of the custodian bank of Global Resources, Growth
Opportunities, and Strategic Opportunities leases its office space from an
affiliate of FMR at a lease payment which, when entered into, was
consistent with prevailing market rates. 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.
AUDITOR. Cooper & Lybrand, L.L.P. , serves as the independent
accountant for Equity Portfolio Growth, Global Resources, Growth
Opportunities, Strategic Opportunities, Equity Income, Income & Growth,
Emerging Markets Income, High Yield, Strategic Income, Government
Investment, Limited Term Bond, Short Fixed-Income, High Income Municipal,
Limited Term Tax-Exempt, and Short-Intermediate Tax-Exempt. Price
Waterhouse, LLP , serves as the independent accountant for Overseas. The
auditor examines financial statements for each fund and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
period ended October 31, November 30, or December 31, 1994, as appropriate,
are included in the Annual Reports, which are separate reports supplied
with this SAI. Each fund's financial statements and financial highlights
are incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of a fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
Also, the maturities of mortgage-backed securities and some asset-backed
securities, such as collateralized mortgage obligations, are determined on
a weighted average life basis, which is the average time for principal to
be repaid. For a mortgage security, this average time is calculated by
estimating the expected principal payments during the life of the mortgage.
The weighted average life of these securities is likely to be substantially
shorter than their stated final maturity.
FIDELITY ADVISOR INSTITUTIONAL CLASS PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. *
3 a .............................. Expenses
b .............................. Financial Highlights
c .............................. Performance
d .............................. Cover Page
4 a i............................. Charter
ii........................... Investment Principles and Risks; Securities and
Investment Practices
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. Cover Page; Charter
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates; Breakdown of Expenses
f .............................. Expenses
g .............................. Expenses; FMR and Its Affiliates
5 A .............................. Charter
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions
iii.......................... *
b ............................. FMR and Its Affiliates
c .............................. Charter
d .............................. Cover Page; Charter
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. Transaction Details; Breakdown of Expenses
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY ADVISOR FUNDS
INSTITUTIONAL CLASS
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of
the applicable fund's most recent financial report and portfolio listing or
a copy of the Statement of Additional Information (SAI) dated June 30,
1995. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA 02109, or
your Investment Professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
EMERGING MARKETS INCOME, HIGH YIELD, STRATEGIC INCOME, AND HIGH INCOME
MUNICIPAL MAY EACH INVEST WITHOUT LIMITATION IN LOWER-QUALITY DEBT
SECURITIES, SOMETIMES CALLED "JUNK BONDS." INVESTORS SHOULD CONSIDER THAT
THESE SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF DEFAULT, THAN
OTHER DEBT SECURITIES. REFER TO "INVESTMENT PRINCIPLES AND RISKS" ON PAGE
FOR FURTHER INFORMATION.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
ACOM I -pro- 695
GROWTH FUNDS:
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Global Resources Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
GROWTH AND INCOME FUNDS:
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE-INCOME FUNDS:
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Limited Term Bond Fund
Fidelity Advisor Short Fixed-Income Fund
TAX-EXEMPT/MUNICIPAL FUNDS:
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Limited Term Tax-Exempt Fund
Fidelity Advisor Short-Intermediate Tax-Exempt Fund
PROSPECTUS
JUNE 30, 1995(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Institutional Class's yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's financial
data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's overall
approach to investing.
BREAKDOWN OF EXPENSES How operating costs are
calculated and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your
account, including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and making
additional investments.
HOW TO SELL SHARES Taking money out and closing your
account.
INVESTOR SERVICES Services to help you manage your
account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND TAXES
ACCOUNT POLICIES
TRANSACTION DETAILS Share price calculations and the
timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
APPENDIX
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Institutional C las s shares are offered through this
prospectus to (i) accounts managed by a bank trust department and
other trust institutions, (ii) accounts managed on a discretionary
basis by a broker-dealer and (iii) accounts managed on a
discretionary basis by a registered investment advisor (RIA)
(collectively, eligible investors) . Shares are available only to
eligible investors that have signed a p articipation
a greement with FDC . The p articipation a greement
specifies certain aggregate asset minimums and asset
qualifications, trading guidelines , marketing restrictions and
program requirements .
Eligible investors with existing Institutional Class accounts will be
required to sign and comply with a participation agreement in order to
purchase additional shares. Such eligible investors that do not meet
revised asset requirements specified in the participation agreement will be
allowed to continue investing in Institutional Class shares until June 30,
1997, after which they will be prevented from making new or subsequent
purchases in Institutional Class, except that employee benefit plans
established by the intermediary will be permitted to make ongoing
purchases. Shareholders who purchased shares prior to June 30, 1995 but do
not fall within (i), (ii) and (iii) above can continue to buy additional
shares of Institutional Class.
Overseas, Equity Portfolio Growth, Global Resources, Growth Opportunities,
Strategic Opportunities, Equity Income, Income & Growth, High Yield,
Government Investment, Limited Term Bond, Short Fixed-Income, High Income
Municipal and Limited Term Tax-Exempt are diversified funds.
Emerging Markets Income, Strategic Income, and Short-Intermediate
Tax-Exempt are non-diversified funds. Non-diversified funds may invest a
greater portion of their assets in securities of a single issuer than
diversified funds. As a result, changes in the financial condition or
market assessment of a single issuer could cause greater fluctuations in
share value than a diversified fund.
Overseas, Equity Portfolio Growth, Global Resources, Growth Opportunities,
Strategic Opportunities, Equity Income and Income & Growth are designed for
investors who are willing to ride out stock market fluctuations in pursuit
of potentially high long-term returns. Overseas, Equity Portfolio Growth,
Global Resources, Growth Opportunities and Strategic Opportunities are
designed for investors who want to be invested in the stock market for its
long-term growth potential. These funds invest for growth and do not pursue
income. Equity Income and Income & Growth are designed for those investors
who seek a combination of growth and income from equity and some bond
investments.
Emerging Markets Income, High Yield, and Strategic Income are designed for
investors who want high current income with some potential for capital
growth from a portfolio of debt instruments with a focus on lower-quality
debt securities and income-producing equity securities. These funds may be
appropriate for long-term, aggressive investors who understand the
potential risks and rewards of investing in lower-quality debt securities,
including defaulted securities.
Government Investment, Limited Term Bond and Short Fixed-Income are
designed for investors who seek high current income from a portfolio of
investment-grade debt securities. These funds also invest consistent with
consideration of capital preservation.
High Income Municipal, Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt are designed for investors in higher tax brackets who seek high
current income that is free from federal income tax. Limited Term
Tax-Exempt and Short-Intermediate Tax-Exempt also invest consistent with
consideration of capital preservation. High Income Municipal focuses on
lower-quality debt securities and may be appropriate for long-term,
aggressive investors who understand the potential risks and rewards of
investing in lower-quality debt securities, including defaulted securities.
The value of each fund's investments and, as applicable, the income they
generate, will vary from day to day, and reflect changes in
market conditions, interest rates and other company, political, and
economic news. In the short-term, stock prices can fluctuate dramatically
in response to these factors. The securities of small, less well-known
companies may be more volatile than those of larger companies. The value of
bonds fluctuates based on changes in interest rates and in the credit
quality of the issuer. Over time, however, stocks, although more volatile,
have shown greater growth potential than other types of securities.
Investments in foreign securities may involve risks in addition to those of
U.S. investments, including increased political and economic risk, as well
as exposure to currency fluctuations.
The investments of Strategic Income, Government Investment, Limited Term
Bond, and Short Fixed-Income are also subject to prepayments, which can
lower a fund's yield, particularly in periods of declining interest rates.
In addition, Overseas, Global Resources, Emerging Markets Income and
Strategic Income may also be appropriate for investors who want to pursue
their investment goals in markets outside of the United States. By
including international investments in your portfolio, you can achieve
additional diversification and participate in growth
opportunities around the world.
Each fund is not in itself a balanced investment plan. You should consider
your investment objective and tolerance for risk when making an investment
decision. When you sell your fund shares, they may be worth more or less
than what you paid for them.
Each fund is composed of multiple classes of shares. Each class of a
fund has a common investment objective and investment portfolio. Class A
shares have a front-end sales charge and pay a distribution fee. Class B
shares do not have a front-end sales charge, but do have a contingent
deferred sales charge (CDSC), and pay a distribution fee and a shareholder
service fee. Because Institutional Class shares have no sales charge, and
do not pay a distribution fee or a shareholder service fee, Institutional
Class shares are expected to have a higher total return than Class A or
Class B shares. You may obtain more information about Class A and Class B
shares, which are not offered through this prospectus, by calling
1-800-843-3001 or from your Investment Professional. See "Transaction
Details," page 35.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy ,
sell, or hold shares of a fund.
Maximum sales charge on purchases and reinvested distributions None
Maximum deferred sales charge on redemptions None
Redemption fee None
Exchange fee None
Annual account maintenance fee (for accounts under $2,500) $12.00
ANNUAL OPERATING EXPENSES are paid out of Institutional Class 's
assets. Each fund pays a management fee to Fidelity Management & Research
Company (FMR) that, for Overseas, Growth Opportunities and Strategic
Opportunities, varies based on performance, and incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and financial reports.
Institutional Class 's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" on page ).
The following table shows projections based on estimated or historical
expenses , adjusted for current fees, of the Institutional
C lass of each fund and are calculated as a percentage of average net
assets of the Institutional Class of each fund.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Institutional Class shares assuming a 5% annual return and
full redemption at the end of each time period.
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
EQUITY FUNDS
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OVERSEA S Management fee 0.80% After 1 $14
year
12b-1 fee (Distribution N one After 3 $42
fee) years
Other expenses 0.53%B After 5 $73
years
Total operating expenses 1.33% After 10 $160
years
EQUITY PORTFOLIO GROWTH Management fee 0.62%C After 1 $8
year
12b-1 fee (Distribution None After 3 $26
fee) years
Other expenses 0.20%A After 5 $45
years
Total operating expenses 0.82% After 10 $101
years
GLOBAL RESOURCES Management fee 0.77% After 1 $14
year
12b-1 fee (Distribution N one After 3 $42
fee) years
Other expenses 0.57%B After 5 $73
years
Total operating expenses 1.34% After 10 $161
years
GROWTH OPPORTUNITIES Management fee 0.69% After 1 $10
year
12b-1 fee (Distribution N one After 3 $32
fee) years
Other expenses 0.30%B After 5 $55
years
Total operating expenses 0.99% After 10 $121
years
STRATEGIC OPPORTUNITIES Management fee 0.67% After 1 $12
year
12b-1 fee (Distribution N one After 3 $38
fee) years
Other expenses 0.54%B After 5 $66
years
Total operating expenses 1.21% After 10 $147
years
EQUITY INCOME Management fee 0.50% After 1 $7
year
12b-1 fee (Distribution None After 3 $23
fee) years
Other expenses 0.21%A After 5 $40
years
Total operating expenses 0.71% After 10 $88
years
INCOME & GROWTH Management fee 0.52% After 1 $10
year
12b-1 fee (Distribution N one After 3 $32
fee) years
Other expenses 0.48%B After 5 $55
years
Total operating expenses 1.00% After 10 $122
years
</TABLE>
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUND PAID WAS USED TO
REDUCE OTHER EXPENSES. WITHOUT THIS REDUCTION, OTHER EXPENSES WOULD HAVE
BEEN 0.22% (EQUITY PORTFOLIO GROWTH) AND 0.23% (EQUITY INCOME).
B PROJECTIONS ARE BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
C EFFECTIVE AUGUST 1, 1994, FMR VOLUNTARILY AGREED TO IMPLEMENT A
MANAGEMENT FEE REDUCTION FOR EQUITY PORTFOLIO GROWTH. THE INDIVIDUAL FUND
FEE RATE WAS REDUCED FROM 0.33% TO 0.30%. IF THIS AGREEMENT WAS NOT IN
EFFECT, THE MANAGEMENT FEE WOULD HAVE BEEN 0.65%.
TAXABLE INCOME
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EMERGING MARKETS INCOME Management fee 0.70% After 1 $13
year
12b-1 fee (Distribution N one After 3 $40
fee) years
Other expenses (after 0.55%B After 5 $69
reimbursement) years
Total operating expenses 1.25% After 10 $151
years
HIGH YIELD Management fee 0.60% After 1 $11
year
12b-1 fee (Distribution N one After 3 $33
fee) years
Other expenses 0.43%B After 5 $57
years
Total operating expenses 1.03% After 10 $126
years
STRATEGIC INCOME Management fee 0.61% After 1 $11
year
12b-1 fee (Distribution N one After 3 $35
fee) years
Other expenses (after 0.49%B After 5 $61
reimbursement) years
Total operating expenses 1.10% After 10 $134
years
GOVERNMENT INVESTMENT Management fee 0.46% After 1 $8
year
12b-1 fee (Distribution N one After 3 $24
fee) years
Other expenses (after 0.29%B After 5 $42
reimbursement) years
Total operating expenses 0.75% After 10 $93
years
LIMITED TERM BOND Management fee 0.4 6 % D After 1 $ 7
year
12b-1 fee (Distribution None After 3 $2 1
fee) years
Other expenses 0. 20 % After 5 $3 7
years
Total operating expenses 0.6 6 % After 10 $ 82
years
SHORT FIXED - INCOME Management fee 0.46% After 1 $9
year
12b-1 fee (Distribution N one After 3 $27
fee) years
Other expenses (after 0.39%B After 5 $47
reimbursement) years
Total operating expenses 0.85% After 10 $105
years
</TABLE>
B PROJECTIONS ARE BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
D REFLECTS INCREASE OF INDIVIDUAL FUND FEE RATE.
TAX-EXEMPT/MUNICIPAL
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HIGH INCOME MUNICIPAL Management fee 0.41% After 1 $8
year
12b-1 fee (Distribution N one After 3 $24
fee) years
Other expenses (after 0.34%B After 5 $42
reimbursement) years
Total operating expenses 0.75% After 10 $93
years
LIMITED TERM TAX-EXEMPT Management fee 0.41% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $2 4
fee) years
Other expenses (after 0. 34 % After 5 $ 42
reimbursement) years
Total operating expenses 0. 75 % After 10 $ 93
years
SHORT-INTERMEDIATE TAX-EXEMPT Management fee 0.41% After 1 $8
year
12b-1 fee (Distribution N one After 3 $24
fee) years
Other expenses (after 0.34%B After 5 $42
reimbursement) years
Total operating expenses 0.75% After 10 $93
years
</TABLE>
B PROJECTIONS ARE BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
FMR has voluntarily agreed to reimburse certain Institutional Class Shares
to the extent that total operating expenses exceed the following percentage
of each of their respective average net assets: for Emerging Markets Income
1.25%; for High Yield 1.10%; for Strategic Income 1.10%; for Government
Investment 0.75%; for Limited Term Bond 0.75%; for Short Fixed-Income
0.85%; for High-Income Municipal 0.75%; for Limited Term Tax-Exempt 0.75%;
and for Short-Intermediate Tax-Exempt 0.75%. If these agreements were not
in effect, other expenses would have been: for Emerging Markets Income
1.09% (estimated); for Strategic Income 1.81% (estimated); for Government
Investment 0.58% (estimated); for Short Fixed-Income 0.52% (estimated); for
High Income Municipal 0.45% (estimated); for Limited Term Tax-Exempt 0.35%;
and for Short-Intermediate Tax-Exempt 0.88% (estimated). Interest, taxes,
brokerage commissions, or extraordinary expenses are not included in this
expense limitation.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in each fund's Annual Report and have been
audited by Coopers & Lybrand L.L.P. or Price Waterhouse LLP (Overseas) .
Their reports on the financial statements and financial highlights are
included in each Annual Report. The financial statements, the financial
highlights, and the reports are incorporated by reference into the funds'
SAI, which may be obtained free of charge from FDC or your Investment
Professional.
On July 3, 1995, each fund (except Equity Portfolio Growth, Equity
Income, Limited Term Bond, and Limited Term Tax-Exempt) is expected to
commence sale of Institutional Class shares and, Overseas and Global
Resources are expected to commence sales of Class B shares.
OVERSEAS
1.Select 2. 3. 4.Class 5.
ed A
Per-Sha
re Data
and
Ratios
6.Years 1990B 1991 1992 1993 1994
ended
October
31
7.Net $ 10.00 $ 9.55 $ 9.78 $ 9.07 $ 12.93
asset
value,
beginnin
g of
period
8.Incom
e from
Investm
ent
Operati
ons
9. Net .05 .14 .05 .03 .01
investm
ent
income
10. Ne (.50) .17 (.62) 3.93 1.14
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
11. Tot (.45) .31 (.57) 3.96 1.15
al from
investm
ent
operatio
ns
12.Less
Distribut
ions
13. Fr -- (.07) (.14) (.07) --
om net
investm
ent
income
14. Fr -- (.01)E -- (.03)E (.02)
om net
realized
gain
15. Tot -- (.08) (.14) (.10) (.02)
al
distributi
ons
16.Net $ 9.55 $ 9.78 $ 9.07 $ 12.93 $ 14.06
asset
value,
end of
period
17.Total (4.50)%D 3.25% (5.88)% 44.13% 8.91%
returnC
18.Net $ 18,161 $ 19,091 $ 18,652 $ 221,37 $ 653,77
assets, 0 4
end of
period
(000
omitted)
19.Rati 3.07%A,F 2.85% 2.64% 2.38% 2.12%
o of
expense
s to
average
net
assets
20.Rati 1.45%A 1.48% .48% (.18)% .05%
o of net
investm
ent
income
to
average
net
assets
21.Portf 137%A 226% 168% 42% 34%
olio
turnover
rate
A 1.ANNUALIZED.
B 2.APRIL 23, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1990.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
E INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
F EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE LIMITATION.
EQUITY PORTFOLIO GROWTH
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.Select Institutional Class A
ed Class
Per-Sha
re Data
and
Ratios
4.Years
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992C 1993 1994
ended
Novemb
er 30
5.Net
$ 8.03 $ 11.09 $ 13.18 $ 9.92 $ 12.02 $ 17.32 $ 15.55 $ 24.28 $ 26.37 $ 29.74 $ 23.78 $ 26.33 $ 29.50
asset
value,
beginnin
g of
period
6.Incom
e from
Investm
ent
Operati
ons
7. Net
.01 .03 --D .28G .06 .01 .04 .17D .19D .30 .01D (.07)D .08
investm
ent
income
(loss)
8. Net
3.05 2.41 (2.03) 2.59 5.50 .34 8.69 4.55 3.78 .42 2.54 3.82 .39
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
9. Total
3.06 2.44 (2.03) 2.87 5.56 .35 8.73 4.72 3.97 .72 2.55 3.75 .47
from
investm
ent
operatio
ns
10.Less
Distribut
ions
11. Fr
-- (.02) (.01) (.01) (.26) (.08) -- (.03) (.10) (.11) -- (.08) --
om net
investm
ent
income
12. Fr
- -- (.33) (1.22) (.76) -- (2.04) -- (2.60) (.50) (1.45) -- (.50) (1.45)
om net
realized
gain
13. Tot
-- (.35) (1.23) (.77) (.26) (2.12) -- (2.63) (.60) (1.56) -- (.58) (1.45)
al
distributi
ons
14.Net
$ 11.09 $ 13.18 $ 9.92 $ 12.02 $ 17.32 $ 15.55 $ 24.28 $ 26.37 $ 29.74 $ 28.90 $ 26.33 $ 29.50 $ 28.52
asset
value,
end of
period
15.Total
38.11% 22.55% (17.12) 29.77% 47.18% 2.75% 56.14% 21.14% 15.36% 2.46% 10.72% 14.52% 1.58%
returnE,F %
16.Net
$ 23,44 $ 63,60 $ 43,53 $ 20,18 $ 24,52 $ 27,47 $ 68,76 $ 179,3 $ 296,4 $ 410,45 $ 22,65 $ 377,8 $ 874,17
assets,
7 7 7 2 3 3 6 25 66 0 5 94 2
end of
period
(000
omitted)
17.Rati
1.50%I 1.07% 1.11% 1.47% 1.60% 1.74% 1.13% .98% .94%H .84%H 1.47%A 1.84%H 1.70%H
o of
expense
s to
average
net
assets
18.Rati
1.50%I 1.07% 1.11% 1.47% 1.60% 1.74% 1.13% .98% .95%H .86%H 1.47%A 1.85%H 1.71%H
o of
expense
s to
average
net
assets
before
expense
reductio
ns
19.Rati
.43% .29% -- 1.20% .38% .07% .25% .73% .66% 1.00% .25%A (.24)% .15%
o of net
investm
ent
income
(loss)
to
average
net
assets
20.Portf
108% 115% 226% 331% 269% 262% 254% 240% 160% 137% 240% 160% 137%
olio
turnover
</TABLE>
GLOBAL RESOURCES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
21.Sele 22. 23. 24. 25.Clas 26. 27.
cted s A
Per-Sha
re Data
and
Ratios
28.Year 1988B 1989 1990 1991K 1992 1993 1994D
s ended
October
31
29.Net $ 10.00 $ 11.47 $ 12.60 $ 12.30 $ 14.11 $ 13.88 $ 17.59
asset
value,
beginnin
g of
period
30.Inco
me from
Investm
ent
Operati
ons
31. Ne (.05) .10J (.10) (.15) (.10) .22 (.11)
t
investm
ent
income
(loss)
32. Ne 1.52 1.96 .93 2.45 .79 4.91 .76
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
33. Tot 1.47 2.06 .83 2.30 .69 5.13 .65
al from
investm
ent
operatio
ns
34.Less
Distribut
ions
35. Fr -- -- (.08) -- -- -- --
om net
investm
ent
income
36. Fr -- (.93) (1.05) (.49) (.92) (1.42) (.68)
om net
realized
gain
37. Tot -- (.93) (1.13) (.49) (.92) (1.42) (.68)
al
distributi
ons
38.Net $ 11.47 $ 12.60 $ 12.30 $ 14.11 $ 13.88 $ 17.59 $ 17.56
asset
value,
end of
period
39.Total 14.70% 19.63% 6.37% 19.50% 5.97% 41.05% 3.97%
returnE,F
40.Net $ 916 $ 2,049 $ 4,615 $ 5,940 $ 7,087 $ 40,309 $ 199,36
assets, 1
end of
period
(000
omitted)
41.Rati 2.85% 3.23% 3.34%I 3.35%I 3.27%I 2.62%H 2.07%H
o of
expense
s to
average
net
assets
42.Rati 2.85% 3.23% 3.34%I 3.35%I 3.27%I 2.63%H 2.10%H
o of
expense
s to
average
net
assets
before
expense
reductio
ns
43.Rati (.64)% .83% (1.13)% (1.28)% (1.22)% (1.18)% (.67)%
o of net
investm
ent
income
(loss) to
average
net
assets
44.Portf 220% 249% 229% 256% 248% 208% 125%
olio
turnover
rate
</TABLE>
A ANNUALIZED
B DECEMBER 29, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1988.
C COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
G DURING THE PERIOD A SHAREHOLDER REDEEMED A SIGNIFICANT PORTION OF THE
ASSETS OF THE FUND. DUE TO THE TIMING OF THIS TRANSACTION, THE FUND
EXPERIENCED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
H FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
I EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
J NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.17 PER SHARE.
K AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
GROWTH OPPORTUNITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
45.Sele Class A
cted
Per-Sha
re Data
and
Ratios
46.Year 1988B 1989 1990 1991 1992 1993 1994
s ended
October
31
47.Net $ 10.00 $ 14.27 $ 16.53 $ 12.99 $ 20.58 $ 21.14 $ 25.39
asset
value,
beginnin
g of
period
48.Inco
me from
Investm
ent
Operati
ons
49. Ne .05 .02 .18D .06 .14 .08 .22
t
investm
ent
income
50. Ne 4.22 3.03 (2.50) 7.70 2.04 5.56 1.92
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
51. Tot 4.27 3.05 (2.32) 7.76 2.18 5.64 2.14
al from
investm
ent
operatio
ns
52.Less
Distribut
ions
53. Fr -- (.03) (.05) (.17) (.09) (.13) (.07)
om net
investm
ent
income
54. Fr -- (.76) (1.17) -- (1.53) (1.26) (.84)
om net
realized
gain
55. Tot -- (.79) (1.22) (.17) (1.62) (1.39) (.91)
al
distributi
ons
56.Net $ 14.27 $ 16.53 $ 12.99 $ 20.58 $ 21.14 $ 25.39 $ 26.62
asset
value,
end of
period
57.Total 42.70% 22.69% (15.05) 60.25% 12.09% 28.11% 8.71%
returnF,G %
58.Net $ 8,097 $ 34,351 $ 51,122 $ 213,09 $ 580,59 $ 2,054,9 $ 4,598,6
assets, 5 5 88 68
end of
period
(000
omitted)
59.Rati 2.52%A,I 2.45% 2.00% 1.73% 1.60% 1.64%E 1.62%E
o of
expense
s to
average
net
assets
60.Rati 2.52%A,I 2.45% 2.00% 1.73% 1.60% 1.65%E 1.63%E
o of
expense
s to
average
net
assets
before
expense
reductio
ns
61.Rati .82%A .31% 1.49% .47% .80% .43% 1.12%
o of net
investm
ent
income
to
average
net
assets
62.Portf 143%A 163% 136% 142% 94% 69% 43%
olio
turnover
rate
</TABLE>
STRATEGIC OPPORTUNITIES - INITIAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
63.Sele
cted
Per-Sha
re Data
and
Ratios
64.Year 1985 1986 1987 1988 1989 1990 1991 1992H 1993 1994 1994C
s ended
Septemb
er 30
65.Net $ 11.05 $ 12.70 $ 16.71 $ 19.13 $ 15.65 $ 19.77 $ 17.37 $ 21.55 $ 19.72 $ 22.72 $ 20.23
asset
value,
beginnin
g of
period
66.Inco
me from
Investm
ent
Operati
ons
67. Ne .35 .36 .53 .48 .64 .80 .77 .73 .45 .54 .13J
t
investm
ent
income
68. Ne 1.56 5.05 2.95 (1.80) 4.08 (2.49) 4.26 .58 4.46 (.81) (.74)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
69. Tot 1.91 5.41 3.48 (1.32) 4.72 (1.69) 5.03 1.31 4.91 (.27) (.61)
al from
investm
ent
operatio
ns
70.Less
Distribut
ions
71. Fr (.06) (.24) (.09) (.25) (.60) (.71) (.85) (.72) (.70) (.51) (.50)
om net
investm
ent
income
72. Fr (.20) (1.16) (.97) (1.91) - - - (2.42) (1.21) (1.71) (.26)
om net
realized
gain
73. Tot (.26) (1.40) (1.06) (2.16) (.60) (.71) (.85) (3.14) (1.91) (2.22) (.76)
al
distributi
ons
74.Net $ 12.70 $ 16.71 $ 19.13 $ 15.65 $ 19.77 $ 17.37 $ 21.55 $ 19.72 $ 22.72 $ 20.23 $ 18.86
asset
value,
end of
period
75.Total 17.64% 46.10 21.87 (4.63) 31.19 (8.96) 30.01 7.89% 26.98 (1.51)% (3.02)
returnF,G % % % % % % % %
76.Net $ 13,60 $ 31,99 $ 27,80 $ 19,22 $ 19,78 $ 15,98 $ 19,19 $ 17,93 $ 20,70 $ 18,850 $ 17,58
assets, 2 1 9 1 0 8 3 3 7 3
end of
period
(000
omitted)
77.Rati 1.50%K 1.50%K 1.30%K 1.49%K .64%L 1.03% 1.00% .87% .89%M 1.14%E 1.11%A,E
o of
expense
s to
average
net
assets
78.Rati 1.50%K 1.50%K 1.30%K 1.49%K 1.04% 1.03% 1.00% .87% 1.05% 1.15%E 1.14%A,E
o of
expense
s to
average
net
assets
before
expense
reductio
ns
79.Rati 2.87% 2.40% 2.88% 3.31% 4.08% 4.21% 4.12% 3.78% 2.74% 2.60% 2.65%A
o of net
investm
ent
income
to
average
net
assets
80.Portf 214% 225% 225% 160% 89% 114% 223% 211% 183% 159% 228%A
olio
turnover
</TABLE>
A ANNUALIZED.
B NOVEMBER 18, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1988.
C FOR THE THREE MONTHS ENDED DECEMBER 31, 1994.
D NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.09 PER SHARE.
E FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
F TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
H AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
I EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
J NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
K EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. IN
ADDITION, DURING THE PERIOD JULY 1, 1986 THROUGH OCTOBER 31, 1987 FMR
WAIVED .05% OF THE ANNUAL INDIVIDUAL FUND FEE OF .35%.
L INCLUDES REIMBURSEMENT OF $.08 PER SHARE FROM FIDELITY SERVICE COMPANY
FOR ADJUSTMENTS TO PRIOR PERIODS FEES.
M INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FMR FOR ADJUSTMENTS TO
PRIOR PERIODS' FEES.
STRATEGIC OPPORTUNITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
81.Sele Class A Class B
cted
Per-Sha
re Data
and
ratios
82.Year 1986B 1987 1988 1989 1990 1991 1992I 1993 1994 1994E 1994D 1994E
s ended
Septemb
er 30
83.Net $ 17.81 $ 16.71 $ 19.06 $ 15.53 $ 19.55 $ 17.21 $ 21.38 $ 19.53 $ 22.52 $ 19.96 $ 19.65 $ 19.98
asset
value,
beginnin
g of
period
84.Inco
me from
Investm
ent
Operati
ons
85. Ne .08J .46 .42 .50 .70 .66 .61 .33 .39P .10P .05P .06P
t
investm
ent
income
86. Ne (1.18) 2.95 (1.80) 4.08 (2.49) 4.26 .58 4.44 (.81) (.75) .28 (.74)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
87. Tot (1.10) 3.41 (1.38) 4.58 (1.79) 4.92 1.19 4.77 (.42) (.65) .33 (.68)
al from
investm
ent
operatio
ns
88.Less
Distribut
ions
89. Fr -- (.09) (.24) (.56) (.55) (.75) (.62) (.57) (.43) (.35) -- (.47)
om net
investm
ent
income
90. Fr -- (.97) (1.91) -- -- -- (2.42) (1.21) (1.71) (.26) -- (.26)
om net
realized
gain
91. Tot -- (1.06) (2.15) (.56) (.55) (.75) (3.04) (1.78) (2.14) (.61) -- (.73)
al
distributi
ons
92.Net $ 16.71 $ 19.06 $ 15.53 $ 19.55 $ 17.21 $ 21.38 $ 19.53 $ 22.52 $ 19.96 $ 18.70 $ 19.98 $ 18.57
asset
value,
end of
period
93.Total (6.23) 21.28% (4.98) 30.45% (9.49) 29.51% 7.26% 26.33% (2.24)% (3.26)% 1.68% (3.41)%
returnG,H% % %
94.Net $ 22,14 $ 283,1 $ 191,4 $ 198,1 $ 172,0 $ 199,6 $ 194,7 $ 269,8 $ 385,34 $ 375,69 $ 8,824 $ 17,090
assets, 1 17 54 74 86 04 10 83 9 1
end of
period
(000
omitted)
95.Rati 1.50%A,K 1.67%K 1.71% 1.51% 1.59% 1.56% 1.46% 1.57%L 1.84% 1.73%A,F,Q 2.63%A,F 2.53%A,F
o of
expense
s to
average
net
assets
96.Rati 1.50%A,K 1.67%K 1.71% 1.51% 1.59% 1.56% 1.46% 1.73% 1.85% 1.84%A,F 2.84%A,F 2.58%A,F
o of
expense
s to
average
net
assets
before
expense
reductio
ns
97.Rati 2.77%A 2.36% 3.10% 3.23% 3.70% 3.61% 3.22% 2.06% 1.89% 2.03%A 1.11%A 1.22%A
o of net
investm
ent
income
to
average
net
assets
98.Portf 225% 225% 160% 89% 114% 223% 211% 183% 159% 228%A 159% 228%A
olio
turnover
</TABLE>
EQUITY INCOME
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.Sele Institutional Class A Class B
cted Class
Per-Sha
re Data
and
Ratios
Years
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992C 1993 1994 1994D
ended
Novembe
r 30
100.Net
$ 10.24 $ 11.95 $ 13.54 $ 10.93 $ 11.10 $ 12.27 $ 9.52 $ 11.08 $ 12.88 $ 14.93 $ 12.37 $ 12.86 $ 14.86 $ 15.21
asset
value,
beginnin
g of
period
101.Inc
ome
from
Investm
ent
Operati
ons
102. Ne
.79 .78 .76 .75 .75 .69 .63O .49 .39 .41P .13 .33 .28P .08P
t
investm
ent
income
103. Ne
1.69 1.92 (1.53) 1.81 1.17 (2.42) 1.52 1.79 2.02 1.05 .47 1.97 1.03 .72
t
realized
and
unrealiz
ed
gain
(loss)
on
investm
ents
104. Tot
2.48 2.70 (.77) 2.56 1.92 (1.73) 2.15 2.28 2.41 1.46 .60 2.30 1.31 .80
al from
investm
ent
operatio
ns
105.Le
ss
Distribut
ions
106. Fr
(.77) (.77) (.70) (.74) (.75) (.72) (.59) (.48) (.36) (.32) (.11) (.30) (.21) (.07)
om net
investm
ent
income
107. Fr
- -- (.34) (1.14) (1.65) -- (.30) -- -- -- -- -- -- -- --
om net
realized
gain
108. Tot
(.77) (1.11) (1.84) (2.39) (.75) (1.02) (.59) (.48) (.36) (.32) (.11) (.30) (.21) (.07)
al
distributi
ons
109.Net
$ 11.95 $ 13.54 $ 10.93 $ 11.10 $ 12.27 $ 9.52 $ 11.08 $ 12.88 $ 14.93 $ 16.07 $ 12.86 $ 14.86 $ 15.96 $ 15.94
asset
value,
end of
period
110.Tot
24.86 23.48 (7.28) 26.99 17.58 (14.90) 22.97 20.91 18.90 9.82% 4.88% 18.03 8.84% 5.25%
al % % % % % % % % % %
returnG,H
111.Net
$ 349,2 $ 544,2 $ 443,6 $ 436,7 $ 463,6 $ 253,0 $ 168,5 $ 139,3 $ 191,1 $ 197,5 $ 1,462 $ 42,32 $ 179,5 $ 35,37
assets,
62 69 03 53 96 49 90 91 38 33 6 01 3
end of
period
(000
omitted)
112.Rat
.63% .61% .54%N .55%N .55%N .61%N .67%N .71%N .79%F .71%F 1.55%A 1.77% 1.64%F 2.18%A,F
io of
expense
s to
average
net
assets
113.Rat
.63% .61% .61%N .65%N .65%N .71%N .77%N .79%N .80%F .73%F 1.55%A 1.77% 1.67%F 2.24%A,F
io of
expense
s to
average
net
assets
before
expense
reductio
ns
114.Rat
7.36% 6.06% 5.58% 6.86% 6.09% 6.11% 5.66% 3.77% 3.00% 2.62% 3.39%A 2.02% 1.69% 1.15%A
io of net
investm
ent
income
to
average
net
assets
115.Por
110%M 107% 137% 78% 93% 103% 91% 51% 120% 140% 51% 120% 140% 140%
tfolio
turnover
</TABLE>
A ANNUALIZED.
B AUGUST 20, 1986 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1986.
C COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E FOR THE THREE MONTHS ENDED DECEMBER 31, 1994.
F FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD FMR NOT REIMBURSED CERTAIN
EXPENSES DURING THE PERIODS SHOWN.
I AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
J NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE AT THE END OF THE PERIOD LESS
THE AMOUNT OF UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE OF THE FUND AT
AUGUST 20, 1986.
K EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. IN
ADDITION, DURING THE PERIOD JULY 1, 1986 THROUGH OCTOBER 31, 1987 FMR
WAIVED .05% OF THE ANNUAL INDIVIDUAL FUND FEE OF .35%.
L INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FMR FOR ADJUSTMENTS TO
PRIOR PERIODS' FEES
M IN JULY 1985, THE SEC ADOPTED REVISIONS TO EXISTING RULES WITH RESPECT TO
THE CALCULATION OF THE PORTFOLIO TURNOVER RATE. THE REVISED RULES REQUIRE
THE INCLUSION IN THE CALCULATION OF LONG-TERM U.S. GOVERNMENT SECURITIES
WHICH, PRIOR TO THESE REVISIONS, WERE EXCLUDED FROM THE CALCULATION.
N EFFECTIVE APRIL 1, 1987 TO SEPTEMBER 10, 1992, FMR REIMBURSED .10% OF THE
ANNUAL MANAGEMENT FEE OF .50%.
O INCLUDES $.04 PER SHARE FROM FOREIGN TAXES RECOVERED.
P NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
Q INCLUDES THE EFFECT OF ANNUALIZING A VOLUNTARY REIMBURSEMENT OF FEES BY
FMR.
INCOME & GROWTH
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
116.Sel Class A
ected
Per-Sha
re Data
and
Ratios
117.Yea 1987B 1988 1989 1990 1991 1992 1993 1994
rs ended
October
31
118.Net $ 10.00 $ 9.44 $ 11.07 $ 12.77 $ 10.41 $ 14.13 $ 14.41 $ 15.91
asset
value,
beginnin
g of
period
119.Inc
ome
from
Investm
ent
Operati
ons
120. Ne .27 .62 1.01G .56 .51 .50 .48 .38
t
investm
ent
income
121. Ne (.63) 1.56 1.27 (1.34) 3.74 .85 2.18 (.79)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
122. Tot (.36) 2.18 2.28 (.78) 4.25 1.35 2.66 (.41)
al from
investm
ent
operatio
ns
123.Le
ss
Distribut
ions
124. Fr (.20) (.55) (.58) (1.06) (.53) (.46) (.56) (.28)
om net
investm
ent
income
125. In -- -- -- -- -- -- -- (.02)
excess
of net
investm
ent
income
126. Fr -- -- -- (.52) -- (.61) (.60) (.49)
om net
realized
gain
127. Re -- -- -- -- -- -- -- (.04)
turn of
Capital
128. Tot (.20) (.55) (.58) (1.58) (.53) (1.07) (1.16) (.83)
al
distributi
ons
129.Net $ 9.44 $ 11.07 $ 12.77 $ 10.41 $ 14.13 $ 14.41 $ 15.91 $ 14.67
asset
value,
end of
period
130.Tot (3.90)% 23.66% 21.15% (7.15)% 41.73% 10.27% 19.66% (2.69)%
al
returnE,F
131.Net $ 34,376 $ 36,224 $ 46,139 $ 60,934 $ 135,53 $ 397,67 $ 1,654,1 $ 3,128,7
assets, 3 2 24 76
end of
period
(000
omitted)
132.Rat 2.06%A 2.06% 1.91% 1.85% 1.71% 1.60% 1.51%H 1.58%H
io of
expense
s to
average
net
assets
133.Rat 2.06%A 2.06% 1.91% 1.85% 1.71% 1.60% 1.52%H 1.59%H
io of
expense
s to
average
net
assets
before
expense
reductio
ns
134.Rat 3.95%A 5.83% 8.80% 5.29% 4.19% 3.97% 3.24% 3.79%
io of net
investm
ent
income
to
average
net
assets
135.Por 206%A 204% 151% 297% 220% 389% 200% 202%
tfolio
turnover
rate
</TABLE>
EMERGING MARKETS INCOME
136.Sel Class A Class B
ected
Per-Sha
re Data
137.Ye 1994C 1994D
ar ended
Decemb
er 31
138.Net $ 10.000 $ 9.700
asset
value,
beginnin
g of
period
139.Inc
ome
from
Investm
ent
Operati
ons
140. Ne .356 .167
t
investm
ent
income
141. Ne (.073) .227
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
142. Tot .283 .394
al from
investm
ent
operatio
ns
143.Le
ss
Distribut
ions
144. Fr (.353) (.220)
om net
investm
ent
income
145. In (.150) (.094)
excess
of net
investm
ent
income
146. Fr (.010) (.010)
om net
realized
gain
147. In (.250) (.250)
excess
of net
realized
gain
148. Tot (.763) (.574)
al
distributi
ons
149.Net $ 9.520 $ 9.520
asset
value,
end of
period
150.Tot 2.47% 3.67%
al
returnE,F
151.Net $ 30,029 $ 5,034
assets,
end of
period
(000
omitted)
152.Rat 1.50%A 2.25%A,I
io of
expense
s to
average
net
assets
153.Rat 2.15%A 2.60%A,I
io of
expense
s to
average
net
assets
before
expense
reductio
ns
154.Rat 6.60%A 5.86%A
io of net
investm
ent
income
to
average
net
assets
155.Por 354%A 354%A
tfolio
turnover
A ANNUALIZED.
B JANUARY 6, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C 3.MARCH 10, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
G NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $ .26 PER SHARE.
H FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
I 1.EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE LIMITATION.
HIGH YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.Select Class A Class B
ed
Per-Sha
re Data
and
Ratios
3.Years 1987B 1988 1989 1990 1991 1992 1993 1994 1994D
ended
October
31
4.Net $ 10.000 $ 9.090 $ 9.860 $ 8.970 $ 8.150 $ 10.120 $ 11.070 $ 12.010 $ 11.300
asset
value,
beginnin
g of
period
5.Incom
e from
Investm
ent
Operati
ons
6. Net .878 1.165 1.237 1.144 1.115 1.146 .980 .848 .223
investm
ent
income
7. Net (.910) .770 (.890) (.820) 1.948 .975 1.153 (.537) (.118)
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
8. Total (.032) 1.935 .347 .324 3.063 2.121 2.133 .311 .105
from
investm
ent
operatio
ns
9.Less
Distribut
ions
10. Fr (.878) (1.165) (1.237) (1.144) (1.093) (1.171) (.963) (.851)I (.195)
om net
investm
ent
income
11. Fr -- -- -- -- -- -- (.230) (.250)I --
om net
realized
gain
12. Tot (.878) (1.165) (1.237) (1.144) (1.093) (1.171) (1.193) (1.101) (.195)
al
distributi
ons
13.Net $ 9.090 $ 9.860 $ 8.970 $ 8.150 $ 10.120 $ 11.070 $ 12.010 $ 11.220 $ 11.210
asset
value,
end of
period
14.Total (.81)% 22.14% 3.34% 3.58% 39.67% 21.96% 20.47% 2.64% .93%
returnE,F
15.Net $ 9,077 $ 11,900 $ 13,315 $ 15,134 $ 38,681 $ 136,31 $ 485,55 $ 679,623 $ 16,959
assets, 6 9
end of
period
(000
omitted)
16.Rati 1.24%A 1.10% 1.10% 1.10% 1.10% 1.10% 1.11% 1.20% 2.20%A
o of
expense
s to
average
net
assets
17.Rati 2.25%A,G 2.22% 2.17% 2.04% 1.76% 1.16% 1.11% 1.20% 2.20%A
o of
expense
s to
average
net
assets
before
expense
reductio
ns
18.Rati 10.74%A 11.86% 12.98% 12.72% 12.20% 9.95% 8.09% 6.92% 5.92%A
o of net
investm
ent
income
to
average
net
assets
19.Portf 166%A 135% 131% 90% 103% 100% 79% 118% 118%
olio
turnover
</TABLE>
STRATEGIC INCOME
20.Sele Class A Class B
cted
Per-Sha
re Data
and
Ratios
21.Year 1994C 1994C
ended
Decemb
er 31
22.Net $ 10.000 $ 10.000
asset
value,
beginnin
g of
period
23.Inco
me from
Investm
ent
Operati
ons
24. Ne .064H .072H
t
investm
ent
income
25. Ne (.046) (.078)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
26. Tot .018 (.006)
al from
investm
ent
operatio
ns
27.Less
Distribut
ions
28. Fr (.098) (.084)
om net
investm
ent
income
29.Net $ 9.920 $ 9.910
asset
value,
end of
period
30.Total .17% (.06)%
returnE,F
31.Net $ 10,687 $ 9,379
assets,
end of
period
(000
omitted)
32.Rati 1.35%A 2.10%A
o of
expense
s to
average
net
assets
33.Rati 2.50%A,G 2.50%A,G
o of
expense
s to
average
net
assets
before
expense
reductio
ns
34.Rati 5.80%A 5.06%A
o of net
investm
ent
income
to
average
net
assets
35.Portf 104%A 104%A
olio
turnover
A ANNUALIZED.
B JANUARY 5, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C OCTOBER 31, 1994 (COMMENCEMENT OF SALES OF CLASS A & CLASS B SHARES) TO
DECEMBER 31, 1994.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
G EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
I THE AMOUNT SHOWN REFLECTS CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
GOVERNMENT INVESTMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36.Sele Class A Class B
cted
Per-Sha
re Data
and
Ratios
37.Year 1987B 1988 1989 1990 1991 1992 1993 1994 1994D
s ended
October
31
38.Net $ 10.000 $ 9.200 $ 9.260 $ 9.310 $ 9.150 $ 9.590 $ 9.730 $ 10.140 $ 9.100
asset
value,
beginnin
g of
period
39.Inco
me from
Investm
ent
Operati
ons
40. Ne .614 .769 .773 .735 .700 .666 .567 .515 .144
t
investm
ent
income
41. Ne (.800) .060 .050 (.160) .419 .125 .601 (1.031) (.137)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
42. Tot (.186) .829 .823 .575 1.119 .791 1.168 (.516) .007
al from
investm
ent
operatio
ns
43.Less
Distribut
ions
44. Fr (.614) (.769) (.773) (.735) (.679) (.651) (.558) (.504)H (.157)H
om net
investm
ent
income
45. Fr -- -- -- -- -- -- (.200) (.130)H --
om net
realized
gain
46. In -- -- -- -- -- -- -- (.030) --
excess
of net
realized
gain on
investm
ents
47. Tot (.614) (.769) (.773) (.735) (.679) (.651) (.758) (.664) (.157)
al
distributi
ons
48.Net $ 9.200 $ 9.260 $ 9.310 $ 9.150 $ 9.590 $ 9.730 $ 10.140 $ 8.960 $ 8.950
asset
value,
end of
period
49.Total (1.84)% 9.34% 9.37% 6.48% 12.65% 8.49% 12.53% (5.27)% 0.10%
returnE,F
50.Net $ 4,584 $ 6,590 $ 8,203 $ 9,822 $ 13,058 $ 23,281 $ 69,876 $ 114,453 $ 2,062
assets,
end of
period
(000
omitted)
51.Rati 1.29%A 1.10% 1.10% 1.10% 1.10% 1.10% .68% .74% 1.70%A
o of
expense
s to
average
net
assets
52.Rati 2.36%A 2.25% 2.75% 2.74% 2.46% 1.79% 1.32% 1.47% 2.62%A
o of
expense
s to
average
net
assets
before
expense
reductio
ns
53.Rati 8.12%A 8.30% 8.45% 8.04% 7.47% 6.98% 6.11% 6.18% 5.22%A
o of net
investm
ent
income
to
average
net
assets
54.Portf 32%A 44% 42% 31% 54% 315% 333% 313% 313%
olio
turnover
</TABLE>
LIMITED TERM BOND
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55.Sele Institutional Class A Class B
cted
Per-Sha
re Data
and
Ratios
Years
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992C 1993 1994 1994D
ended
Novembe
r 30
56.Net
$ 9.960 $ 10.55 $ 11.24 $ 10.25 $ 10.18 $ 10.41 $ 10.14 $ 10.55 $ 10.64 $ 11.16 $ 10.96 $ 10.64 $ 11.14 $ 10.43
asset 0 0 0 0 0 0 0 0 0 0 0 0 0
value,
beginnin
g of
period
57.Inco
me from
Investm
ent
Operati
ons
58. Ne
1.053 1.026 .953 .944 .937 .901 .884 .840 .832 .602 .170 .785 .609 .204
t
investm
ent
income
59. Ne
.590 .710 (.770) (.070) .230 (.270) .411 .102 .531 (.833) (.320) .511 (.876) (.178)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
60. Tot
1.643 1.736 .183 .874 1.167 .631 1.295 .942 1.363 (.231) (.150) 1.296 (.267) .026
al from
investm
ent
operatio
ns
61.Less
Distribut
ions
62. Fr
(1.053) (1.026) (.953) (.944) (.937) (.901) (.885) (.852) (.843) (.597) (.170) (.796) (.555) (.187)
om net
investm
ent
income
63. Fr
- -- -- -- -- -- -- -- -- -- (.062) -- -- (.058) (.019)
om
Return
of
Capital
64. Fr
- -- (.020) (.220) -- -- -- -- -- -- -- -- -- -- --
om net
realized
gain
65. Tot
(1.053) (1.046) (1.173) (.944) (.937) (.901) (.885) (.852) (.843) (.659) (.170) (.796) (.613) (.206)
al
distributi
ons
66.Net
$ 10.55 $ 11.24 $ 10.25 $ 10.18 $ 10.41 $ 10.14 $ 10.55 $ 10.64 $ 11.16 $ 10.27 $ 10.64 $ 11.14 $ 10.26 $ 10.25
asset 0 0 0 0 0 0 0 0 0 0 0 0 0 0
value,
end of
period
67.Total
17.40 17.04 1.78% 8.81% 12.03 6.46% 13.35 9.21% 13.17 (2.10) (1.37) 12.50 (2.44) .24%
returnE,F
% % % % % % % % %
68.Net
$ 253,9 $ 418,6 $ 407,2 $ 418,9 $ 426,8 $ 356,5 $ 327,7 $ 160,1 $ 183,7 $ 172,1 $ 2,583 $ 59,18 $ 141,8 $ 3,156
assets,
13 32 28 29 32 64 56 56 90 22 4 66
end of
period
(000
omitted)
69.Rati
.65% .53% .53% .54% .54% .58% .57% .57% .64% .61% .82%A 1.23% 1.02% 1.65%A
o of
expense
s to
average
net
assets
70.Rati
.65% .53% .53% .54% .54% .58% .57% .57% .64% .61% .82%A 1.23% 1.09% 2.41%A
o of
expense
s to
average
net
assets
before
expense
reductio
ns
71.Rati
10.29 9.22% 9.03% 9.16% 9.16% 8.90% 8.59% 7.96% 7.41% 6.45% 7.67%A 6.81% 6.04% 5.42%A
o of net %
investm
ent
income
to
average
net
assets
72.Portf
88%G 59% 92% 48% 87% 59% 60% 7% 59% 68% 7% 59% 68% 68%
olio
turnover
</TABLE>
A ANNUALIZED.
B JANUARY 7, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
D COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
G IN JULY 1985, THE SEC ADOPTED REVISIONS TO EXISTING RULES WITH RESPECT TO
THE CALCULATION OF THE PORTFOLIO TURNOVER RATE. THE REVISED RULES REQUIRE
THE INCLUSION IN THE CALCULATION OF LONG-TERM U.S. GOVERNMENT SECURITIES
WHICH, PRIOR TO THESE REVISIONS, WERE EXCLUDED FROM THE CALCULATION.
H THE AMOUNT SHOWN REFLECTS CERTAIN RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES.
SHORT FIXED-INCOME
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
73.Sele Class A
cted
Per-Sha
re Data
and
Ratios
74.Year 1987B 1988 1989 1990 1991 1992 1993 1994
s ended
October
31
75.Net $ 10.000 $ 10.060 $ 9.940 $ 9.950 $ 9.620 $ 9.870 $ 9.950 $ 10.090
asset
value,
beginnin
g of
period
76.Inco .101 .852 .832 .868 .848 .830 .732 .559
me from
Investm
ent
Operati
ons
Net
investm
ent
income
77. Ne .060 (.120) .010 (.330) .270 .071 .146 (.581)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
78. Tot .161 .732 .842 .538 1.118 .901 .878 (.022)
al from
investm
ent
operatio
ns
79.Less (.101) (.852) (.832) (.868) (.868) (.821) (.738) (.464)
Distribut
ions
From
net
investm
ent
income
80. In -- -- -- -- -- -- -- (.044)
excess
of net
investm
ent
income
81. Re -- -- -- -- -- -- -- (.080)
turn of
Capital
82. Tot (.101) (.852) (.832) (.868) (.868) (.821) (.738) (.588)
al
Distribut
ions
83.Net $ 10.060 $ 9.940 $ 9.950 $ 9.620 $ 9.870 $ 9.950 $ 10.090 $ 9.480
asset
value,
end of
period
84.Total 1.61% 7.56% 8.89% 5.59% 12.19% 9.44% 9.13% (.22)%
returnD,E
85.Net $ 3,252 $ 13,433 $ 12,394 $ 13,062 $ 25,244 $ 170,55 $ 654,20 $ 787,92
assets, 8 2 6
end of
period
(000
omitted)
86.Rati .90%A .90% .90% .90% .90% .90% .95% .97%
o of
expense
s to
average
net
assets
87.Rati 2.15%A,F 1.84% 2.22% 1.90% 1.74% 1.03% .95% .97%
o of
expense
s to
average
net
assets
before
expense
reductio
ns
88.Rati 7.65%A 8.39% 8.45% 8.86% 8.50% 7.59% 6.77% 5.91%
o of net
investm
ent
income
to
average
net
assets
89.Portf 119%A 178% 157% 144% 127% 57% 58% 108%
olio
turnover
rate
</TABLE>
HIGH INCOME MUNICIPAL
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90.Sele Class A Class B
cted
Per-Sha
re Data
and
Ratios
91.Year 1987B 1988 1989 1990 1991 1992 1993 1994 1994C
s ended
October
31
92.Net $ 10.000 $ 9.850 $ 10.460 $ 10.820 $ 10.870 $ 11.410 $ 11.650 $ 12.720 $ 11.610
asset
value,
beginnin
g of
period
93.Inco
me from
Investm
ent
Operati
ons
94. Ne .092 .750 .800 .811 .803 .774 .710 .689 .188
t
investm
ent
income
95. Ne (.150) .610 .410 .150 .660 .250 1.100 (1.430) (.400)
t
realized
and
unrealiz
ed gain
(loss)
on
investm
ents
96. Tot (.058) 1.360 1.210 .961 1.463 1.024 1.810 (.741) (.212)
al from
investm
ent
operatio
ns
97.Less
Distribut
ions
98. Fr (.092) (.750) (.800) (.811) (.803) (.774) (.710) (.689) (.188)
om net
investm
ent
income
99. Fr -- -- (.050) (.100) (.120) (.010) (.030) (.060) --
om net
realized
gain
100. In -- -- -- -- -- -- -- (.010) --
excess
of net
realized
gain
101. Tot (.092) (.750) (.850) (.911) (.923) (.784) (.740) (.759) (.188)
al
distributi
ons
102.Net $ 9.850 $ 10.460 $ 10.820 $ 10.870 $ 11.410 $ 11.650 $ 12.720 $ 11.220 $ 11.210
asset
value,
end of
period
103.Tot (.58)% 14.22% 12.05% 9.28% 14.02% 9.21% 15.95% (6.03)% (1.86)%
al
returnD,E
104.Net $ 1,275 $ 3,290 $ 6,669 $ 22,702 $ 67,135 $ 156,65 $ 497,57 $ 544,422 $ 9,968
assets, 9 5
end of
period
(000
omitted)
105.Rat .80%A .89% .90% .90% .90% .90% .92% .89% 2.09%A
io of
expense
s to
average
net
assets
106.Rat 2.25%A 2.25%F 2.75%F 2.09% 1.24% .96% .92% .89% 2.09%A
io of
expense
s to
average
net
assets
before
expense
reductio
ns
107.Rat 7.24%A 7.33% 7.60% 7.37% 7.08% 6.59% 5.59% 5.78% 4.58%A
io of net
investm
ent
income
to
average
net
assets
108.Por -- 19% 27% 11% 10% 13% 27% 38% 38%
tfolio
turnover
</TABLE>
A ANNUALIZED.
B SEPTEMBER 16, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
C COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
D TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
F EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
LIMITED TERM TAX-EXEMPT
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
109.Sel Institutional Class A Class B
ected Class
Per-Sha
re Data
and
Ratios
Years
1985B 1986 1987 1988 1989 1990 1991 1992 1993 1994 1992D 1993 1994 1994E
ended
Novembe
r 30
110.Net
$ 10.00 $ 10.28 $ 10.99 $ 10.38 $ 10.52 $ 10.61 $ 10.64 $ 10.80 $ 11.08 $ 10.460 $ 11.01 $ 11.08 $ 10.460 $ 9.890
asset
0 0 0 0 0 0 0 0 0 0 0
value,
beginnin
g of
period
111.Inc
ome
from
Investm
ent
Operati
ons
112. Ne
.130 .671 .641 .650 .674 .689 .682 .666 .536 .481 .131 .508 .455 .155
t
investm
ent
income
113. Ne
.280 .760 (.540) .140 .090 .030 .160 .280 .260 (1.030) .070 .260 (1.040) (.490)
t
realized
and
unrealiz
ed
gain
(loss)
on
investm
ents
114. Tot
.410 1.431 .101 .790 .764 .719 .842 .946 .796 (.549) .201 .768 (.585) (.335)
al from
investm
ent
operatio
ns
115.Les
s
Distribut
ions
116. Fr
(.130) (.671) (.641) (.650) (.674) (.689) (.682) (.666) (.536) (.481) (.131) (.508) (.455) (.155)
om net
investm
ent
income
117. Fr
- -- (.050) (.070) -- -- -- -- -- (.880) -- -- (.880) -- --
om net
realized
gain
118. In
- -- -- -- -- -- -- -- -- -- (.020) -- -- (.020) --
excess
of net
realized
gain
119. Tot
(.130) (.721) (.711) (.650) (.674) (.689) (.682) (.666) (1.416) (.501) (.131) (1.388) (.475) (.155)
al
distributi
ons
120.Net
$ 10.28 $ 10.99 $ 10.38 $ 10.52 $ 10.61 $ 10.64 $ 10.80 $ 11.08 $ 10.46 $ 9.410 $ 11.08 $ 10.46 $ 9.400 $ 9.400
asset 0 0 0 0 0 0 0 0 0 0 0
value,
end of
period
121.Tot
4.12% 14.39% .97% 7.77% 7.50% 7.04% 8.15% 9.01% 8.01% (5.43)% 1.37% 7.72% (5.78)% (3.44)
al
returnF,G
122.Net
$ 94,39 $ 161,0 $ 162,8 $ 132,4 $ 121,4 $ 111,50 $ 100,2 $ 28,42 $ 15,07 $ 11,702 $ 1,752 $ 39,80 $ 57,382 $ 1,682
assets,
1 45 57 43 18 6 94 8 6 0
end of
period
(000
omitted)
123.Rat
.69%A .58% .59% .63% .65% .62% .61% .66% .65% .65% 1.04%A .90% .90% 1.65%A
io of
expense
s to
average
net
assets
124.Rat
.69%A .58% .59% .63% .65% .62% .61% .67% .83% .76% 1.06%A 1.36% 1.04% 2.36%A
io of
expense
s to
average
net
assets
before
expense
reductio
ns
125.Rat
6.33%A 6.29% 6.01% 6.20% 6.45% 6.53% 6.40% 6.05% 5.01% 4.75% 5.65%A 4.76% 4.49% 3.74%A
io of net
investm
ent
income
to
average
net
assets
126.Por
103%A 34% 43% 24% 31% 32% 20% 36% 46% 53% 36% 46% 53% 53%
tfolio
turnover
</TABLE>
SHORT-INTERMEDIATE TAX-EXEMPT
<TABLE>
<CAPTION>
<S> <C>
127.Selected Per-Share Data and Ratios Class A
128.Year ended November 30 1994C
129.Net asset value, beginning of period $ 10.000
130.Income from Investment Operations .259
Net interest income
131. Net realized and unrealized gain (loss) on investments (.230)
132. Total from investment operations .029
133.Less Distributions (.259)
From net interest income
134.Net asset value, end of period $ 9.770
135.Total returnF,G .27%
136.Net assets, end of period (000 omitted) $ 16,563
137.Ratio of expenses to average net assets .75%A,H
138.Ratio of expenses to average net assets before expense reductions 1.54%A,H
139.Ratio of net interest income to average net assets 3.74%A
140.Portfolio turnover rate 111%A
</TABLE>
A ANNUALIZED.
B SEPTEMBER 19, 1985 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1985.
C MARCH 16, 1994 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1994.
D COMMENCEMENT OF SALE OF CLASS A SHARES SEPTEMBER 10, 1992.
E COMMENCEMENT OF SALE OF CLASS B SHARES JUNE 30, 1994.
F TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
H FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES
BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO .75% OF AVERAGE NET
ASSETS.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
Average annual total returns covering periods of less than one year assume
that performance will remain constant for the rest of the year.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders. This difference may
be significant for a fund whose investments are denominated in foreign
currencies.
In calculating yield , a fund may from time to time use a security's
coupon rate instead of its yield to maturity in order to reflect the risk
premium on that security. This practice will have the effect of reducing a
fund's yield.
A TAX-EQUIVALENT YIELD s hows what an investor would have to earn
before taxes to equal a tax-free yield.
Each class of a growth or growth and income fund may quote its adjusted NAV
including all distributions paid. This value may be averaged over specified
periods and may be used to calculate a moving average.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please contact your
Investment Professional, or call 1-800-843-3001.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Equity Portfolio Growth is a
diversified fund of Fidelity Advisor Series I, a Massachusetts business
trust organized on June 24, 1983. Growth Opportunities, Income & Growth,
High Yield, Government Investment and Short Fixed-Income are diversified
funds of Fidelity Advisor Series II, a Massachusetts business trust
organized on April 24, 1986. Equity Income is a diversified fund of
Fidelity Advisor Series III, a Massachusetts business trust organized on
May 17, 1982. Limited Term Bond is a diversified fund of Fidelity Advisor
Series IV, a Massachusetts business trust organized on May 6, 1983. Global
Resources and High Income Municipal are diversified funds of Fidelity
Advisor Series V, a Massachusetts business trust organized on April 24,
1986. Limited Term Tax-Exempt is a diversified fund and Short-Intermediate
Tax-Exempt is a non-diversified fund of Fidelity Advisor Series VI, a
Massachusetts business trust organized on June 1, 1983. Overseas is a
diversified fund of Fidelity Advisor Series VII, a Massachusetts business
trust organized on March 21, 1980. Emerging Markets Income and Strategic
Income are non-diversified funds and Strategic Opportunities is a
diversified fund of Fidelity Advisor Series VIII, a Massachusetts business
trust organized on September 23, 1983. Each trust is an open-end management
investment company. There is a remote possibility that one fund might
become liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. For shareholders
of Overseas, Equity Portfolio Growth, Strategic Opportunities, Emerging
Markets Income and Strategic Income, you are entitled to one vote for each
share you own. For shareholders of Global Resources, Growth Opportunities,
Equity Income, Income & Growth, High Yield, Government Investment, Limited
Term Bond, Short Fixed-Income, High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt, the
number of votes you are entitled to is based upon the dollar value of your
investment.
Separate votes are taken by each class of shares, fund, or trust, if
a matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which chooses their investments and
handles their business affairs. FMR chooses the investments for each
fund (except Government Investment, High Income Municipal, Limited Term
Tax-Exempt and Short-Intermediate Tax-Exempt) with the assistance of
foreign affiliates.
As of April 30, 1995, FMR advised funds having approximately
20 million shareholder accounts with a total value of more than
$ 285 billion.
Affiliates assist FMR with foreign securities: Fidelity Management &
Research (U.K.) Inc. (FMR U.K.), in London, England; Fidelity Management &
Research Far East Inc. (FMR Far East), in Tokyo, Japan; Fidelity
International Investment Advisors (FIIA), in Pembroke, Bermuda; Fidelity
International Investment Advisors (U.K.) Limited (FIIAL U.K.), in Kent,
England; and Fidelity Investment Japan Ltd. (FIJ), in Tokyo, Japan.
John H. Carlson is manager of Advisor Emerging Markets Income, which he
has managed since joining Fidelity in June 1995. Mr. Carlson also manages
New Markets Income. Previously, he was executive director of Emerging
Markets at Lehman Brothers. From 1990 to 1992, Mr. Carlson was executive
vice president for Daiwa Securities America.
Bettina E. Doulton has been manager of Advisor Equity Income since August
1993, VIP Equity-Income since July 1993 and Value Fund since March
1995 . Previously, she managed Select Automotive and assisted on
Magellan(registered trademark). Ms. Doulton also served as an analyst
following the domestic and European automotive and tire manufacturing
industry as well as the gaming and lodging industry. She joined Fidelity in
1986.
Margaret L. Eagle is vice president and manager of Advisor High
Yield , which she has managed since it began in January 1987.
Previously, she managed Spartan High Income and High Income (now
Capital & Income). She also managed the bond portion of Puritan(registered
trademark). Ms. Eagle joined Fidelity in 1980.
Daniel R. Frank is vice president and manager of Advisor Strategic
Opportunities , which he has managed since its inception in December
1983. Previously he was an assistant to Peter Lynch on Magellan(registered
trademark). Mr. Frank joined Fidelity in 1979.
Michael S. Gray is vice president and manager of Advisor Limited Term
Bond , which he has managed since September 1987. Mr. Gray also
manages Investment Grade Bond, Spartan Investment Grade Bond, and
Intermediate Bond. Mr. Gray joined Fidelity in 1982.
Robert E. Haber is vice president and manager of Advisor Income &
Growth , which he has managed since January 1987. Mr. Haber also
manages Balanced and co-manages Global Balanced. Previously, he managed
Convertible Securities. Mr. Haber joined Fidelity in 1985.
John R. Hickling is vice president and manager of Advisor
Overseas , which he has managed since February 1993. Mr. Hickling
also manages Overseas and VIP: Overseas. Previously he managed Emerging
Markets, Europe, Pacific Basin, Japan, and International Growth & Income.
Mr. Hickling joined Fidelity in 1982.
Robert Ives is manager of Advisor Government Investment, which he has
managed since February 1995. Mr. Ives also manages Spartan Government
Income and Government Securities. Previously, he managed Ginnie Mae ,
Spartan Ginnie Mae , and Mortgage Securities . Mr. Ives joined
Fidelity in 1991, after receiving an M.B.A. from the University of Chicago.
Malcolm W. MacNaught is vice president and manager of Advisor Global
Resources , which he has managed since December 1987. Mr. MacNaught
also manages Select Precious Metals and Minerals and Select American Gold.
Mr. MacNaught joined Fidelity in 1968.
Charles Morrison is manager of Advisor Short Fixed-Income , which he
has managed since February 1995. He also manages Spartan Short-Term
Income and Short-Term Bond. Mr. Morrison is vice president of
Fidelity Management Trust Company. He joined Fidelity in 1987.
David Murphy is manager of Advisor Limited Term Tax-Exempt and Advisor
Short-Intermediate Tax-Exempt. Mr. Murphy also manages Limited Term
Municipal, Spartan Intermediate Municipal, Spartan New Jersey Municipal
High Yield, Spartan New York Intermediate Municipal, and Spartan
Short-Intermediate Municipal. Previously, he managed Spartan California
Intermediate Municipal. Mr. Murphy joined Fidelity in 1989.
Robert E. Stansky is vice president and manager of Advisor Equity Portfolio
Growth , which he has managed since April 1987. Mr. Stansky also
manages Growth Company. Previously, he managed Emerging Growth and Select
Defense and Aerospace. Mr. Stansky joined Fidelity in 1983.
Donald G. Taylor is manager of Advisor Strategic Income which he has
managed since October 1994. Mr. Taylor also manages VIP II: Investment
Grade Bond. In addition, he manages Income Plus for Fidelity International.
Previously, he managed Short-Term Bond, Spartan Short-Term Bond, Advisor
Short Fixed-Income, Corporate Trust, Qualified Dividend, and Utilities
Income. Mr. Taylor joined Fidelity in 1986.
George A. Vanderheiden is vice president and manager of Advisor Growth
Opportunities , which he has managed since November 1987. Mr.
Vanderheiden also manages Destiny I and Destiny II. He is a managing
director of FMR Corp., and l eader of the g rowth
g roup . Mr. Vanderheiden joined Fidelity in 1971.
Guy E. Wickwire is vice president and manager of Advisor High Income
Municipal , which he has managed since July 1994. Mr.
Wickwire also manages Massachusetts Tax-Free High Yield and Insured
Tax-Free. Previously, he managed High Yield Tax-Free. Mr. Wickwire
joined Fidelity in 1981.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services. Fidelity
Investments Institutional Operations Company (FIIOC) performs transfer
agent servicing functions for the Institutional Class shares of each
fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Through ownership of voting common stock, members of the Edward C.
Johnson 3d family form a controlling group with respect to FMR Corp.
Changes may occur in the Johnson family group, through death or disability,
which would result in changes in each individual family member's holding of
stock. Such changes could result in one or more family members becoming
holders of over 25% of the stock. FMR Corp. has received an opinion of
counsel that changes in the composition of the Johnson family group under
these circumstances would not result in the termination of the funds'
management or distribution contracts and, accordingly, would not require a
shareholder vote to continue operation under those contracts.
Fidelity International Limited (FIL), is the parent company of FIIA, FIJ,
and FIIAL U.K. The Johnson family group also owns, directly or indirectly,
more than 25% of the voting common stock of FIL.
UMB Bank, n.a. (UMB) is the transfer agent for High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt , although it employs FIIOC to perform these functions for
Institutional Class shares of each fund. UMB is located at 1010 Grand
Avenue, Kansas City, Missouri 64106.
A broker-dealer may use a portion of the commissions paid by Overseas,
Equity Portfolio Growth, Global Resources, Growth Opportunities, Strategic
Opportunities, Equity Income, Income & Growth , and High Yield to
reduce custodian or transfer agent fees for those funds. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
a fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The value of each fund's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies, and general market and economic
conditions.
The value of bonds fluctuates based on changes in interest rates, market
conditions, other economic and political news, and on their quality and
maturity . In general, bond prices rise when interest rates fall, and
vice versa. This effect is usually more pronounced for longer-term
securities. Lower-quality securities offer higher yields, but also carry
more ri sk.
A fund ' s focus on international investing involves increased
or additional risks from those above. Investments in foreign securities
may involve risks in addition to those of U.S. investments, including
increased political and economic risks , as well as
exposure to currency fluctuations . This is especially true for emerging
markets. B ecause many of the fund s ' investments are
denominated in foreign currencies, changes in the value of foreign
currencies can significantly affect a fund's share price. FMR may use a
variety of investment techniques to either increase or decrease a fund's
investment exposure to any currency.
FMR may use various investment techniques to hedge a portion of the
funds ' risks, but there is no guarantee that these strategies will
work as FMR intends. When you sell your shares, they may be worth more or
less than what you paid for them.
If you are subject to the federal alternative minimum tax, you should note
that High Income Municipal may invest up to 100% of its assets and each of
Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt may invest up to
20% of its assets in municipal securities issued to finance private
activities. The interest from these investments is a tax-preference item
for purposes of the tax.
OVERSEAS FUND seeks growth of capital primarily through investments in
foreign securities.
The fund defines foreign securities as securities of issuers whose
principal activities are outside of the United States. The fund currently
intends to invest at least 65% of its total assets in securities of issuers
from at least three different countries outside of North America (the
United States, Canada, Mexico and Central America). There is no limit on
investments in any one region, country, or currency, although the fund
normally invests in at least three different countries. The fund expects to
invest most of its assets in securities of issuers located in developed
countries in these general geographic areas: the Americas (other than the
United States), the Far East and Pacific Basin, and Western Europe.
The fund may invest in many types of issuers, including companies and other
business organizations as well as governments and their agencies. The fund
expects that equity securities (including shares of closed-end investment
companies and depositary receipts) will account for the majority of its
investments. Although the majority of the fund's investments are expected
to be in equity securities, the fund may also purchase debt securities,
including lower-quality, higher yielding securities. FMR will not emphasize
income in choosing investments unless FMR believes the income will
contribute to the securities' growth potential. FMR may also invest a
portion of the fund's assets in high-quality, short-term debt securities,
bank deposits and money market instruments (including repurchase
agreements) denominated in U.S. dollars or foreign currencies.
FMR determines where an issuer is located by looking at such factors as its
country of organization, the primary trading market for its securities, and
the location of its assets, personnel, sales, and earnings. When allocating
the fund's investments among countries and regions, FMR considers such
factors as the potential for economic growth, expected levels of inflation,
governmental policies and the outlook for currency relationships. Although
the fund may invest significantly in the United States, the fund currently
intends to be as fully invested in non-U.S. issuers as is practicable in
light of the fund's cash flow and cash needs.
EQUITY PORTFOLIO GROWTH seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics .
The fund, under normal conditions, will invest at least 65% of its total
assets in common and preferred stock. The fund looks for domestic and
foreign companies with above-average growth characteristics compared to the
average of the companies included in the S&P 500. Growth may be measured by
factors such as earnings or gross sales. Companies with strong growth
potential often have new products, technologies, distribution channels, or
other opportunities. As a general rule, these companies may include
smaller, less well-known companies, and companies whose stocks have higher
than average price/earnings (P/E) ratios. The market prices of these stocks
may be particularly sensitive to economic, market, or company news. FMR may
also pursue growth in larger or revitalized companies or companies that
hold a strong position in the market. These growth characteristics may be
found in mature or declining industries.
GLOBAL RESOURCES FUND seeks long-term growth of capital and protection of
the purchasing power of shareholders' capital by investing primarily in
securities of foreign and domestic companies that own or develop natural
resources, or supply goods and services to such companies, or in physical
commodities.
The fund, under normal conditions, will invest at least 65% of its total
assets in securities of foreign and domestic companies that own or develop
natural resources, or supply goods and services to such companies, or in
physical commodities. FMR will seek securities whose prices directly
reflect positive changes in the value of an underlying natural resource or
whose issuers will benefit from particular phases in the overall economic
cycle. Accordingly, the fund may shift its emphasis from one natural
resource industry to another depending upon prevailing trends or
developments. The fund may also invest in securities of companies in other
industries, and in corporate and governmental debt securities of all types.
The fund expects to invest a majority of its assets in the securities of
companies that have their principal business activities in at least three
different countries (including the United States).
A company will be deemed to have substantial ownership of, or activities in
natural resources if, at the time those company's securities are acquired,
at least 50% of the company's assets are involved, either directly or
through subsidiaries, in exploring, mining, refining, processing,
transporting, fabricating, dealing in, or owning natural resources. Natural
resources include precious metals (e.g., gold, platinum and silver),
ferrous and nonferrous metals (e.g., iron, aluminum and copper), strategic
metals (e.g., uranium and titanium), hydrocarbons (e.g., coal, oil
and natural gases), chemicals, forest products, real estate, food products
and other basic commodities.
Although the fund is authorized to invest up to 50% of its assets in
physical commodities, it currently intends to invest no more than 25% of
its total assets in them, and intends to limit its physical commodity
investments to readily marketable precious metals. Precious metals, at
times, have been subject to substantial price fluctuations over short
periods of time and may be affected by unpredictable international monetary
and political policies such as currency devaluations or revaluations,
economic and social conditions within a country, trade imbalances, or trade
or currency restrictions between countries.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common stocks.
The fund, under normal conditions, will invest at least 65% of its total
assets in securities of companies that FMR believes have long-term growth
potential. Although the fund invests primarily in common stock and
securities convertible into common stock, it has the ability to purchase
other securities, such as preferred stock and bonds, that may produce
capital growth. The fund may invest in foreign securities without
limitation.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a "special
situation."
Under normal conditions, the fund will invest at least 65% of its total
assets in companies involving a special situation. The term "special
situation" refers to FMR's identification of an unusual, and possibly
non-repetitive, development taking place in a company or a group of
companies in an industry.
A special situation may involve one or more of the following
characteristics:
(small solid bullet) A technological advance or discovery, the
offering of a new or unique product or service, or changes in consumer
demand or consumption forecasts.
(small solid bullet) Changes in the competitive outlook or growth
potential of an industry or a company within an industry, including changes
in the scope or nature of foreign competition or the development of an
emerging industry.
(small solid bullet) New or changed management, or material changes
in management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences
abroad, including changes in foreign or domestic import and tax laws or
other regulations.
(small solid bullet) Other events, including natural disasters, favorable
litigation settlements, or a major change in demographic patterns.
"Special situations" often involve breaks with past experience. They can be
relatively aggressive investments. In seeking capital appreciation,
the fund also may invest in securities of companies not involving a special
situation, but which are companies with valuable fixed assets and whose
securities are believed by FMR to be undervalued in relation to the
companies' assets, earnings, or growth potential. FMR intends to invest
primarily in common stocks and securities that are convertible into common
stocks; however, it also may invest in debt securities of all types and
quality if FMR believes that investing in these securities will result in
capital appreciation. The fund may invest up to 30% of its assets in
foreign investments.
EQUITY INCOME FUND seeks a yield from dividend and interest income which
exceeds the composite dividend yield on securities comprising the S&P 500.
In addition, consistent with the primary objective of obtaining dividend
and interest income, the fund will consider the potential for achieving
capital appreciation.
Under normal conditions, the fund will invest at least 65% of its
total assets in income-producing equity securities. For purposes of this
policy, equity securities are defined as common and preferred stocks. The
balance of the fund's assets will tend to be invested in debt securities, a
high percentage of which are expected to be convertible into common stocks.
The fund does not intend to invest in securities of issuers without proven
earnings and/or credit histories. Because the fund invests for income, as
well as capital appreciation, investors should not expect capital
appreciation comparable with funds which seek only capital appreciation.
The yield on the fund's assets generally will increase or decrease from
year to year in accordance with market conditions and in relation to the
changes in yields of the stocks included in the S&P 500.
INCOME & GROWTH FUND seeks both income and growth of capital by investing
in a diversified portfolio of equity and fixed-income securities with
income, growth of income and capital appreciation potential.
The fund invests in equity securities, convertible securities, common and
preferred stocks, and fixed-income securities that provide income or
opportunities for capital growth. The fund may buy securities that are not
currently paying income but offer prospects for future income. The fund may
invest in securities of foreign issuers. In selecting investments for the
fund, FMR will consider such factors as the issuer's financial strength,
its outlook for increased dividend or interest payments, and the potential
for capital gains.
EMERGING MARKETS INCOME FUND seeks a high level of current income by
investing primarily in debt securities and other instruments of issuers in
emerging markets. As a secondary objective, the fund seeks capital
appreciation.
The fund, under normal conditions, will invest at least 65% of its total
assets in debt securities and other instruments of issuers in emerging
markets. Countries with emerging markets include countries (i) that have an
emerging stock market, as defined by the International Finance Corporation,
(ii) with low-to middle-income economies, according to the World Bank, or
(iii) that are listed in World Bank publications as "developing."
The fund emphasizes countries with relatively low gross national product
per capita compared to the world's major economies, and with the potential
for rapid economic growth. FMR expects that emerging market opportunities
will be found mainly in Latin America, Asia, Africa, and emerging European
nations. FMR determines where an issuer is located by looking at such
factors as its country of organization, the primary trading market for its
securities, and the location of its assets, personnel, sales, and earnings.
There is no limit on investments in any one region, country, or currency,
although the fund normally invests in at least three different countries.
The fund may also invest a portion of its assets in common and preferred
stocks of emerging markets issuers, debt securities of non-emerging market
foreign issuers, and lower-quality debt securities of U.S. issuers. FMR
does not currently anticipate that these investments will exceed
approximately 20% of the fund's total assets. The fund may invest in
securities of any maturity. In addition, for cash management purposes,
the fund will ordinarily invest a portion of its assets in high-quality,
short-term debt securities and money market instruments, including
repurchase agreements and bank deposits denominated in U.S. or foreign
currencies.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible securities and
preferred stocks.
The fund, under normal conditions, will invest at least 65% of its total
assets in income producing debt securities and preferred stocks, including
convertible and zero coupon securities. The fund may also invest in
securities issued or guaranteed by the U.S. Government, any state or any of
their respective subdivisions, agencies or instrumentalities, and
securities of foreign issuers, including securities of foreign governments.
The fund may invest up to 35% of its total assets in equity securities,
including common stocks, warrants and rights.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation.
The fund invests primarily in fixed-income securities, allocated among
three broad categories: (1) U.S. government securities, including mortgage
securities and securities issued by government agencies; (2) corporate
securities, including lower-quality, high-yield securities as well as
investment-grade corporate bonds; and (3) foreign corporate and
governmental securities, including emerging market instruments and
securities of issuers in more developed markets. Although FMR expects that
the fund will normally have investments in each of the three asset
categories, there is no limit on the amount that the fund may invest in any
one type of fixed-income securities. Diversification, when successful, can
mean higher returns with decreased volatility. By allocating its
investments across different types of fixed-income securities, the fund
attempts to moderate the significant investment risks of each category
through diversification. However, each category may decline at the same
time. FMR regularly reviews the fund's allocation and makes changes
gradually over time to favor investments that it believes provide the most
favorable outlook for achieving the fund's objective.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
The fund, under normal circumstances, will invest at least 65% of its total
assets in government securities. The fund considers "government securities"
to include those which are subject to repurchase agreements. The fund
invests primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities, including U.S.
Treasury bonds, notes and bills, Government National Mortgage Association
mortgage-backed pass-through certificates (Ginnie Maes) and mortgage-backed
securities issued by the Federal National Mortgage Association (Fannie
Maes) or the Federal Home Loan Mortgage Corporation (Freddie Macs). These
securities may or may not be fully backed by the U.S. Government. In
seeking current income, the fund also may consider the potential for
capital gain.
LIMITED TERM BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed - income obligations.
The fund invests primarily in fixed-income obligations of all types. The
fund may invest in domestic and foreign investment grade securities. When
consistent with its primary objective, the fund may also seek capital
appreciation.
Under normal conditions, the fund maintains a dollar-weighted average
maturity of 10 years or less, but individual securities may be of any
maturity. In determining a security's maturity for purposes of calculating
the fund's average maturity, estimates of the expected time for its
principal to be repaid may be used. This can be substantially shorter than
its stated final maturity.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current income,
consistent with the preservation of capital, by investing primarily in a
broad range of investment-grade fixed-income securities. Where appropriate
the fund will take advantage of opportunities to realize capital
appreciation.
Under normal conditions, at least 65% of the fund's total assets will be
invested in fixed-income securities of all types, which may include
convertible and zero coupon securities. The fund may invest a portion of
its assets in securities issued by foreign companies and foreign
governments.
Under normal conditions, the fund maintains a dollar-weighted average
maturity of three years or less, but individual securities may be of any
maturity. In determining a security's maturity for purposes of calculating
the fund's average maturity, estimates of the expected time for its
principal to be repaid may be used. This can be substantially shorter than
its stated final maturity.
HIGH INCOME MUNICIPAL FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax.
The fund normally invests so that at least 80% of its net assets is
invested in municipal obligations whose interest is free from federal
income tax. The fund may invest in medium- and lower-quality municipal
obligations. The fund may invest more than 25% of its total assets
in securities whose revenue sources are from similar types of projects
(e.g., education, electric utilities, health care, housing, transportation,
or water, sewer and gas utilities) or whose issuers share the same
geographic location. The fund may invest up to 100% of its assets in
municipal obligations subject to the federal alternative minimum tax.
The fund may purchase long-term municipals with maturities of 20 years
or more, which generally produce higher yields than short-term municipals.
The fund also may purchase short-term municipal obligations in order to
provide for short-term capital needs. The average maturity of the fund is
currently expected to be greater than 20 years, but individual securities
may be of any maturity.
LIMITED TERM TAX-EXEMPT FUND seeks the highest level of income exempt from
federal taxes that can be obtained consistent with the preservation of
capital.
The fund normally will invest so that 80% or more of its net assets will be
invested in securities whose interest is free from federal tax. The fund
invests in municipal obligations rated investment grade or higher. The fund
may also invest more than 25% of its total assets in securities
whose revenue sources are from similar types of projects (e.g., education,
electric utilities, health care, housing, transportation or water, sewer,
and gas utilities) or whose issuers share the same geographic location. The
fund may, under normal circumstances, invest up to 20% of its net assets in
obligations subject to the federal alternative minimum tax.
Under normal conditions, at least 80% of the fund's net assets will be
invested in obligations having remaining maturities of 15 years or less,
but individual securities may be of any maturity. Under normal conditions,
the fund maintains a dollar-weighted average maturity of 10 years or less,
but individual securities may be of any maturity. In determining a
security's maturity for purposes of calculating the fund's average
maturity, estimates of the expected time for its principal to be repaid may
be used. This can be substantially shorter than its stated final
maturity.
SHORT - INTERMEDIATE TAX-EXEMPT FUND seeks as high a level of current
income, exempt from federal income tax, as is consistent with preservation
of capital.
The fund invests primarily in municipal securities. The fund normally will
invest so that 80% or more of its net assets will be invested in securities
whose interest is free from federal income tax. The fund may, under normal
circumstances, invest up to 20% of its net assets in municipal securities
subject to the federal alternative minimum tax. The fund may invest any
portion of its assets in industrial revenue bonds (IRBs) backed by private
issuers, and may invest up to 25% of its total assets in IRBs related to a
single industry. The fund may also invest 25% or more of its total assets
in securities whose revenue sources are from similar types of projects
(e.g., education, electric utilities, health care, housing, transportation,
or water, sewer and gas utilities) or whose issuers share the same
geographic location.
Under normal conditions, the fund maintains a dollar-weighted average
maturity of between two and four years, but individual securities may be of
any maturity. In determining a security's maturity for purposes of
calculating the fund's average maturity, estimates of the expected time for
its principal to be repaid may be used. This can be substantially shorter
than its stated final maturity.
TEMPORARY DEFENSIVE INVESTMENT POLICIES. FMR normally invests each fund's
assets according to its investment strategy.
Overseas, Equity Portfolio Growth, Global Resources, Growth Opportunities,
Strategic Opportunities, Equity Income, High Yield, and Income &
Growth each reserve the right to invest without limitation in preferred
stocks and investment-grade debt instruments for temporary, defensive
purposes.
Emerging Markets Income, Strategic Income, Government Investment, Limited
Term Bond and Short Fixed-Income each reserve the right to invest
without limitation in investment-grade money market or short-term debt
instruments for temporary, defensive purposes.
High Income Municipal, Limited Term Tax-Exempt, and Short-Intermediate
Tax-Exempt each do not expect to invest in federally taxable obligations.
Each, however, reserves the right to invest without limitation in
short-term instruments, to hold a substantial amount of uninvested cash, or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may employ in
pursuit of a fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. A complete listing of each fund's policies
and limitations and more detailed information about each fund's investments
is contained in the funds SAI. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help a fund
achieve its goal. Current holdings and recent investment strategies are
described in a fund's financial reports, which are sent to shareholders
twice a year. For a free SAI or financial report, call your Investment
Professional.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors.
RESTRICTIONS: With respect to 75% of its total assets, each of Overseas,
Global Resources, Growth Opportunities, Equity Income, Income & Growth,
High Yield, Government Investment, Limited Term Bond, Short Fixed-Income,
High Income Municipal and Limited Term Tax-Exempt may not purchase more
than 10% of the outstanding voting securities of any issuer.
With respect to 100% of its assets , each of Equity Portfolio Growth
and Strategic Opportunities may not purchase more than 10% of the
outstanding voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa.
Debt securities, loans, and other direct debt have varying degrees of
quality and varying levels of sensitivity to changes in interest rates.
Longer-term bonds are generally more sensitive to interest rate changes
than short-term bonds.
Taxable lower-quality debt securities (sometimes called "junk bonds"), and
tax-exempt lower-quality debt securities (sometimes called "municipal
junk bonds") often have speculative characteristics and involve
greater risk of default or price changes due to changes in the issuer's
creditworthiness, or they may already be in default. The market prices of
these securities may fluctuate more than higher-quality securities and may
decline significantly in periods of general or regional economic
difficulty.
The table on the following page provides a summary of ratings
assigned to debt holdings (not including money market instruments) in the
funds' portfolios. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1994, and are presented as a percentage of
total security investments. These percentages are historical and do not
necessarily indicate a fund's current or future debt holdings.
FISCAL 1994 DEBT HOLDINGS, BY RATING
(AS A % OF INVESTMENTS IN EACH RATING CATEGORY) (AS A % OF
INVESTMENTS IN EACH RATING CATEGORY)
INVESTMENT GRADE LOWER QUALITY
STANDARD & POOR'S CORPORATION AAA, AA, A BBB BB B CCC CC,C D NR
EQUITY FUNDS:
Overseas .43 -- -- -- -- -- -- .61
Equity Portfolio Growth -- -- .01 -- -- -- -- .01
Global Resources -- -- -- -- -- -- -- --
Growth Opportunities 6.38 -- -- -- -- -- -- .17
Strategic Opportunities 15.67 -- .28 .33 -- .04 .76 1.29
Equity Income 2.03 .50 .38 2.17 .03 -- -- .50
Income & Growth 19.17 2.93 4.39 4.28 .97 -- -- 11.79
TAXABLE/INCOME
Emerging Markets Income -- -- 9.37 5.32 -- -- -- 54.79
High Yield .79 .26 8.02 32.56 4.79 .61 4.69 29.11
Strategic Income 31.24 .69 2.84 20.62 -- -- -- 10.73
Government Investment 89.71 -- -- -- -- -- -- .56
Limited Term Bond 69.85 .12 -- -- -- -- -- .09
Short Fixed-Income 28.28 21.14 6.40 .69 -- -- -- 16.94
TAX-EXEMPT/MUNICIPAL FUNDS:
High Income Municipal 32.93 22.73 6.31 2.32 -- -- -- 31.76
Limited Term Tax-Exempt 78.53 -- -- -- -- -- -- 10.16
Short - Intermediate Tax-Exempt 64.65 -- 9.86 -- -- -- -- 10.96
MOODY'S INVESTOR SERVICE, INC.
Aaa, Aa, A Baa Ba B Caa Ca C --
EQUITY FUNDS:
Overseas .49 -- -- .50 -- -- -- .05
Equity Portfolio Growth -- -- .02 -- -- -- -- --
Global Resources -- -- -- -- -- -- -- --
Growth Opportunities 6.42 -- -- .13 -- -- -- --
Strategic Opportunities 15.67 -- .61 -- .88 .03 .04 1.14
Equity Income 2.13 .61 .19 2.38 -- -- -- .32
Income & Growth 20.40 1.97 3.92 8.48 .55 .25 -- 7.97
TAXABLE/INCOME
Emerging Markets Income 1.01 -- 8.44 16.37 -- -- -- 43.66
High Yield -- .18 3.71 38.04 7.49 2.77 .56 28.07
Strategic Income 31.24 -- 1.49 22.86 -- -- -- 10.51
Government Investment 90.27 -- -- -- -- -- -- --
Limited Term Bond 69.25 .72 -- -- -- -- -- .09
Short Fixed-Income 29.78 21.17 9.90 3.27 -- -- -- 9.32
TAX-EXEMPT/MUNICIPAL FUNDS:
High Income Municipal 27.46 28.41 10.76 1.38 -- -- -- 28.05
Limited Term Tax-Exempt 88.37 -- -- -- -- -- -- .33
Short - Intermediate Tax-Exempt 69.51 7.11 2.75 -- -- -- -- 6.10
FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED DIRECTLY OR
INDIRECTLY BY MOODY'S OR S&P AMOUNTED TO .05%
(OVERSEAS), 0% (EQUITY PORTFOLIO GROWTH), 0% (GLOBAL RESOURCES), 0% (GROWTH
OPPORTUNITIES), 1.14% (STRATEGIC
OPPORTUNITIES), .31% (EQUITY INCOME), 4.85% (INCOME & GROWTH),
41.73% (EMERGING MARKETS INCOME), 22.19% (HIGH
YIELD), 5.51% (STRATEGIC INCOME), AND 7.85% FOR (SHORT FIXED-INCOME).
THESE PERCENTAGES MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED
SECURITIES. FMR HAS DETERMINED THAT UNRATED
SECURITIES THAT ARE LOWER QUALITY ACCOUNT FOR 0% (OVERSEAS), 0% (EQUITY
PORTFOLIO GROWTH), 0% (GLOBAL RESOURCES), 0%
(GROWTH OPPORTUNITIES), 1.14% (STRATEGIC OPPORTUNITIES), .31% (EQUITY
INCOME), 3.87% (INCOME & GROWTH), 41.51%
(EMERGING MARKETS INCOME), 22.19% (HIGH YIELD), 5.51% (STRATEGIC INCOME),
AND 3.88% FOR (SHORT FIXED-INCOME) OF
EACH FUND'S TOTAL SECURITY INVESTMENTS. REFER TO THE FUND'S APPENDIX
FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S AND S&P
AMOUNTED TO 20.86% (HIGH INCOME
MUNICIPAL), 0% (LIMITED TERM TAX-EXEMPT) AND 1.46% (SHORT-INTERMEDIATE
TAX-EXEMPT). THESE PERCENTAGES MAY
INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS
WELL AS UNRATED SECURITIES. FMR HAS
DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER QUALITY ACCOUNT FOR
18.09% (HIGH INCOME MUNICIPAL), 0% (LIMITED
TERM TAX-EXEMPT) AND 0% (SHORT-INTERMEDIATE TAX-EXEMPT) OF EACH FUND'S
SECURITY INVESTMENTS. REFER TO THE
APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
RESTRICTIONS: For all funds, except Short-Intermediate Tax-Exempt,
purchase of a debt security is consistent with a fund's debt quality policy
if it is rated at or above the stated level by Moody's or rated in the
equivalent categories by S&P, or is unrated but judged to be of equivalent
quality by FMR.
Limited Term Bond currently intends to limit its investments in debt
securities to those of Baa-quality and above, and currently intends to
limit its investments in debt securities rated Baa to 5% of its assets.
Short Fixed-Income currently intends to limit its investments in lower than
Baa-quality debt securities to 35% of its assets and currently intends to
limit its investments in debt securities to B-quality and above.
Global Resources currently intends to limit its investments in lower than
Baa-quality debt securities to 35% of its assets and currently intends to
limit its investments in debt securities to Caa-quality and above.
Each of Overseas, Equity Portfolio Growth, Growth Opportunities,
Strategic Opportunities , Equity Income, and Income & Growth
currently intends to limit its investments in lower than Baa-quality debt
securities to 35% of its assets.
Government Investment currently intends to limit its investments in debt
securities to A quality and above.
Limited Term Tax-Exempt currently intends to limit its investments in debt
securities to those of Baa- quality and above, and currently intends to
limit its investments in debt securities rated Baa to 25% of its
assets.
Purchase of a debt security is consistent with Short-Intermediate
Tax-Exempt's debt quality policy if, with respect to 60% of its assets, it
is judged by FMR to be of equivalent quality to debt securities rated A or
better by Moody's or S&P. The fund currently intends to limit its
investments in debt securities rated below Baa by Moody's or BBB by S&P, or
unrated debt securities judged by FMR to be of equivalent quality, to 5% of
its assets. The fund currently intends to limit its investments in debt
securities to Ba-quality and above.
MONEY M ARKET I NSTRUMENTS are high-quality instruments that
present minimal credit risk. They may include U.S. Government obligations,
commercial paper and other short-term corporate obligations, and
certificates of deposit, bankers' acceptances, bank deposits, and other
financial institution obligations. These instruments may carry fixed or
variable interest rates.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. Government. Not all U.S. Government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. They may be issued in
anticipation of future revenues, and may be backed by the full taxing power
of a municipality, the revenues from a specific project, or the credit of a
private organization. A security's credit may be enhanced by a bank,
insurance company, or other entity. The value of some or all municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders. A fund may own a
municipal security directly or through a participation interest.
EXPOSURE TO FOREIGN MARKETS Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, with h olding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign securities may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile.
AMERICAN DEPOSITARY RECEIPTS AND EUROPEAN DEPOSITARY RECEIPTS (ADRS AND
EDRS) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
ASSET-BACKED SECURITIES may include interests in pools of the following:
purchase contracts, financing leases, or sales agreements entered into by
municipalities; lower-rated debt securities; or consumer loans. The value
of these securities may be significantly affected by changes in interest
rates, the market's perception of issuers, and the creditworthiness of the
parties involved. Certain asset-backed securities rely on continued
payments by a municipality, and may also be subject to prepayment risk.
MORTGAGE SECURITIES are interests in pools of commercial or residential
mortgages, and may include complex instruments such as collateralized
mortgage obligations and stripped mortgage-backed securities. Mortgage
securities may be issued by the U.S. Government or by private entities. For
example, Ginnie Maes are interests in pools of mortgage loans insured or
guaranteed by a U.S. Government agency. Because mortgage securities pay
both interest and principal as their underlying mortgages are paid off,
they are subject to prepayment risk. This is especially true for stripped
securities. Also, the value of a mortgage security may be significantly
affected by changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other factors
difficult to predict, making their value highly volatile.
VARIABLE AND FLOATING RATE SECURITIES may have interest rates that move in
tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other debt securities,
although they may be more volatile and the value of certain types of
stripped securities may move in the same direction as interest rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S. repurchase
agreements, and may be denominated in foreign currencies. They also may
involve greater risk of loss if the counterparty defaults. Some
counterparties in these transactions may be less creditworthy than those in
U.S. markets.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features and
standby commitments are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as changes in real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the management
skill and creditworthiness of the issuer. Real estate-related instruments
may also be affected by tax and regulatory requirements, such as those
relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, purchasing
indexed securities, and selling securities short.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that the fund supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities and some other securities,
may be subject to legal restrictions. Difficulty in selling securities
may result in a loss or may be costly to a fund.
RESTRICTIONS. Each fund (except Overseas, Emerging Markets Income, High
Yield, and Strategic Income) may not purchase a security if, as a
result, more than 10% of its net assets would be invested in illiquid
securities.
Each of Overseas, Emerging Markets Income, High Yield, and Strategic Income
may not purchase a security if, as a result, more than 15% of its net
assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
WARRANTS are instruments which entitle the holder to buy underlying equity
securities at a specific price for a specific period of time. A warrant
tends to be more volatile than its underlying securities and ceases to have
value if it is not exercised prior to its expiration date. In addition,
changes in the value of a warrant do not necessarily correspond to changes
in the value of its underlying securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
changes in the market value of any issuer or industry.
RESTRICTIONS: With respect to 100% of its assets, each of Equity Portfolio
Growth and Strategic Opportunities may not purchase a security if, as a
result, more than 5% would be invested in the securities of a ny
issuer.
With respect to 75% of its total assets, each of Overseas, Global
Resources, Growth Opportunities, Equity Income, Income & Growth, High
Yield, Government Investment, Limited Term Bond, Short Fixed-Income, High
Income Municipal, and Limited Term Tax-Exempt may not purchase a security
if, as a result, more than 5% would be invested in the securities of
any issuer.
Emerging Markets Income, Strategic Income and Short-Intermediate Tax-Exempt
are considered non-diversified. Generally, to meet federal tax requirements
at the close of each quarter, each fund does not invest more than 25% of
its total assets in any issuer and, with respect to 50% of total assets,
does not invest more than 5% of its total assets in any issuer.
These limitations do not apply to U.S. government securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 33% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI) , an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a delay in
recovering a fund's securities. A fund may also lend money to other funds
advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of each fund's
total assets; however High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt do not currently intend to make loans.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
OVERSEAS FUND seeks growth of capital primarily through investments in
foreign securities.
EQUITY PORTFOLIO GROWTH seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics.
GLOBAL RESOURCES FUND seeks long-term growth of capital and protection of
the purchasing power of shareholders' capital by investing primarily in
securities of foreign and domestic companies that own or develop natural
resources, or supply goods and services to such companies, or in physical
commodities.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common stocks.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a "special
situation." Under normal conditions, the fund will invest at least 65% of
its total assets in companies involving a special situation. FMR intends to
invest primarily in common stocks and securities that are convertible
into common stocks ; however, it also may invest in debt
securities of all types and quality if FMR believes that investing in these
securities will result in capital appreciation. The fund may invest up to
30% of its assets in foreign investments.
EQUITY INCOME seeks a yield from dividend and interest income which exceeds
the composite dividend yield on securities comprising the S&P 500. In
addition, consistent with the primary objective of obtaining dividend and
interest income, the fund will consider the potential for achieving capital
appreciation.
INCOME & GROWTH FUND seeks both income and growth of capital by investing
in a diversified portfolio of equity and fixed-income securities with
income, growth of income and capital appreciation potential.
EMERGING MARKETS INCOME FUND seeks a high level of current income by
investing primarily in debt securities and other instruments of issuers in
emerging markets. As a secondary objective, the fund seeks capital
appreciation.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible securities and
preferred stocks.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
LIMITED TERM BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed income obligations.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current income,
consistent with the preservation of capital, by investing primarily in a
broad range of investment-grade fixed-income securities. Where appropriate
the fund will take advantage of opportunities to realize capital
appreciation.
HIGH INCOME MUNICIPAL FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests so that at least 80% of
its net assets is invested in municipal obligations whose interest is free
from federal income tax.
LIMITED TERM TAX-EXEMPT FUND seeks the highest level of income exempt from
federal taxes that can be obtained consistent with the preservation of
capital. The fund normally will invest so that 80% or more of its net
assets will be invested in securities whose interest is free from federal
income tax.
SHORT INTERMEDIATE TAX-EXEMPT FUND seeks as high a level of current income,
exempt from federal income tax, as is consistent with preservation of
capital. The fund normally invests so that 80% or more of its net assets
will be invested in securities whose interest is free from federal income
tax.
With respect to 75% of its total assets, each of Overseas, Global
Resources, Growth Opportunities, Equity Income, Income & Growth, High
Yield, Government Investment, Limited Term Bond, Short
Fixed - Income, High Income Municipal and Limited Term Tax-Exempt
may not purchase a security if, as a result, more than 5% would be invested
in the securities of a single issuer. With respect to 100% of its assets,
each of Equity Portfolio Growth and Strategic Opportunities may not
purchase a security if, as a result, more than 5% would be invested in
the securities of any issuer.
With respect to 75% of its total assets, each of Overseas, Global
Resources, Growth Opportunities, Equity Income, Income & Growth, High
Yield, Government Investment, Limited Term Bond, Short Fixed-Income, High
Income Municipal and Limited Term Tax-Exempt may not purchase more than 10%
of the outstanding voting securities of a single issuer. With respect to
100% of its assets, each of Equity Portfolio Growth and Strategic
Opportunities may not purchase more than 10% of the outstanding voting
securities of a single issuer.
Each fund may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33 1/3% of its total assets.
Loans, in the aggregate, may not exceed 33 1/3% of each fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. E xpenses paid out of each class's assets are
reflected in that class's share price or dividends; they are neither
billed directly to shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services for certain of the funds. Each fund also
pays OTHER EXPENSES, which are explained on page .
FMR may, from time to time, agree to reimburse a fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by a fund if expenses fall below the specified limit prior to
the end of the fiscal year. Reimbursement arrangements, which may be
terminated at any time without notice, can decrease a fund's
expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Equity Income
pays FMR a monthly management fee at a flat annual rate of 0.50% of its
average net assets. The fee for Equity Portfolio Growth, Global Resources,
Income & Growth, Emerging Markets Income, High Yield, Strategic Income,
Government Investment, Limited Term Bond, Short Fixed-Income, High Income
Municipal, Limited Term Tax-Exempt, and Short-Intermediate Tax-Exempt is
calculated by adding a group fee rate to an individual fee rate, and
multiplying the result by each fund's average net assets. The fee for
Overseas, Growth Opportunities and Strategic Opportunities is determined by
taking a basic fee and then applying a performance adjustment. The
performance adjustment either increases or decreases the management fee,
depending on how well each fund has performed relative to the Morgan
Stanley Capital International Europe , Australia, Far East Index for
Overseas or the S&P 500 for each of Growth Opportunities and Strategic
Opportunities.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. For Overseas, Equity Portfolio Growth, Global
Resources, Growth Opportunities, Strategic Opportunities, and Income &
Growth (the Equity Funds), this rate cannot rise above 0.52%, and it drops
as total assets under management increase. For Emerging Markets Income,
High Yield, Strategic Income, Government Investment, Limited Term Bond,
Short Fixed-Income, High Income Municipal, Limited Term Tax-Exempt and
Short-Intermediate Tax-Exempt (the Fixed-Income Funds) this rate cannot
rise above 0.37%, and it drops as total assets under management increase.
The basic fee rate (calculated monthly) is calculated by adding a group fee
rate to an individual fund fee rate, and multiplying the result by each
fund's average net assets.
The performance adjustment rate is calculated monthly by comparing the
performance of each of Overseas, Growth Opportunities and Strategic
Opportunities to that of the respective indices over the most recent
36-month period. The difference is translated into a dollar amount that is
added to or subtracted from the basic fee. The maximum annualized
performance adjustment rate is +/- 0.20%.
Investment performance will be measured separately for each class of shares
offered by Strategic Opportunities, Growth Opportunities, and Overseas and
the least of the results obtained will be used in calculating the
performance adjustment.
The following table states the management fee ratio for each fund as of
its most recent fiscal year end.
Group Individual Total
Fee Rate Fund Fee Manageme
Rate nt Fee
Overseas [D] 0.32% 0.45% 0.80%
Equity Portfolio Growth 0.32% 0.32%[A] 0.64%[A]
Global Resources 0.32% 0.45% 0.77%
Growth Opportunities [D] 0.32% 0.30% 0.69%
Strategic Opportunities [D] 0.32% 0.30% 0.67%[C]
Equity Income N/A N/A 0.50%
Income & Growth 0.32% 0.20% 0.52%
Emerging Markets Income 0.16% 0.55% 0.70%[C]
High Yield 0.1 6 % 0.45% 0.60%
Strategic Income 0.16% 0.45% 0.60%[C]
Government Investment 0.16% 0.30% 0.46%
Limited Term Bond 0.16% 0.25%[B] 0.41%
Short Fixed-Income 0.16% 0.30% 0.46%
High Income Municipal 0.16% 0.25% 0.41%
Limited Term Tax-Exempt 0.16% 0.25% 0.41%
Short-Intermediate Tax-Exempt 0.16% 0.25% 0.41%[C]
[A] EFFECTIVE AUGUST 1, 1994, FMR VOLUNTARILY AGREED TO REDUCE THE FUND'S
INDIVIDUAL FUND FEE RATE FROM 0.33% TO 0.30%. IF THIS REDUCTION WERE NOT IN
EFFECT DURING FISCAL 1994, THE TOTAL FEE WOULD HAVE BEEN 0.65%.
[B] ON DECEMBER 14, 1994, SHAREHOLDERS OF THE FUND APPROVED AN INCREASE OF
THE INDIVIDUAL FUND FEE RATE FROM 0.25% TO 0.30% EFFECTIVE FEBRUARY 24,
1995.
[C] ANNUALIZED.
[D] THE BASIC FEE RATE FOR FISCAL 1994 WAS 0.77% FOR OVERSEAS, 0.62% FOR
GROWTH OPPORTUNITIES AND 0.62% FOR STRATEGIC OPPORTUNITIES.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR Far
East, FIJ, and FIIA. FIIA in turn has a sub-advisory agreement with FIIAL
U.K. These sub-advisers are compensated for providing FMR with investment
research and advice on issuers based outside the United States. FMR pays
FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively, of the
costs of providing these services. FMR pays FIJ and FIIA a fee equal to 30%
of its management fee rate associated with investments for which the
sub-adviser provided investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50%
of its management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis. FIIA pays FIIAL U.K. a fee
equal to 110% of the cost of providing these services.
For fiscal 1994, FMR, on behalf of each fund with sub-advisory agreements,
paid FMR U.K., FMR Far East, F I J and FIIA fees amounting to less
than 0.01% of each fund's average net assets. FMR, on behalf of
Limited Term Bond, did not pay fees to either FMR U.K.,
or FMR Far East for fiscal 1994.
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for the Institutional Class of Overseas, Equity
Portfolio Growth, Global Resources, Growth Opportunities, Strategic
Opportunities, Equity Income, Income & Growth, Emerging Markets Income,
High Yield, Strategic Income, Government Investment, Limited Term Bond and
Short Fixed-Income (the Taxable Funds) . Fidelity Service Co. (FSC)
calculates the NAV and dividends for the Institutional Class of the Taxable
Funds, maintains the general accounting records , and administers the
securities lending program for each of the Taxable Funds. In fiscal 1994,
fees paid by the Institutional Class to FIIOC amounted to: 0.11% (Equity
Portfolio Growth), 0.12% (Equity Income), and 0.11% (Limited Term Bond), of
the Institutional Class 's average net assets. For fiscal
1994, fees paid to FSC amounted to: 0.04% (Equity Portfolio Growth), 0.06%
(Equity Income), and 0.04% (Limited Term Bond), of each fund's average net
assets.
UMB has entered into sub-arrangements pursuant to which FIIOC performs
certain transfer agency, dividend disbursing and shareholder services for
Institutional Class shares of each of High Income Municipal, Limited Term
Tax-Exempt and Short-Intermediate Tax-Exempt (the Tax-Exempt Funds). UMB
has entered into sub-arrangements pursuant to which FSC calculates the NAV
and dividends for the Institutional Class of the Tax-Exempt Funds, and
maintains each Tax-Exempt Fund's general accounting records. All of the
fees are paid to FIIOC and FSC by UMB, which is reimbursed by the
Institutional Class or a fund, as appropriate, for such payments.
In fiscal 1994, fees paid by UMB to FIIOC on behalf of the Institutional
Class of Limited Term Tax-Exempt amounted to 0.07% of its average net
assets, and fees paid by UMB to FSC on behalf of Limited Term Tax-Exempt
amounted to 0.07% of its average net assets.
Each fund has adopted a DISTRIBUTION AND SERVICE PLAN on behalf of
Institutional Class. Each P lan recognizes that FMR may use its
resources, including management fees, to pay expenses associated with the
sale of Institutional Class shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the funds' Institutional Class
shares. The Board of Trustees has authorized such payments for Limited
Term Bond, Equity Income, and Equity Portfolio Growth . Institutional
Class does not pay FMR separate fees for this service.
Each fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity. A broker-dealer may use a
portion of the commissions paid by certain fund 's to reduce
the fund's custodian or transfer agent fees.
The portfolio turnover rate for fiscal 1994 was 34% for Overseas,
137% for Equity Portfolio Growth, 125% for Global Resources,
43% for Growth Opportunities, 228% ( annualized ) for
Strategic Opportunities, 140% for Equity Income, 202% for
Income & Growth, 354% ( annualized ) for Emerging Markets
Income, 118% for High Yield, 104% ( annualized ) for
Strategic Income, 313% for Government Investment, 68%
for Limited Term Bond, 108% for Short Fixed - Income,
38% for High Income Municipal, 53% for Limited Term
Tax-Exempt, and 111% ( annualized ) for Short-Intermediate
Tax-Exempt. These rates vary from year to year. High turnover rates
increase transaction costs and may increase taxable capital gains. FMR
considers these effects when evaluating the anticipated benefits of
short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
If you invest through an Investment Professional, read that Investment
Professional's program materials in conjunction with this prospectus for
additional service features or fees that may apply. Certain features of the
funds, such as minimum initial or subsequent investment amounts, may be
modified in these programs, and administrative charges may be imposed for
the services rendered.
The different ways to set up (register) your account with Fidelity are
listed on the right.
The account guidelines that follow may not apply to certain funds or to
certain retirement accounts. For instance, tax-free funds are not available
for purchase in retirement accounts. If your employer offers a fund through
a retirement program, contact your employer for more information. Otherwise
call your Investment Professional directly.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR TAXABLE FUNDS)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 401(K) PLANS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
(solid bullet) MONEY PURCHASE/PROFIT SHARING PLANS (KEOGH PLANS) are tax
deferred pension accounts designated for employees of unincorporated
businesses or for persons who are self-employed.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA). Contact your Investment
Professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Contact your Investment Professional.
HOW TO BUY SHARES
INSTITUTIONAL CLASS'S SHARE PRICE, called NAV, is calculated every business
day. Institutional Class shares are sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
4:00 p.m. Eastern time.
If you are placing your order through an Investment Professional, it is the
responsibility of your Investment Professional to transmit your order to
buy shares to the transfer agent before 4:00 p.m. Eastern time.
The transfer agent must receive payment within three business days
after an order for shares is placed; otherwise your purchase order may be
canceled and you could be held liable for resulting fees and/or losses.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an account
application and mail it along with your check. You may also open your
account by wire as described below. If there is no account application
accompanying this prospectus, call your Investment Professional or
1-800-843-3001.
If you are investing through a tax-sheltered retirement plan, such as an
IRA, for the first time, you will need a special application. Contact your
Investment Professional for more information and a retirement account
application.
Share certificates are no longer available for Institutional Class shares.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Wire money into your account,
(small solid bullet) Open your account by exchanging from the same
class of another Fidelity Advisor fund or from another Fidelity fund
account , or
(small solid bullet) Contact your Investment Professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
TO ADD TO AN ACCOUNT $250
MINIMUM BALANCE $1,000
For further information on opening an account, please consult your
Investment Professional or refer to the account application.
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE (small solid bullet) Exchange from the same class of another (small solid bullet) Exchange
from the same class of another
1-800-843-3001 OR YOUR Fidelity Advisor fund or from another Fidelity Advisor fund or from
another
INVESTMENT PROFESSIONAL Fidelity fund account with the same Fidelity fund account with the
same
registration, including name, address, and registration, including name,
address, and
taxpayer ID number. taxpayer ID number.
Mail (mail_graphic) (small solid bullet) Complete and sign the account application. (small solid bullet) Make your
check payable to the complete
Make your check payable to the complete name of the fund of your choice
and note
name of the fund of your choice and note the applicable class. Indicate
your fund
the applicable class. M ail to the address account number on your check and
m ail to
indicated on the application. the address printed on your
account
statement.
(small solid bullet) Exchange by
mail: call 1-800-843-3001 or
your Investment Professional for
instructions.
In Person (hand_graphic) (small solid bullet) Bring your account application and check to (small solid bullet) Bring your
check to your Investment
your Investment Professional.
Professional.
Wire (wire_graphic) (small solid bullet) Call 1-800-843-3001 to set up your account (small solid bullet) Not
available for retirement
accounts.
and to arrange a wire transaction. Not (small solid bullet) Wire to:
available for retirement accounts. Banker's Trust Co.
(small solid bullet) Wire to: Routing # 021001033
Banker's Trust Co. Custody & Shareholder Services
Routing # 021001033 Fidelity Advisor DART System
Custody & Shareholder Services DDA#: (call 1-800-843-3001)
Fidelity Advisor DART System FBO: (account name)
DDA#: (call 1-800-843-3001) (account number)
FBO: (account name)
(account number) Specify the complete name of
the fund of
your choice , note the
applicable class , and
Specify the complete name of the fund of include your account number and
your
your choice , note the applicable class , and name.
include your new account number and your
name.
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at 4:00 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request must
be made in writing, except for exchanges to the same class of shares
of an other Fidelity Advisor fund or to shares of other
Fidelity funds, which can be requested by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR NON-RETIREMENT ACCOUNT SHARES,
leave at least $ 1,000 worth of shares in the account to keep it
open.
TO SELL SHARES BY BANK WIRE, you will need to sign up for th is
service in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and the fund from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within
the last 30 days,
(small solid bullet) The check is being mailed to a different
address than the one on your account (record address),
(small solid bullet) The check is being made payable to someone
other than the account owner, or
(small solid bullet) The redemption proceeds are being transferred
to a Fidelity account with a different registration.
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, signed certificates (if applicable), and
(small solid bullet) Any other applicable requirements listed in the
following table.
Deliver your letter to your Investment Professional, or mail it to the
following address:
Fidelity Investments Institutional Operations Co mpany
P.O. Box 1182
Boston, MA 02 103-1182
Unless otherwise instructed, the transfer agent will send a check to the
record address.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE All account types except retirement (small solid bullet) Maximum
check request: $100,000.
1-800-843-3001OR YOUR
INVESTMENT PROFESSIONAL
(phone_graphic) All account types (small solid bullet) You may
exchange into the same class
of
other Fidelity Advisor
fund s or into
other
Fidelity fund s if both
account s are
registered with the
same name s , address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint Tenant, Sole Proprietorship, (small solid bullet) The
letter of instruction must
be signed by
UGMA, UTMA all persons required to sign
for
transactions, exactly as
their names
Retirement account appear on the account.
(small solid bullet) The
account owner should complete a
retirement distribution form.
Call
1-800-843-3001 or your
Investment
Professional to request one.
Trust (small solid bullet) The
trustee must sign the letter
indicating
capacity as trustee. If the
trustee's name is
not in the account
registration, provide a
copy of the trust document
certified within
the last 60 days.
Business or Organization (small solid bullet) At least
one person authorized by
corporate resolution to act
on the account
must sign the letter.
Executor, Administrator, (small solid bullet) Call
1-800-843-3001 or your
Investment
Conservator/Guardian Professional for instructions.
Wire (wire_graphic) All account types except retirement (small solid bullet) You must
sign up for the wire
feature
before using it. To verify
that it is in place,
call 1-800-843-3001. Minimum
wire:
$1,000.
(small solid bullet) Your
wire redemption request must
be
received by the transfer
agent before 4:00
p.m. Eastern time for money
to be wired
on the next business day.
</TABLE>
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you manage
your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every
transaction that affects your account balance or your account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed,
even if you have more than one account in the fund. Call your Investment
Professional if you need additional copies of financial reports.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Institutional Class shares and buy
Institutional Class shares of other Fidelity Advisor funds or shares of
other Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see
"Exchange Restrictions" on page .
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital gains
to shareholders each year. Each fund distributes capital gains, if
any, in December and may distribute additional capital gains after
the close of its fiscal year. Normally, dividends for Equity Income and
Income & Growth are distributed in March, June, September and December;
dividends for Overseas, Equity Portfolio Growth, Global Resources, Growth
Opportunities and Strategic Opportunities are distributed in December;
dividends for Equity Portfolio Growth and Equity Income may also be
distributed in January; dividends for Emerging Markets Income, Strategic
Income, High Yield, Limited Term Bond, Government Investment, Short
Fixed-Income, High Income Municipal, Limited Term Tax-Exempt and
Short-Intermediate Tax-Exempt are declared daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. The funds offer three options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the same class of the
fund. If you do not indicate a choice on your application, you will be
assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
If you select distribution option 2 or 3 and the U.S. Postal Service cannot
deliver your checks, or if your checks remain uncashed for six months,
those checks will be reinvested in your account at the current NAV and your
election may be converted to the Reinvestment Option.
You may change your distribution option at any time by notifying the
transfer agent in writing.
For retirement accounts, all distributions are automatically reinvested.
When you are over 59 1/2 years old, you can receive distributions in cash.
When each of Overseas, Equity Portfolio Growth, Global Resources, Growth
Opportunities, Strategic Opportunities, Equity Income and Income & Growth
deducts a distribution from its NAV, the reinvestment price is the
applicable fund's NAV at the close of business that day.
Dividends from Emerging Markets Income, High Yield, Strategic Income,
Government Investment, Limited Term Bond, Short Fixed-Income, High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt will
be reinvested at the applicable fund's NAV on the last day of the month.
Capital gain distributions from these funds will be reinvested at the NAV
as of the date the applicable fund deducts the distributions from its NAV.
Distribution checks will be mailed within seven days, or longer for a
December ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds ' tax implications. If
your account is not a tax-deferred retirement account, be aware of these
tax implications.
TAXES ON DISTRIBUTIONS. Interest income that High Income Municipal, Limited
Term Tax-Exempt, and Short-Intermediate Tax-Exempt earn is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed. Distributions from each fund
(except High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt) , however, are subject to federal income
tax and may also be subject to state or local taxes. If you live outside
the United States, your distributions from these funds could also be taxed
by the country in which you reside.
For federal tax purposes , income and short-term capital gain
distributions for each fund (except High Income Municipal, Limited Term
Tax-Exempt, and Short-Intermediate Tax-Exempt) are taxed as dividends;
long-term capital gain distributions are taxed as long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally free
from state and local income taxes. However, particular states may limit
this benefit, and some types of securities, such as repurchase agreements
and some agency-backed securities, may not qualify for the benefit. In
addition, some states may impose intangible property taxes. You should
consult your own tax adviser for details and up-to-date information on the
tax laws in your state.
However, for shareholders of High Income Municipal, Limited Term Tax-Exempt
and Short-Intermediate Tax-Exempt, gain on the sale of tax-free bonds
results in taxable distributions. For shareholders of High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt,
s hort-term capital gains and a portion of the gain on bonds purchased
at a discount are taxed as dividends; long-term capital gain distributions,
if any, are taxed as long-term capital gains.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. High Income Municipal may invest up to 100% of its
assets and each of Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt may invest up to 20% of its assets in these securities .
Individuals who are subject to the tax must report this interest on their
tax returns.
A portion of the dividends from High Income Municipal, Limited Term
Tax-Exempt, and Short-Intermediate Tax-Exempt may be free from state or
local taxes. Income from investments in your state are often tax-free to
you. Each year, the transfer agent will send you a breakdown of income from
each state to help you calculate your taxes.
During fiscal 1994, 100% of the income dividends from High Income
Municipal, Limited Term Tax-Exempt and Short-Intermediate Tax-Exempt were
free from federal income tax. And during fiscal 1994, 5.63% of High Income
Municipal's and 11.07% of Short-Intermediate Tax-Exempt's income dividends
were subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges - are
subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you sell
them.
Whenever you sell shares of a fund, the transfer agent will send you a
confirmation statement showing how many shares you sold and at what price.
You will also receive a consolidated transaction statement at least
quarterly . However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of tax
to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount of
your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution or dividend distribution, as applicable, from its NAV,
you will pay the full price for the shares and then receive a portion of
the price back in the form of a taxable distribution.
CURRENCY CONSIDERATIONS. For funds that can invest in foreign securities,
if a fund's dividends exceed its taxable income in any year, which is
sometimes the result of currency-related losses, all or a portion of the
fund's dividends may be treated as a return of capital to shareholders for
tax purposes. To minimize the risk of a return of capital, each of these
funds may adjust its dividends to take currency fluctuations into account,
which may cause the dividends to vary. Any return of capital will reduce
the cost basis of your shares, which will result in a higher reported
capital gain or a lower reported capital loss when you sell your shares.
The statement you receive in January will specify if any distributions
included a return of capital.
Undistributed net gains from currency transactions, if any, will generally
be distributed as a separate dividend in December.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and
its investments and these taxes generally will reduce the fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. NAV is normally calculated as of the close of business of the
NYSE, normally 4:00 p.m. Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting that
class' pro rata share of the value of the applicable fund's liabilities,
subtracting the liabilities allocated to that class, and dividing the
result by the number of shares of that class that are outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. If quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued by a
method that the Board of Trustees believes accurately reflects fair value.
THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of Institutional Class shares are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations and certain
fiduciaries.
IF YOU ARE UNABLE TO REACH THE TRANSFER AGENT BY PHONE (for example, during
periods of unusual market activity), consider placing your order by mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they
would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) The funds do not accept cash.
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) When making a purchase with more than one
check, each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the
number of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase
will be canceled and you could be liable for any losses or fees a fund or
the transfer agent has incurred.
(small solid bullet) Direct Purchases: You begin to earn dividends
as of the first business day following the day the fund receives payment.
(small solid bullet) Confirmed Purchases: You begin to earn
dividends as of the business day the fund receives payment.
(small solid bullet) Automated Purchase Orders : You begin to earn
dividends as of the business day your order is received and accepted.
CONFIRMED PURCHASES. Certain Financial Institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow no later than close of business
on the next business day. If payment is not received by the next business
day, the order will be canceled and the Financial Institution will be
liable for any losses.
AUTOMATED PURCHASE ORDERS. S hares of each fund can be purchased or
sold through Investment Professionals utilizing an automated order
placement and settlement system that guarantees payment for orders on a
specified date.
TO AVOID THE COLLECTION PERIOD associated with check purchases, consider
buying shares by bank wire, U.S. Postal money order, U.S. Treasury check,
or Federal Reserve check.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of Emerging Markets Income, High Yield,
Strategic Income, Government Investment, Limited Term Bond,
Short Fixed-Income, High Income Municipal, Limited Term Tax-Exempt and
Short-Intermediate Tax-Exempt will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday will
continue to earn dividends until the next business day.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check have been
collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
THE TRANSFER AGENT RESERVES THE RIGHT TO DEDUCT AN ANNUAL
MAINTENANCE FEE of $12.00 from accounts with a value of less then
$2,500, subject to an annual maximum charge of $60.00 per shareholder.
Accounts opened after September 30 will not be subject to the fee for that
year. The fee, which is payable to the transfer agent, is designed to
offset in part the relatively higher costs of servicing smaller accounts.
The fee will not be deducted from retirement accounts (except non-Fidelity
prototype retirement accounts), accounts using a systematic investment
program, or if total assets in Fidelity mutual funds exceed $50,000.
Eligibility for the $50,000 waiver is determined by aggregating Fidelity
mutual fund accounts maintained by FIIOC or State Street Bank & Trust
Company which are registered under the same primary social security
number.
IF YOUR ACCOUNT BALANCE FALLS BELOW $ 1 ,000, you will be given 30
days' notice to reestablish the minimum balance. If you do not increase
your balance, the transfer agent reserves the right to close your account
and send the proceeds to you. Your shares will be redeemed at the NAV on
the day your account is closed.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to Investment Professionals who support the sale
of shares of the funds. In some instances, these incentives will be offered
only to certain types of Investment Professionals, such as bank-affiliated
or non-bank affiliated broker-dealers, or to Investment Professionals whose
representatives provide services in connection with the sale or expected
sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging your
Institutional Class shares for Institutional Class shares of other Fidelity
Advisor funds or for shares of other Fidelity funds. However, you should
note the following:
(small solid bullet) The fund you are exchanging into must be
registered for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales
charge, you pay the difference between that fund's sales charge and any
sales charge you may have previously paid in connection with the shares you
are exchanging. For example, if you had already paid a sales charge of 2%
on your shares and you exchange them into a fund with a 3% sales charge,
you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to temporarily
or permanently terminate the exchange privilege of any investor who makes
more than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
APPENDIX
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge d ." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
AA - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
some - time in the future.
BAA - Bonds which are rated Baa are considered as medium-grade
obligations, ( i.e., they are neither highly protected nor poorly
secured ) . Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative
elements ; t heir future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds which are rated C are the lowest-rated class of
bonds , and issue s so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF S&P'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highe st -rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher-rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories .
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB, or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC - The rating CC typically is applied to debt subordinated
to senior debt that is assigned an actual or implied CCC debt
rating.
C - The rating C typically is applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been filed
but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also
will be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC. This Prospectus and the related SAI do not
constitute an offer by the fund or by FDC to sell or to buy shares of the
fund to any person to whom it is unlawful to make such offer.
Fidelity Advisor Institutional Class
Cross Reference Sheet
Form N-1A
Item Number Statement of Additional Information
Section
-----------
- -------------------------------------------
10, 11 .................... Cover Page; Table of Contents
........
12 .................... *
........
13 a - c .................... Investment Policies and
Limitations
........
d .................... Portfolio Transactions
........
14 a - c .................... Trustees and Officers
........
15 a .................... *
........
b .................... Description of the Trusts
........
c .................... Trustees and Officers
........
16 a i .................... FMR
........
ii .................... Trustees and Officers
........
iii .................... Management Contracts; Contracts
with FMR
........ Affiliates
b,c,d .................... Management Contracts; Contracts
with FMR
........ Affiliates
e .................... *
........
f .................... Distribution and Service Plans
........
g .................... *
........
h .................... Description of the Trusts
........
i .................... Contracts with FMR Affiliates
........
17 a .................... Portfolio Transactions
........
b .................... Portfolio Transactions
........
c .................... Portfolio Transactions
........
d, e .................... *
........
18 a .................... Description of the Trusts
........
b .................... *
........
19 a .................... Additional Purchase, Exchange
and Redemption
........ Information
b .................... Additional Purchase, Exchange
and Redemption
........ Information; Valuation
c .................... *
........
20 Distributions and Taxes
21 a, b .................... Distribution and Service Plans;
Contracts with FMR
........ Affiliates
c .................... *
........
22 .................... Performance; Appendix
........
23 .................... Financial Statements
........
* Not Applicable
FIDELITY ADVISOR FUNDS
INSTITUTIONAL CLASS
STATEMENT OF ADDITIONAL INFORMATION
JUNE 30, 1995
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
June 30, 1995) for Institutional Class shares. Please retain this document
for future reference. Each fund's financial statements and financial
highlights, included in their respective Annual Reports, for the most
recent fiscal period are incorporated herein by reference. To obtain an
additional copy of this SAI, any Prospectus or Annual Report, please call
Fidelity Distributors Corporation, 82 Devonshire Street, Boston,
Massachusetts 02109 or your Investment Professional.
TABLE OF CONTENTS PAGE
<TABLE>
<CAPTION>
<S> <C>
Investment Policies and Limitations
Special Considerations Affecting Canada
Special Considerations Affecting Latin America
Special Considerations Affecting Japan, the Pacific Basin, and Southeast Asia
Special Considerations Affecting Europe
Special Considerations Affecting Africa
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange, and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts with FMR Affiliates
Distribution and Service Plans
Description of the Trusts
Financial Statements
Appendix
</TABLE>
COMI-ptb-695
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Global Resources Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Limited Term Bond Fund
Fidelity Advisor Short Fixed-Income Fund
TAX-EXEMPT/MUNICIPAL FUNDS
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Limited Term Tax-Exempt Fund
Fidelity Advisor Short-Intermediate Tax-Exempt Fund
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.)
Limited (FIIAL U.K.)
Fidelity Investments Japan Limited (FIJ)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Investments Institutional Operations Company (FIIOC) (Taxable
Funds)
UMB Bank, n.a. (UMB) (Tax-Exempt Funds)
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets or other circumstances will not be considered when determining
whether the investment complies with a fund's investment policies and
limitations.
A fund's fundamental investment policies and limitations cannot be changed
without approval of a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940 ) of the fund. However,
except for the fundamental investment limitations listed below and the
policies restated in the "Fundamental Policies" paragraph on pag e ,
the investment policies and limitations described in this SAI are not
fundamental and may be changed without shareholder approval.
OVERSEAS FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than obligations issued or guaranteed by the
government of the United States, its agencies or instrumentalities) if, as
a result thereof: (i) more than 5% of the fund's total assets would be
invested in the securities of such issuer or (ii) the fund would hold more
than 10% of the outstanding voting securities of such issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed), less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the fund's total assets by reason of a decline in
net assets will be reduced within three days (exclusive of Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite any issue of securities, except to the extent that the fund
may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States, its agencies or
instrumentalities) if, as a result thereof, more than 25% of the fund's
total assets (taken at current value) would be invested in the securities
of issuers having their principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the price
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System if, as a result, the sum of such interests
and other investments considered illiquid under limitation (iv) would
exceed 15% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5. 0 %
of the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements).
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 10% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
For the fund's limitations on futures and options transactions, see the
section entitled " Futures and Options" beginning on page .
For the fund's limitations on short sales, see the section entitled "Short
Sales" on page .
EQUITY PORTFOLIO GROWTH
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) 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 (a) more than 5% of the fund's total
assets (taken at current value) would be invested in the securities of such
issuer, or (b) the fund would hold more than 10% of the voting securities
of such issuer;
(2) make short sales of securities (unless it owns or by virtue of its
ownership of other securities has the right to obtain, securities
equivalent in kind and amount to the securities sold), provided, however,
that the fund may purchase or sell futures contracts;
(3) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions, provided, however, that
the fund may make initial and variation margin payments in connection with
purchases or sales of futures contracts or of options on futures contracts;
(4) 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 the fund's total assets (including the
amount borrowed) less liabilities (not including borrowings). Any
borrowings that come to exceed 33 1/3% of the value of the fund's total
assets by reason of a decline in net assets will be reduced within 3 days
(exclusive of Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(5) underwrite any issue of securities (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);
(6) 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, 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;
(7) purchase or sell real estate (but this shall not prevent the fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of the fund's total assets would be lent to other parties, except (i)
through the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies and limitations, or (ii)
by engaging in repurchase agreements with respect to portfolio securities;
(10) purchase securities of other investment companies (except in the open
market where no commission other than the ordinary broker's commission is
paid, or as a part of a merger or consolidation, and in no event may
investments in such securities exceed 10% of the total assets of the fund);
(11) purchase the securities of any issuer if, as a result, more than 5% of
the fund's total assets (taken at current value) would be invested in the
securities of companies which, including predecessors, have a record of
less than three years of continuous operation; or
(12) invest in oil, gas, or other mineral exploration or development
programs.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The fund does not currently intend to purchase interests in real
estate investment trusts that are not readily marketable, or interests in
real estate limited partnerships that are not listed on an exchange or
traded on the NASDAQ National Market System if, as a result, the sum of
such interests and other investments considered illiquid under limitation
(iii) would exceed 10% of the fund's net assets.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by (a) lending money (up to 5% of the fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities or
to repurchase agreements.)
(vi) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(vii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(viii) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled " Futures and Options" beginning on page .
For the fund's limitations on short sales, see the section entitled "Short
Sales" on page .
GLOBAL RESOURCES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than obligations issued or guaranteed by the
government of the United States, or any of its agencies or
instrumentalities) if, as a result thereof, (a) more than 5% of the fund's
total assets would be invested in the securities of such issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of such
issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed 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;
(4) underwrite securities issued by others, except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business ) ;
or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) 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 with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to invest in physical commodities
other than precious metals (i.e., gold, palladium, platinum and silver) and
it intends to limit such investments to not more than 25% of the fund's
total assets. The fund may receive no more than 10% of its yearly income
from gains resulting from selling metals or any other physical commodity.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 10% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xii) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xii i ) The fund does not currently intend to invest all of its
assets in the securities of a single open-end management investment company
with substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures contracts and options, see the
section entitled "Futures and Options " on page . For the
fund's limitations on short sales, see the section entitled "Short Sales"
on page .
GROWTH OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments, and
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limit does not apply to purchases of debt securities or
to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower cost of the market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options " on page . For the
fund's limitations on short sales, see the section entitled "Short Sales"
on page .
STRATEGIC OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) 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 5% of the fund's
total assets (taken at current value) would be invested in the securities
of such issuer;
(2) purchase the securities of any issuer, if such purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of
such issuer to be held in the fund's portfolio;
(3) issue senior securities (except to the extent that issuance of one or
more classes of shares of the fund in accordance with an order issued by
the Securities and Exchange Commission may be deemed to constitute issuance
of a senior security);
(4) make short sales of securities, (unless it owns, or by virtue of its
ownership of other securities has the right to obtain, at no additional
cost, securities equivalent in kind and amount to the securities sold);
provided, however, that the fund may enter into forward foreign currency
exchange transactions; and further provided that the fund may purchase or
sell futures contracts;
(5) purchase any securities or other property on margin, (except for such
short-term credits as are necessary for the clearance of transactions);
provided, however, that the fund may make initial and variation margin
payments in connection with purchases or sales of futures contracts or
options on futures contracts;
(6) 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 the fund's total assets (including the
amount borrowed) less liabilities (not including 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 fund will not purchase securities for investment while
borrowings equaling 5% or more of its total assets are outstanding;
(7) 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");
(8) 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 would be invested in the securities of one or more issuers
having their principal business activities in the same industry;
(9) purchase or sell real estate (but this shall not prevent the fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(10) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(11) lend any security or make any other loan if as a result, more than 33
1/3% of the fund's total assets would be lent to other parties except (i)
through the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies, and limitations, or
(ii) by engaging in repurchase agreements with respect to portfolio
securities;
(12) purchase securities of other investment companies (except in the open
market where no commission other than the ordinary broker's commission is
paid, or as part of a merger or consolidation, and in no event may
investments in such securities exceed 10% of the value of total assets of
the fund). The fund may not purchase or retain securities issued by other
open-end investment companies;
(13) invest more than 5% of the fund's total assets (taken at market value)
in the securities of companies which, including predecessors, have a record
of less than three years' continuous operation; or
(14) invest in oil, gas, or other mineral exploration or development
programs.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (6)). The fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the fund's total assets.
(ii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iii) The fund does not currently intend to purchase interests in real
estate investment trusts that are not readily marketable or interests in
real estate limited partnerships that are not listed on an exchange or
traded on the NASDAQ National Market System if, as a result, the sum of
such interests and other investments considered illiquid under limitation
(ii) would exceed 10% of the fund's net assets.
(iv) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(v) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(vi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(vii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" on page . For the fund's
limitations on short sales, see the section entitled "Short Sales" on page
.
EQUITY INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System if, as a result, the sum of such interests
and other investments considered illiquid under limitation (iv) would
exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation or merger.
(viii) The fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page . For the fund's
limitations on short sales, see the section entitled "Short Sales" on page
.
INCOME & GROWTH FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of its net assets. Included in
that amount, but not to exceed 2% of the fund's net assets, may be warrants
that are not listed on the New York Stock Exchange or the American Stock
Exchange. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, other mineral
exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page . For the fund's
limitations on short sales, see the section entitled "Short Sales" on page
.
EMERGING MARKETS INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) 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;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(8) 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 with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 10% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xii) With respect to 75% of its total assets, the fund does not
currently intend to 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, the fund would hold more
than 10% of the outstanding voting securities of that issuer.
(xiii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi v ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
HIGH YIELD FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the value of the fund's total assets would be invested
in the securities of that issuer, or (b) it would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System if, as a result, the sum of such interests
and other investments considered illiquid under limitation (iv) would
exceed 15% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or attached
to securities are not subject to these restrictions.
(ix) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(xi) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
STRATEGIC INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) 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;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) 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 with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL:
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans and loan participations or other forms of direct debt instruments
and, in connection therewith, assuming any associated unfunded loan
commitments of the sellers. (This limitation does not apply to purchases of
debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral explorations or development programs or leases.
(xi) With respect to 75% of its total assets, the fund does not
currently intend to 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, the fund would hold more
than 10% of the outstanding voting securities of that issuer.
(xi i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
GOVERNMENT INVESTMENT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940.
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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 issuers having their
principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other investments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
(v) T he fund does not currently intend to invest in interests in
real estate investment trusts that are not readily marketable or to invest
in intere s ts in real estate limited partnerships that are not listed
on the New York Stock Exchange or the American Stock Exchange or traded
on the NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange or as a result of a reorganization, consolidation or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result more than 5%
of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than
thre e years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to enter into any futures contract
or option on a futures contract if, as a result, the sum of initial margin
deposits on futures contracts and related options and premiums paid for
options on futures contracts the fund has purchased, after taking into
account unrealized profits and losses on such contracts would exceed 5% of
the fund's total assets.
(xiii) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" beginning on page .
LIMITED TERM BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) i ssue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment), in an
amount not exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures contracts
or from investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment advisor or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by: (a) lending money (up to 7.5% of the fund's
net assets) to a registered investment company or fund for which FMR or an
affiliate serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments, and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities or
to repurchase agreements.)
(vi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(vii) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(viii) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(ix) The fund currently does not intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to (a) purchase securities of other
investment companies except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(xi) The fund does nor currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options " beginning on page .
SHORT FIXED-INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental limitation (3)). The fund will not purchase any
security while borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR or
its affiliates if total outstanding borrowings immediately after such
borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by (i) lending money (up to 7.5% of the fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (ii) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities or
to repurchase agreements.)
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange or as a result of a reorganization, consolidation, or merger.
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or attached
to securities are not subject to these restrictions.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(x i ) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Option s " on page .
HIGH INCOME MUNICIPAL FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) underwrite securities issued by others (except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests of real
estate investment trusts that are not readily marketable, or to invest in
interests of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vii) The fund does not currently intend to engage in repurchase agreements
or make loans , but this limitation does not apply to purchases of
debt securities.
(viii) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options" on page .
LIMITED TERM TAX-EXEMPT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS AND
POLICIES SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of its 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of 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;
(4) 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;
(5) 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 tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) 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;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by Fidelity Management &
Research Company or an affiliate or successor with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short ,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to engage in repurchase agreements
or make loans , but this limitation does not apply to purchases of
debt securities.
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger. Any
securities issued by other investment companies would also have to meet the
fund's credit and maturity standards. In some cases, other investment
companies may incur expenses that are comparable to expenses paid by the
fund, which would be taken into account in considering investments in such
securities.
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to invest in oil, gas, other
mineral exploration or development programs or leases.
(ix) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
Trustees of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(x) 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.
For the fund's limitations on futures contracts and options, see the
section entitled "Futures and Options " beginning on page .
SHORT-INTERMEDIATE TAX-EXEMPT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) 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 tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate, unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business;
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this
limitation does not apply to purchases of debt securities or to repurchase
agreements) .
(8) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by Fidelity Management &
Research Company or an affiliate or successor with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the Trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years continuous operation.
(x) The fund may not purchase or sell physical commodities unless acquired
as a result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities.)
(xi) The fund does not currently intend to invest in interests of real
estate investment trusts that are not readily marketable, or to invest in
interests of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(xii) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xiii) With respect to 75% of its total assets, the fund does not
currently intend to 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, the fund would hold more
than 10% of the outstanding voting securities of that issuer.
(xi v ) 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.
For the fund's limitations on futures and options transactions, see the
section entitled "Futures and Options " beginning on page .
For purposes of certain fundamental investment limitations, FMR identifies
the issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an issuing
political subdivision are separated from those of other political entities;
and whether a governmental body is guaranteeing the security.
EACH FUND'S INVESTMENTS MUST BE CONSISTENT WITH ITS INVESTMENT OBJECTIVE
AND POLICIES. ACCORDINGLY, NOT ALL OF THE SECURITY TYPES AND INVESTMENT
TECHNIQUES DISCUSSED BELOW ARE ELIGIBLE INVESTMENTS FOR EACH OF THE FUNDS.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940 (1940
Act) . These transactions may include repurchase agreements with
custodian banks; short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); municipal securities;
U.S. government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions; and
short-term borrowings. In accordance with exemptive orders issued by the
Securities and Exchange Commission (SEC), the Board of Trustees has
established and periodically reviews procedures applicable to transactions
involving affiliated financial institutions.
ASSET-BACKED SECURITIES represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured as
pass-through securities. Interest and principal payments ultimately depend
upon payment of the underlying loans by individuals, although the
securities may be supported by letters of credit or other credit
enhancements. The value of asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator
of the loans, or the financial institution providing the credit
enhancement.
DELAYED-DELIVERY TRANSACTIONS. A fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered. A fund
may receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, a fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
a fund's other investments. If a fund remains substantially fully invested
at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, a fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, a fund could miss a
favorable price or yield opportunity, or could suffer a loss.
A fund may renegotiate delayed-delivery transactions after they are entered
into, and may sell underlying securities before they are delivered, which
may result in capital gains or losses.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions the tax-exempt funds
do not intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, each tax-exempt fund may
invest a portion of its assets in fixed-income obligations whose interest
is subject to federal income tax.
Should a tax-exempt fund invest in federally taxable obligations, it would
purchase securities that, in FMR's judgment, are of high quality. These
obligations would include those issued or guaranteed by the U.S. government
or its agencies or instrumentalities; obligations of domestic banks; and
repurchase agreements. The funds' standards for high-quality, taxable
obligations are essentially the same as those described by Moody's Investor
Services (Moody's) in rating corporate obligations within its two highest
ratings of Prime-1 and Prime-2, and those described by Standard & Poor's
Corporation (S&P) in rating corporate obligations within its two highest
ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of the tax-exempt funds'
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the tax-exempt funds' holdings would
be affected and the Trustees would reevaluate the tax-exempt funds'
investment objectives and policies.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. A fund will convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to a fund at one rate, while offering a lesser rate
of exchange should a fund desire to resell that currency to the dealer.
Forward contracts are generally traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. The parties to a forward contract may agree to offset or
terminate the contract before its maturity, or may hold the contract to
maturity and complete the contemplated currency exchange.
A fund may use currency forward contracts for any purpose consistent with
its investment objective. The following discussion summarizes the principal
currency management strategies involving forward contracts that could be
used by a fund. A fund may also use swap agreements, indexed securities,
and options and futures contracts relating to foreign currencies for the
same purposes.
When a fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, a fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." A fund may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
A fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if a fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. A fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
A fund may enter into forward contracts to shift its investment exposure
from one currency into another. This may include shifting exposure from
U.S. dollars to a foreign currency, or from one foreign currency to another
foreign currency. For example, if a fund held investments denominated in
Deutschemarks, a fund could enter into forward contracts to sell
Deutschemarks and purchase Swiss Francs. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to the
currency that is sold, and increase exposure to the currency that is
purchased much as if a fund had sold a security denominated in one currency
and purchased an equivalent security denominated in another. Cross-hedges
protect against losses resulting from a decline in the hedged currency, but
will cause a fund to assume the risk of fluctuations in the value of the
currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. A fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on FMR's skill
in analyzing and predicting currency values. Currency management strategies
may substantially change a fund's investment exposure to changes in
currency exchange rates, and could result in losses to a fund if currencies
do not perform as FMR anticipates. For example, if a currency's value rose
at a time when FMR had hedged a fund by selling that currency in exchange
for dollars, a fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, a fund
could realize currency losses from the hedge and the security position at
the same time if the two currencies do not move in tandem. Similarly, if
FMR increases a fund's exposure to a foreign currency, and that currency's
value declines, a fund will realize a loss. There is no assurance that
FMR's use of currency management strategies will be advantageous to the
fund or that it will hedge at an appropriate time.
FOREIGN INVESTMENTS. Investing in securities issued by companies or other
issuers whose principal activities are outside the United States may
involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in foreign currencies and
of dividends and interest paid with respect to such securities will
fluctuate based on the relative strength of the U.S. dollar. In addition,
there is generally less publicly available information about foreign
issuers' financial condition and operations, particularly those not subject
to the disclosure and reporting requirements of the U.S. securities laws.
Foreign issuers are generally not bound by uniform accounting, auditing,
and financial reporting requirements and standards of practice comparable
to those applicable to U.S. issuers. Further, economies of particular
countries or areas of the world may differ favorably or unfavorably from
the economy of the United States.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects. The considerations noted above generally are
intensified for investments in developing countries. Developing countries
may have relatively unstable governments, economies based on only a few
industries, and securities markets that trade a small number of securities.
Foreign markets may offer less protection to investors than U.S. markets.
It is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may expose a fund to increased risk
in the event of a failed trade or the insolvency of a foreign
broker-dealer, and may involve substantial delays. In addition, the costs
of foreign investing, including withholding taxes, brokerage commissions
and custodial costs, are generally higher than for U.S. investing. In
general, there is less overall governmental supervision and regulation of
securities exchanges, brokers, and listed companies than in the United
States. It may also be difficult to enforce legal rights in foreign
countries.
Each fund may invest in foreign securities that impose restrictions on
transfer within the United States or to U.S. persons. Although securities
subject to such transfer restrictions may be marketable abroad, they may be
less liquid than foreign securities of the same class that are not subject
to such restrictions.
A fund may invest in American Depository Receipts and European Depository
Receipts (ADRs and EDRs), which are certificates evidencing ownership of
shares of a foreign-based issuer held in trust by a bank or similar
financial institution. Designed for use in the U.S. and European securities
markets, respectively, ADRs and EDRs are alternatives to the purchase of
the underlying securities in their national markets and currencies.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may include
agreements to purchase and sell foreign securities in exchange for fixed
U.S. dollar amounts, or in exchange for specified amounts of foreign
currency. Unlike typical U.S. repurchase agreements, foreign repurchase
agreements may not be fully collateralized at all times. The value of the
security purchased by the fund may be more or less than the price at which
the counterparty has agreed to repurchase the security. In the event of a
default by the counterparty, the fund may suffer a loss if the value of the
security purchased is less than the agreed-upon repurchase price, or if the
fund is unable to successfully assert a claim to the collateral under
foreign laws. As a result, foreign repurchase agreements may involve higher
credit risks than repurchase agreements in U.S. markets, as well as risks
associated with currency fluctuations. In addition, as with other emerging
market investments, repurchase agreements with counterparties located in
emerging markets or relating to emerging market securities may involve
issuers or counterparties with lower credit ratings than typical U.S.
repurchase agreements.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however, may
exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of a fund's investment in the company.
The activities that a fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing
third-party takeover efforts. This area of corporate activity is
increasingly prone to litigation and it is possible that a fund could be
involved in lawsuits related to such activities. FMR will monitor such
activities with a view to mitigating, to the extent possible, the risk of
litigation against the fund and the risk of actual liability if a fund is
involved in litigation. No guarantee can be made, however, that litigation
against the fund will not be undertaken or liabilities incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options; Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures Margin
Payments, Limitations on Futures and Options Transactions, Liquidity of
Options and Futures Contracts, Options and Futures Relating to Foreign
Currencies, OTC Options, Purchasing put and Call Options, and Writing Put
and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. A fund will comply with
guidelines established by the SEC with respect to coverage of options and
futures strategies by mutual funds, and, if the guidelines so require, will
set aside appropriate liquid assets in a segregated custodial account in
the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of a fund's assets could impede
portfolio management or the fund's ability to meet redemption requests or
other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. A fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of a fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when a fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's Composite Index of 500
Stocks (S&P 500) or the Bond Buyer Municipal Bond Index. Futures can be
held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. Each fund intends to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the fund can
commit assets to initial margin deposits and option premiums.
In addition to the above limitations, a fund will not: (a) sell futures
contracts, purchase put options, or write call options if, as a result,
more than 25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or write
put options if, as a result, a fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options purchased by
a fund would exceed 5% of the fund's total assets. These limitations do not
apply to options attached to or acquired or traded together with their
underlying securities, and do not apply to securities that incorporate
features similar to options.
The above limitations on a fund's investments in futures contracts and
options, and a fund's policies regarding futures contracts and options
discussed elsewhere in this SAI, may be changed as regulatory agencies
permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, a
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. A fund
may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign
currencies. A fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
a fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a
fund against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates,
it may not be possible to match the amount of currency options and futures
to the value of a fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (OTC) (options not
traded on exchanges) generally are established through negotiation with the
other party to the option contract. While this type of arrangement allows a
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains
the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. A fund may
terminate its position in a put option it has purchased by allowing it to
expire or by exercising the option. If the option is allowed to expire, the
fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out in
the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures
contract, a fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option a fund has written, however, the fund
must continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features) and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by a fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, non-government-stripped fixed-rate
mortgage-backed securities, and over-the-counter options. Also, FMR may
determine some restricted securities, municipal lease obligations,
government-stripped fixed-rate mortgage-backed securities, loans and other
direct debt instruments, emerging market securities, and swap agreements to
be illiquid. However, with respect to over-the-counter options a fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option before
expiration.
In the absence of market quotations, illiquid investments are priced at
fair value as determined in good faith by a committee appointed by the
Board of Trustees. If, through a change in values, net assets or other
circumstances, a fund were in a position where more than 10% or 15% of its
net assets (see each fund's non-fundamental investment limitations) was
invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.
INDEXED SECURITIES. A fund may purchase securities whose prices are indexed
to the prices of other securities, securities indices, currencies, precious
metals or other commodities, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. Gold-indexed securities, for example, typically
provide for a maturity value that depends on the price of gold, resulting
in a security whose price tends to rise and fall together with gold prices.
Currency-indexed securities typically are short-term to intermediate-term
debt securities whose maturity values or interest rates are determined by
reference to the values of one or more specified foreign currencies, and
may offer higher yields than U.S. dollar-denominated securities of
equivalent issuers. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may increase when the
specified currency value increases, resulting in a security that performs
similarly to a foreign-denominated instrument, or their maturity value may
decline when foreign currencies increase, resulting in a security whose
price characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values
of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
United States and abroad. At the same time, indexed securities are subject
to the credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates. Recent issuers of indexed securities have included banks,
corporations, and certain U.S. government agencies. Indexed securities may
be more volatile than the underlying instruments.
INTERFUND BORROWING PROGRAM. Pursuant to an exemptive order issued by the
SEC, each fund has received permission to lend money to, and borrow money
from, other funds advised by FMR or its affiliates. High Income Municipal,
Limited Term Tax-Exempt, and Short-Intermediate Tax-Exempt each will
participate in the interfund borrowing program only as a borrower.
Interfund loans and borrowings normally extend overnight, but can have a
maximum duration of seven days. Loans may be called on one day's notice.
Each fund (except High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt) will lend through the program only when the
returns are higher than those available from other short-term instruments
(such as repurchase agreements). A fund will borrow through the program
only when the costs are equal to or lower than the cost of bank loans. A
fund may have to borrow from a bank at a higher interest rate if an
interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If a fund does not receive scheduled interest or
principal payments on such indebtedness, the fund's share price and yield
could be adversely affected. Loans that are fully secured offer a fund more
protections than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation
of collateral from a secured loan would satisfy the borrower's obligation,
or that the collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may be
highly speculative. Borrowers that are in bankruptcy or restructuring may
never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of developing countries also involves a
risk that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal when
due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the fund could be held
liable as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to a fund in the event of fraud or misrepresentation. In the
absence of definitive regulatory guidance, each fund relies on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, each fund has direct recourse against the borrower, it
may have to rely on the agent to apply appropriate credit remedies against
a borrower. If assets held by the agent for the benefit of a fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by a fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
A fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
Each fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see each fund's investment
limitations). For purposes of these limitations, a fund generally will
treat the borrower as the "issuer" of indebtedness held by the fund. In the
case of loan participations where a bank or other lending institution
serves as financial intermediary between the fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
LOWER-QUALITY DEBT SECURITIES. While the market for high-yield corporate
debt securities has been in existence for many years and has weathered
previous economic downturns, the 1980s brought a dramatic increase in the
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of the high-yield bond market, especially during
periods of economic recession. In fact, from 1989 to 1991, the percentage
of lower-quality debt securities that defaulted rose significantly above
prior levels, although the default rate decreased from 1992 and 1993.
The market for lower-quality debt securities may be thinner and less active
than that for higher-quality debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not
available, lower-quality debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-quality debt
securities and a fund's ability to sell these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering investments
for a fund, FMR will attempt to identify those issuers of high-yielding
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the fund's shareholders.
LOWER-QUALITY MUNICIPAL SECURITIES. While the market for municipals
is considered to be substantial, adverse publicity and changing investor
perceptions may affect the ability of outside pricing services used by a
fund to value its portfolio securities, and a fund's ability to dispose of
lower-quality bonds. The outside pricing services are monitored by FMR and
reported to the Board to determine whether the services are furnishing
prices that accurately reflect fair value. The impact of changing investor
perceptions may be especially pronounced in markets where municipal
securities are thinly traded.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security holder to
seek to protect the interests of security holders if it determines this to
be in the best interest of the fund's shareholders.
MARKET DISRUPTION RISK. The value of municipal securities may be
affected by uncertainties in the municipal market related to legislation or
litigation involving the taxation of municipal securities or the rights of
municipal securities holders in the event of a bankruptcy. Municipal
bankruptcies are relatively rare, and certain provisions of the U.S.
Bankruptcy Code governing such bankruptcies are unclear and remain
untested. Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of the
market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all
of the municipal securities held by a fund.
MORTGAGE-BACKED SECURITIES. A fund may purchase mortgage-backed securities
issued by government and non-government entities such as banks, mortgage
lenders, or other financial institutions. A mortgage-backed security is an
obligation of the issuer backed by a mortgage or pool of mortgages or a
direct interest in an underlying pool of mortgages. Some mortgage-backed
securities, such as collateralized mortgage obligations (CMOs), make
payments of both principal and interest at a variety of intervals; others
make semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed securities are
based on different types of mortgages including those on commercial real
estate or residential properties. Other types of mortgage-backed securities
will likely be developed in the future, and a fund may invest in them if
FMR determines they are consistent with the fund's investment objective and
policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
MUNICIPAL LEASES and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract, and are
issued by state and local governments and authorities to acquire land or a
wide variety of equipment and facilities. Generally, a fund will not hold
such obligations directly as a lessor of the property, but will purchase a
participation interest in a municipal obligation from a bank or other third
party. A participation interest gives the fund a specified, undivided
interest in the obligation in proportion to its purchased interest in the
total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
PHYSICAL COMMODITIES. As a practical matter, investments in physical
commodities can present concerns such as delivery, storage and maintenance,
possible illiquidity and the unavailability of accurate market valuations.
FMR, in addressing these concerns, currently intends to purchase only
readily marketable precious metals and to deliver and store them with a
qualified U.S. bank. Investments in bullion earn no investment income and
may involve higher custody and transaction costs than investments in
securities. Global Resources may receive no more than 10% of its yearly
income from gains resulting from selling metals or any other physical
commodity. Therefore, the fund may be required either to hold its metals or
to sell them at a loss, or to sell its portfolio securities at a gain,when
it would not otherwise do so for investment reasons.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as changes in real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the management
skill and creditworthiness of the issuer. Real estate-related instruments
may also be affected by tax and regulatory requirements, such as those
relating to the environment.
REFUNDING CONTRACTS. A fund may purchase securities on a when-issued basis
in connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and a fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that
may be several months or several years in the future. A fund generally will
not be obligated to pay the full purchase price if it fails to perform
under a refunding contract. Instead, refunding contracts generally provide
for payment of liquidated damages to the issuer (currently 15-20% of the
purchase price). A fund may secure its obligations under a refunding
contract by depositing collateral or a letter of credit equal to the
liquidated damages provisions of the refunding contract. When required by
SEC guidelines, a fund will place liquid assets in a segregated custodial
account equal in amount to its obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. The securities
purchased by a fund are used to collateralize the repurchase obligation. As
such, they are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental interest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility that the value of the underlying security will be less than the
resale price, as well as delays and costs to a fund in connection with
bankruptcy proceedings), it is each fund's (except Equity Portfolio
Growth's) current policy to engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found
satisfactory by FMR. Equity Portfolio Growth will engage in repurchase
agreement transactions only with banks of the Federal Reserve System and
primary dealers in U.S. g overnment securities.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. A fund will
enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
(NYSE) and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1) a
fund must receive 100% collateral in the form of cash or cash equivalents
(e.g., U.S. Treasury bills or notes) from the borrower; (2) the borrower
must increase the collateral whenever the market value of the securities
loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, a fund must be able to terminate the
loan at any time; (4) a fund must receive reasonable interest on the loan
or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) a fund may pay only reasonable custodian
fees in connection with the loan; and (6) the Board of Trustees must be
able to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES. A fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a convertible
security a fund holds, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value
of the convertible security. A fund currently intends to hedge no more than
15% of its total assets with short sales on equity securities underlying
its convertible security holdings under normal circumstances.
If a fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will be
required to hold such securities while the short sale is outstanding. A
fund will incur transaction costs, including interest expense, in
connection with opening, maintaining, and closing short sales.
SOVEREIGN DEBT OBLIGATIONS. A fund may purchase sovereign debt instruments
issued or guaranteed by foreign governments or their agencies, including
debt of Latin American nations or other developing countries. Sovereign
debt may be in the form of conventional securities or other types of debt
instruments such as loans or loan participations. Sovereign debt of
developing countries may involve a high degree of risk, and may be in
default or present the risk of default. Governmental entities responsible
for repayment of the debt may be unable or unwilling to repay principal and
interest when due, and may require renegotiation or rescheduling of debt
payments. In addition, prospects for repayment of principal and interest
may depend on political as well as economic factors.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. A fund may acquire
standby commitments to enhance the liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. A fund may purchase standby commitments separate from or in
conjunction with the purchase of securities subject to such commitments. In
the latter case, a fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
purchase an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by a fund; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of investments or market
factors. Depending on their structure, swap agreements may increase or
decrease a fund's exposure to long- or short-term interest rates (in the
United States or abroad), foreign currency values, mortgage securities,
corporate borrowing rates, or other factors such as security prices or
inflation rates. Swap agreements can take many different forms and are
known by a variety of names. A fund is not limited to any particular form
of swap agreement if FMR determines it is consistent with a fund's
investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
rights to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if a fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease a fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a fund's investments and its share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by a fund, the fund must be prepared to
make such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. A fund expects to be able to
reduce its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
A fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If a fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, a fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. In selecting tender option bonds for a fund, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value. In many instances,
bonds and participation interests have tender options or demand features
that permit a fund to tender (or put) the bonds to an institution at
periodic intervals and to receive the principal amount thereof. A fund
considers variable rate instruments structured in this way (Participating
VRDOs) to be essentially equivalent to other VRDOs it purchases. The
Internal Revenue Service (IRS) has not ruled whether the interest on
Participating VRDOs is tax-exempt and, accordingly, a fund intends to
purchase these instruments based on opinions of bond counsel. A fund may
invest in fixed-rate bonds that are subject to third party puts and in
participation interests in such bonds held by a bank in trust or otherwise.
WARRANTS are securities that give a fund the right to purchase equity
securities from the issuer at a specific price (the strike price) for a
limited period of time. The strike price of warrants typically is much
lower than the current market price of the underlying securities, yet they
are subject to similar price fluctuations. As a result, warrants may be
more volatile investments than the underlying securities and may offer
greater potential for capital appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with respect
to the underlying securities and do not represent any rights in the assets
of the issuing company. Also, the value of the warrant does not necessarily
change with the value of the underlying securities, and a warrant ceases to
have value if it is not exercised prior to expiration date. These factors
can make warrants more speculative than other types of investments.
ZERO COUPON BONDS do not make interest payments ; i nstead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its dividends, a fund takes into account as income a portion of
the difference between a zero coupon bond's purchase price and its face
value.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are
generally secured by the revenues derived from mortgages purchased with
the proceeds of the bond issue. It is extremely difficult to predict the
supply of available mortgages to be purchased with the proceeds of an issue
or the future cash flow from the underlying mortgages. Consequently, there
are risks that proceeds will exceed supply, resulting in early retirement
of bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment. Among the factors that may lead to declining
or insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general economic
conditions. Student loan revenue bonds are generally offered by state (or
substate) authorities or commissions and are backed by pools of student
loans. Underlying student loans may be guaranteed by state guarantee
agencies and may be subject to reimbursement by the United States
Department of Education through its guaranteed student loan program. Others
may be private, uninsured loans made to parents or students which are
supported by reserves or other forms of credit enhancement. Recoveries of
principal due to loan defaults may be applied to redemption of bonds or may
be used to re-lend, depending on program latitude and demand for loans.
Cash flows supporting student loan revenue bonds are impacted by numerous
factors, including the rate of student loan defaults, seasoning of the loan
portfolio, and student repayment deferral during periods of forbearance.
Other risks associated with student loan revenue bonds include potential
changes in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and other
program subsidies currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to
rate increases, costly environmental litigation , and federal
environmental mandates are challenges faced by issuers of water and sewer
bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads , highways or other transit
facilities . Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier that uses the
airport as a hub. Air traffic generally tracks broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of the
area. Fuel costs and availability also affect other transportation-related
securities, as does the presence of alternate forms of transportation, such
as public transportation.
The following paragraph restates fundamental policies previously disclosed
in the above descriptions of security types and investment practices.
FUNDAMENTAL POLICIES : It is the policy of Equity Portfolio
Growth to engage in repurchase agreement transactions
only with banks of the Federal Reserve System and primary dealers in
U.S. G overnment securities .
SPECIAL CONSIDERATIONS AFFECTING CANADA
Canada occupies the northern part of North America and is the second
largest country in the world (3.97 million square miles in area) extending
from the Atlantic Ocean to the Pacific Ocean. The companies in which the
funds may invest include those involved in the energy industry, industrial
materials (chemicals, base metals, timber and paper) and agricultural
materials (grain cereals). The economy of Canada is strongly influenced by
the activities of companies and industries involved in the production and
processing of natural resources. Canada is a major producer of
hydroelectricity, oil and gas. The business activities of companies in the
energy field may include the production, generation, transmission,
marketing, control or measurement of energy or energy fuels. The securities
of companies in the energy industry are subject to changes in value and
dividend yield which depend, to a large extent, on the price and supply of
energy fuels. Rapid price and supply fluctuations may be caused by events
relating to international politics, energy conservation and the success of
exploration products. Canada is one the world's leading industrial
countries and is rich in natural resources such as zinc, uranium, nickel,
gold, silver, aluminum, iron and copper. Forest covers over 44% of land
area, making Canada a leading world producer of newsprint. Canada is also a
major exporter of agricultural products.
Canada, the United States and Mexico began to implement the North American
Free Trade Agreement (NAFTA) in 1994, reducing trade barriers affecting
important sectors of each country's economy. This agreement is expected to
lead to increased trade among the three countries.
Many factors affect and could have an adverse impact on the financial
condition of Canada, including social, environmental and economic
conditions, factors which are not within the control of Canada. Although
the Canadian political system is generally more stable than that of many
other foreign countries, continued tension with respect to greater
independence for, or possible separation of, Quebec causes political
uncertainty. Moreover, while the Canadian dollar is generally less volatile
relative to the U.S. dollar than other foreign currencies, the value of the
Canadian dollar has decreased significantly in recent years. Continued
efforts to reduce the structural Canadian budget deficit will be required.
FMR is unable to predict what effect, if any, such factors would have on
instruments held in the fund's portfolio.
Securities of Canadian companies are not considered by FMR to have the same
level of risk as those of other non-U.S. companies. Canadian and U.S.
companies are generally subject to similar auditing and accounting
procedures, and similar government supervision and regulation. Canadian
markets are more liquid than many other foreign markets and share similar
characteristics with U.S. markets. A fund may elect to participate in new
equity issues or initial public offerings of Canadian companies.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America is a region rich in natural resources such as oil, copper,
tin, silver, iron ore, forestry, fishing, livestock, and agriculture. The
region has a large population (roughly 300 million) representing a large
number of markets. Economic growth was strong in the 1960s and 1970s, but
slowed dramatically in the 1980s as a result of poor economic policies,
higher international interest rates and the denial of access to new foreign
capital. Capital flight has proven a persistent problem and external debt
has been forcibly rescheduled. High inflation and low economic growth have
begun to give way to stable, manageable inflation rates and higher economic
growth, although political turmoil (including assassinations) continues in
some countries. Changes in political leadership and the implementation of
market oriented economic policies, such as privatization, trade reform, and
fiscal and monetary reform are among the recent steps taken to renew
economic growth. External debt is being restructured and flight capital
(domestic capital that has left the home country) has begun to return.
Various trade agreements have also been formed within the region, including
the Andean Pact, Mercosur, and NAFTA. NAFTA, which was implemented on
January 1, 1994, is the largest of these agreements.
Latin American equity markets can be extremely volatile and in the past
have shown little correlation with the United States market. Currencies
have typically been weak, given high inflation rates, but have stabilized
more recently. Most currencies are not free floating, but wide fluctuations
in value over relatively short periods of time can still occur due to
changes in the market.
Mexico's economy is a mixture of state-owned industrial plants (notably
oil), private manufacturing and services, and both large-scale and
traditional agriculture. Mexico's economy has been transformed
significantly over the last six to seven years. Large budget deficits and a
high level of state ownership in many productive and service areas have
given way to balanced budgets and privatization. In the last few years, the
government has sold the telephone company, the major steel companies, the
banks, and many others. The major state ownership remaining is in the oil
sector and the electricity sector. Economic policy transformation has led
to much reduced inflation and more stable economic growth in the last few
years. The recently implemented NAFTA will further cement the economic ties
between Mexico, Canada, and the United States.
Continued political unrest, particularly in southern Mexico, and
uncertainty as to the effectiveness of reforms have recently had an adverse
impact on economic development. In December 1994, Mexico reversed a
long-held currency policy by devaluing the Mexican peso and allowing it to
float freely. The value of the peso against the U.S. dollar and other
currencies declined sharply. As a result, Mexican stocks plunged while
interest rates soared, and other Latin America securities markets were also
adversely affected. Extension and continuance of financial aid to Mexico
from the U.S., including loan guarantees, is uncertain at this time.
Brazil is the sixth largest country in the world in population, with about
155 million people, and represents a huge domestic market. Brazil entered
the 1990s with declining real growth, runaway inflation, an unserviceable
foreign debt of $122 billion, and a lack of policy direction. Brazil's rate
of consumer-price inflation continues to accelerate while gross domestic
product (GDP) remains depressed. A major long-run strength is Brazil's
natural resources. Iron ore, bauxite, tin, gold, and forestry products make
up some o f Brazil's natural resource base, which includes some of
the largest mineral reserves in the world. The private sector has remained
efficient, mainly through export promotion. The government has recently
embarked on an ambitious reform program that seeks to modernize and
reinvigorate the economy by stabilizing prices, deregulating the economy,
and opening the economy to increased foreign competition. Privatization of
certain industries is proceeding slowly.
Chile, like Brazil, is endowed with considerable mineral resources,
particularly copper, which accounts for 40% of total exports. Export
production (especially in the forestry and mining sectors) continues to be
the main long-term engine of economic growth and modernization. Economic
reform has been ongoing in Chile for over 15 years, but political democracy
has only recently returned to Chile. Privatization of the public sector
beginning in the early 1980s has bolstered the equity market. A
well-organized pension system has created a long-term domestic investor
base.
Argentina is strong in wheat production and other foodstuffs and in
livestock ranching. A well-educated and skilled population boasts one of
the highest literacy rates in the region. The country has been ravaged by
decades of extremely high inflation and political instability. Like Mexico,
however, Argentina has had a dramatic transformation in its economy in the
last several years. Extremely high inflation rates and stagnant economic
growth have been replaced by low inflation and strong economic growth.
Massive privatization has occurred and continues, which should reduce the
amount of external debt outstanding.
Venezuela has substantial oil reserves. External debt is being
renegotiated, and the government is implementing economic reform in order
to reduce the size of the public sector, although these reform attempts
have recently met with political opposition. Internal gasoline prices,
which are one-third those of international prices, are being increased in
order to reduce subsidies. Price controls did not prevent annual inflation
from reaching at least 75% in 1994, compared to 45.9% in 1993. The official
target of 25-30% inflation for 1995 is improbable, with a continuation of
higher levels more likely. The failure of major banks adversely affected
the Venezuelan economy in 1994 and could continue to have a negative
impact. Plans for privatization and exchange and interest rate
liberalization are examples of recently introduced reforms. It is not clear
when the economic situation in Venezuela will improve and the country
remains extremely dependent on oil.
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND SOUTHEAST
ASIA
Many Asian countries may be subject to a greater degree of social,
political and economic instability than is the case in the United States
and Western European countries. Such instability may result from (i)
authoritarian governments or military involvement in political and economic
decision-making; (ii) popular unrest associated with demands for improved
political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; and (v) ethnic,
religious and racial disaffection.
The economies of most of the Asian countries are heavily dependent upon
international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners,
principally, the United States, Japan, China and the European Community.
The enactment by the United States or other principal trading partners of
protectionist trade legislation, reduction of foreign investment in the
local economies and general declines in the international securities
markets could have a significant adverse effect upon the securities markets
of the Asian countries.
Thailand has one of the fastest growing stock markets in the world. The
manufacturing sector is becoming increasingly sophisticated and is
benefiting from export-oriented investing. The manufacturing and service
sectors continue to account for the bulk of Thailand's economic growth. The
agricultural sector continues to become less important. The government has
followed fairly sound fiscal and monetary policies, aided by increased tax
receipts from a fast moving economy. The government also continues to move
ahead with new projects - especially telecommunications, roads and port
facilities - needed to refurbish the country's overtaxed infrastructure.
Nonetheless, political unrest has caused many international businesses to
question Thailand's political stability.
Hong Kong's economic growth which was vigorous in the 1980s has not been
positively affected by its impending return to Chinese dominion in 1997.
Although China has committed by treaty to preserve the economic and social
freedoms enjoyed in Hong Kong for 50 years after regaining control of Hong
Kong, the continuation of the current form of the economic system in Hong
Kong after the reversion will depend on the actions of the government of
China. Business confidence in Hong Kong, therefore, can be significantly
affected by developments, which in turn can affect markets and business
performance. In preparation for 1997, Hong Kong has continued to develop
trade with China, while also maintaining its long-standing export
relationship with the United States. Spending on infrastructure
improvements is a significant priority of the colonial government while the
private sector continues to diversify abroad based on its position as an
established international trade center in the Far East.
In terms of GDP, industrial standards and level of education, South Korea
is second only to Japan in Asia. It enjoys the benefits of a diversified
economy with well developed sectors in electronics, automobiles, textiles
and shoe manufacture, steel and shipbuilding among others. The driving
force behind the economy's dynamic growth has been the planned development
of an export-oriented economy in a vigorously entrepreneurial society.
Inflation rates, however, began to challenge South Korea's strong economic
performance in the early 1990s. Moreover, the international situation
between South Korea and North Korea continues to be uncertain.
Indonesia is a mixed economy with many socialist institutions and central
planning but with a recent emphasis on deregulation and private enterprise.
Like Thailand, Indonesia has extensive natural wealth, yet with a large and
rapidly increasingly population, it remains a poor country. Indonesia's
dependence on commodity exports makes it vulnerable to a fall in world
commodity prices.
Malaysia has one of the fastest growing economies in the Asian-Pacific
region. Malaysia has become the world's third-largest producer of
semiconductor devices (after the United States and Japan) and the world's
largest exporter of semiconductor devices. More remarkable is the country's
ability to achieve rapid economic growth with relative price stability as
the government followed prudent fiscal and monetary policies. Malaysia's
high export dependence level leaves it vulnerable to recession in the
countries with which it trades or to a fall in world commodity prices.
India is one of the world's top fifteen industrial nations and has
considerable natural resources. The government exercises significant
influence over many aspects of the economy. Accordingly, future government
actions could have a significant effect on private sector companies, market
conditions, and prices and yields of securities of Indian issuers held by a
fund. Policymakers in India actively encourage foreign direct investment,
particularly in labor intensive industries. In addition, Indian stock
exchanges rely entirely on delivery of physical share certificates and have
experienced operational difficulties. These problems have included the
existence of fraudulent shares in the market, failed trades, and delays in
the settlement and registration of securities transactions. Indian stock
exchanges have in the past been forced to close for political reasons; for
example, a brokers' strike closed the exchange for ten days in December
1993, and there is no assurance that the exchanges will not be forced to
close again.
Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived
from its history. During the 1970s and the early 1980s, the economy
expanded rapidly, achieving an average annual growth rate of 9%. Per capita
GDP is among the highest in Asia. Singapore holds a position as a major oil
refining and services center.
Japan currently has the second largest GDP in the world. The Japanese
economy has grown substantially over the last three decades. Its growth
rate averaged over 5% in the 1970s and 1980s. However, in the 1990s, the
growth rate in Japan has slowed. Despite small rallies and market gains,
Japan has been plagued with economic sluggishness. Economic conditions have
weakened considerably in Japan since October 1992. The boom in Japan's
equity and property markets during the expansion of the late 1980's
supported high rates of investment and consumer spending on durable goods,
but both of these components of demand have now retreated sharply following
the decline in asset prices. Profits have fallen sharply, the previously
tight labor market conditions have eased considerably, and consumer
confidence has waned. The banking sector has experienced a sharp rise in
non-performing loans, and strains in the financial system may continue.
Continued political uncertainty has resulted from numerous changes in
government, shifting government coalitions and the political and economic
problems associated with a large trade imbalance.
Although Japan's economic growth has declined significantly since 1990,
many Japanese companies seem capable of rebounding due to increased
investments, smaller borrowings, increased product development and
continued government support. Growth recovered slightly in 1994. Japan's
economic growth in the early 1980s was due in part to government
borrowings. Japan is heavily dependent upon international trade and,
accordingly, has been and may continue to be adversely affected by trade
barriers, and other protectionist or retaliatory measures of, as well as
economic conditions in, the United States and other countries with which it
trades. Industry, the most important sector of the economy, is heavily
dependent on imported raw materials and fuels. Japan's major industries are
in the engineering, electrical, textile, chemical, automobile, fishing, and
telecommunication fields. Japan imports iron ore, copper, and many forest
products. Only 19% of its land is suitable for cultivation. Japan's
agricultural economy is subsidized and protected. It is about 50%
self-sufficient in food production. Even though Japan produces a minute
rice surplus, it is dependent upon large imports of wheat, sorghum, and
soybeans from other countries. Japan's high volume of exports such as
automobiles, machine tools, and semiconductors have caused trade tensions
with other countries, particularly the United States. Attempts to approve
trading agreements between the countries may reduce the friction caused by
the current trade imbalance. In recent months, the Japanese markets have
also been adversely affected by the earthquake in Kobe, Japan, and the
bankruptcy of Barings Bank, Ltd., although the long-term effects of these
events are difficult to predict.
Australia has a prosperous Western-style capitalist economy, with a per
capita GDP comparable to levels in industrialized West European countries.
It is rich in natural resources and is the world's largest exporter of beef
and wool, second-largest exporter of mutton, and among the top wheat
exporters. Australia is also a major exporter of minerals, metals and
fossil fuels. Due to the nature of its exports, a downturn in world
commodity prices could have a significant negative impact on its economy.
SPECIAL CONSIDERATIONS AFFECTING EUROPE
New developments surrounding the creation of a unified common market in
Europe have helped to reduce physical and economic barriers promoting the
free flow of goods and services throughout Western Europe. These new
developments could make this new unified market one of the largest in the
world.
The European Community (EC) consists of Belgium, Denmark, France, Germany,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and the
United Kingdom (the member states). In 1986, the member states of the EC
signed the "Single European Act," an agreement committing these countries
to the establishment of a market among themselves, unimpeded by internal
barriers or hindrances to the free movement of goods, persons, services, or
capital. To meet this goal, a series of directives have been issued to the
member states. Compliance with these directives is designed to eliminate
three principal categories of barriers: 1) physical frontiers, such as
customs posts and border controls; 2) technical barriers (which include
restrictions operating within national territories) such as regulations and
norms for goods and services (product standards); discrimination against
foreign bids (bids by other EC members) on public purchases; or
restrictions on foreign requests to establish subsidiaries; and 3) fiscal
frontiers, notably the need to levy value-added taxes, tariffs, or
excise taxe s on goods or services imported from other EC states.
The ultimate goal of this project is to achieve a large unified domestic
European market in which available resources would be more efficiently
allocated through the elimination of the above-mentioned barriers and the
added costs associated with those barriers. Elimination of these barriers
would simplify product distribution networks, allow economies of scale to
be more readily achieved, and free the flow of capital and other resources.
The Maastricht Treaty on economic and monetary union (EMU) attempts to
provide its members with a stable monetary framework consistent with the
EC's broad economic goals. But until the EMU takes effect, which is
intended to occur between 1997 and 1999, the community will face the need
to reinforce monetary cooperation in order to reduce the risk of a
recurrence of tensions between domestic and external policy objectives.
The total European market, as represented by both EC and non-EC countries,
consists of over 328 million consumers, making it larger currently than
either the United States or Japanese markets. European businesses compete
nationally and internationally in a wide range of industries including:
telecommunications and information services, roads and transportation,
building materials, food and beverages, broadcast and media, financial
services, electronics, and textiles. Actual and anticipated actions on the
part of member states to conform to the unified Europe directives has
prompted interest and activity not only by European firms, but also by
foreign entities anxious to establish a presence in Europe that will result
from these changes. Indications of the effect of this response to a unified
Europe can be seen in the areas of mergers and acquisitions, corporate
expansion and development, GDP growth, and national stock market activity.
The early experience of the former centrally planned economies has already
demonstrated the crucially important link between structural reforms,
macroeconomic stabilization, and successful economic transformation. Among
the central European countries, the Czech Republic, Hungary, and Poland
have made the greatest progress in structural reform; inflationary
pressures in those countries have abated following price
liberalization, and output has begun to recover. These achievements will be
difficult to sustain, however, in the absence of strong efforts to contain
the large fiscal deficits that have accompanied the considerable losses of
output and tax revenue since the start of the reform process.
In the Baltic countries there are encouraging signs that reforms are taking
hold and are being supported by strong stabilization efforts. In most other
countries of the former Soviet Union, in contrast, inadequate stabilization
efforts now threaten to lead to hyper-inflation, which could derail the
reform process. Inflation, which had abated following the immediate impact
of price liberalization in early 1992, surged to extremely high levels. The
main reason for this development has been excessive credit expansion to the
government and to state enterprises. The transformation process is being
seriously hampered by the widespread subsidization of inefficient
enterprises and the resulting misallocation of resources. The lack of
effective economic and monetary cooperation among the countries of the
former Soviet Union exacerbates other problems by severely constraining
trade flows and impeding inflation control. Partly as a result of these
difficulties, some countries have decided that the introduction of separate
currencies offers the best scope for avoiding hyper-inflation and for
improving economic conditions. This development can facilitate the
implementation of stronger stabilization programs.
Economic conditions appear to have improved for some of the transition
economies of central Europe. Following three successive years of output
declines, there are preliminary indications of a turnaround in the Czech
Republic and the Slovak Republic, Hungary and Poland; growth in
private sector activity and strong exports, especially to Western Europe,
now appear to have contained the fall in output. Most central European
countries in transition, however, are expected to achieve positive real
growth in 1995 as market reforms deepen. The strength of the projected
output gains will depend crucially on the ability of the reforming
countries to contain fiscal deficits and inflation and on their continued
access to, and success in, export markets. Economic conditions in the
former Soviet Union have continued to deteriorate. Real GDP in Russia is
estimated to have fallen 19 percent in 1992, after a 9 percent decline in
1991. In many other countries of the region, output losses have been even
larger. These declines reflect the adjustment difficulties during the early
stages of the transition, high rates of inflation, the compression of
imports, disruption in trade among the countries of the former Soviet
Union, and uncertainties about the reform process itself. Large-scale
subsidies are delaying industrial restructuring and are exacerbating the
fiscal situation. A reversal of these adverse factors is not anticipated in
the near term, and output is expected to decline further in most of these
countries. A number of their governments, including those of Hungary and
Poland, are currently implementing or considering reforms directed at
political and economic liberalization, including efforts to foster
multi-party political systems, decentralize economic planning, and move
toward free market economies. At present, no Eastern European country has a
developed stock market, but Poland, Hungary and the Czech Republic have
small securities markets in operation. Ethnic and civil conflict s
currently rage throughout the former Yugoslavia. The outcome is uncertain.
Both the EC and Japan, among others, have made overtures to establish
trading arrangements and assist in the economic development of the Eastern
European nations. There is also an urgent need for positive steps to resist
protectionist pressures, especially by bringing the multilateral trade
negotiations under the Uruguay Round of the General Agreement on Trade and
Tariffs to a successful conclusion. Determined action to alleviate
short-term difficulties and to achieve key medium-term objectives would
unquestionably strengthen consumer and business confidence. Interest rates
generally have declined somewhat with the easing of tensions in the
Exchange Rate Mechanism, but for most countries tight monetary conditions
remain an obstacle to stronger growth and a threat to exchange market
stability. However, in the long-term, reunification could prove to be an
engine for domestic and international growth.
The conditions that have given rise to these developments are changeable,
and there is no assurance that reforms will continue or that their goals
will be achieved.
Portugal is a genuinely emerging market which has experienced rapid growth
since the mid-1980s, except for a brief period of stagnation over 1990-91.
Portugal's government remains committed to privatization of the financial
system away from one dependent upon the banking system to a more balanced
structure appropriate for the requirements of a modern economy.
Economic reforms launched in the 1980s continue to benefit Turkey in the
1990s. Turkey's economy has grown since the 1980s. Agriculture remains the
most important economic sector, employing over half of the labor force, and
accounting for significant portions of GDP and exports. Inflation and
interest rates remain high, and a large budget deficit will continue to
cause difficulties in Turkey's continuing transformation from a
centrally controlled to a free market economy.
Like many other Western economies, Greece suffered severely from the global
oil price hikes of the 1970s, with annual GDP growth plunging from 8% to 2%
in the 1980s, and inflation, unemployment, and budget deficits rising
sharply. The fall of the socialist government in 1989 and the inability of
the conservative opposition to obtain a clear majority led to business
uncertainty and the prospect for continued flat economic performance. Once
Greece has sorted out its political situation, it will have to face the
challenges posed by the steadily increasing integration of the EU,
including the progressive lowering of trade and investment barriers.
Tourism continues as a major industry, providing a vital offset to a
sizable commodity trade deficit.
REAL GDP ANNUAL RATE OF GROWTH
1993
Denmark 1.2 %
France -1.0 %
Germany -1.1 %
Italy -0.7 %
Netherlands -1.0 %
Spain -0.6 %
Switzerland 2.0 %
United Kingdom 2.0%
Source: World Economic Outlook October 1994
(Figures are quoted based on each country's domestic currency.)
NATIONAL INDICES (WITHOUT DIVIDENDS) OCTOBER 1994
GROWTH IN U.S. DOLLARS
EUROPE
6 Months 12 Months 5 Years
Greece -10.22 5.56 2.71
Portugal .65 7.68 -5.53
Turkey 48.77 -45.261 -7.386
SPECIAL CONSIDERATIONS AFFECTING AFRICA
Africa is a continent of roughly 50 countries with a total population of
approximately 840 million people. Literacy rates (the percentage of people
who are over 15 years of age and who can read and write) are relatively
low, ranging from 20% to 60%. The primary industries include crude oil,
natural gas, manganese ore, phosphate, bauxite, copper, iron, diamonds,
cotton, coffee, cocoa, timber, tobacco, sugar, tourism, and cattle. Many
African countries are fraught with political instability. However, there
has been a trend over the past several years toward democratization. Many
countries are moving from a military style, Marxist, or single party
government to a multi-party system. Still, there remain many countries that
do not have a stable political process. Many countries have been enmeshed
in civil , ethnic or border wars. Ethnic, religious, cultural and
linguistic differences divide the African peoples. Economically, the
Northern Rim countries (including Morocco, Egypt, and Algeria) ,
Nigeria, Zimbabwe and South Africa are the wealthier countries on the
continent due to their strong ties with the European nations. The market
capitalization of these countries has been growing recently as more
international companies invest in Africa and as local companies start to
list on the exchanges. However, religious strife has been a significant
source of instability in the Northern Rim countries. Although racial
discord in South Africa may be reduced by constitutional and political
changes that are in progress, as well as increased foreign investments, the
long-term future of South Africa remains uncertain.
On the other end of the economic spectrum are countries, such as
Burkina-Faso, Madagascar, and Malawi, that are considered to be among the
poorest or least developed in the world. These countries are generally
landlocked or have poor natural resources. The economies of many African
countries are heavily dependent on international oil prices. Of all the
African industries, oil has been the most lucrative, accounting for 40% to
60% of many countries' GDP. However, the general decline in oil prices has
had an adverse impact on many economies.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to the
sub-advisers (see the section entitled "Management Contracts"), the
sub-advisers are authorized to place orders for the purchase and sale of
portfolio securities, and will do so in accordance with the policies
described below. FMR is also responsible for the placement of transaction
orders for other investment companies and accounts for which it or its
affiliates act as investment adviser. In selecting broker-dealers, subject
to applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to: the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions; and, for equity funds, arrangements for
payment of fund expenses. Generally, commissions for foreign investments
traded on foreign exchanges will be higher than for U.S. investments and
may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; and the
availability of securities or the purchasers or sellers of securities .
In addition, such broker-dealers may furnish analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts; and effect securities
transactions and perform functions incidental thereto (such as clearance
and settlement). Generally, FMR selects such broker-dealers (to the extent
possible consistent with execution considerations) in accordance with a
ranking of broker-dealers determined periodically by FMR's investment staff
(for equity funds), based upon the quality of research and execution
services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by, and to place
portfolio transactions with, brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with FBSI and Fidelity
Brokerage Services ( FBS ) , subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. From
September 1992 through December 1994, FBS operated under the name Fidelity
Brokerage Services Limited, Inc. (FBSL). As of January 1995, FBSL was
converted into a limited liability company and assumed the name FBS.
Prior to September 4, 1992, FBSL operated under the name Fidelity
Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr.
Johnson 3d, Johnson family members, and various trusts for the benefit of
the Johnson family own, directly or indirectly, more than 25% of the voting
common stock of FIL.
FMR may allocate brokerage transactions to broker-dealers who have entered
into arrangements with FMR under which the broker-dealer allocates a
portion of the commissions paid by Overseas, Equity Portfolio Growth,
Global Resources, Growth Opportunities, Strategic Opportunities, Equity
Income, and Income & Growth toward payment of that fund's expenses, such as
transfer agent fees or custodian fees. The transaction quality must,
however, be comparable to those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
The funds' Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of each fund and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For the fiscal periods ended 1993 and 1994, respectively, each fund's
portfolio turnover rates are shown in the chart below. Because a high
turnover rate increases transaction costs and may increase taxable gains,
FMR carefully weighs the anticipated benefits of short-term investing
against these consequences. An increased turnover rate is due to a greater
volume of shareholder purchase orders, short-term interest rate volatility
and other special market conditions.
Fund Fiscal Period Ended 1993 1994
Overseas October 31 42% 34%
Equity Portfolio Growth November 30 160% 137%
Global Resources October 31 208% 125%
Growth Opportunities October 31 69% 43%
Strategic Opportunities September 30+ 183% 159%
Equity Income November 30 120% 140%
Income & Growth October 31 200% 202%
Emerging Markets Income December 31 N/A* 354%**
High Yield October 31 79% 118%
Strategic Income December 31 N/A* 104%**
Government Investment October 31 333% 313%
Limited Term Bond November 30 59% 68%
Short Fixed-Income October 31 58% 108%
High Income Municipal October 31 27% 38%
Limited Term Tax-Exempt November 30 46% 53%
Short-Intermediate Tax-Exempt November 30 N/A* 111%**
* Emerging Markets Income, Strategic Income, and Short-Intermediate
Tax-Exempt commenced operations on March 10, 1994, October 31, 1994, and
March 16, 1994, respectively.
** Annualized. Portfolio turnover rates shown are from commencement of
operations to the end of the fiscal period, as indicated.
+ As of November 9, 1994, t he fiscal year end for Strategic
Opportunities changed from September 30 to December 31.
The brokerage commissions paid by Overseas, Equity Portfolio Growth,
Global Resources, Growth Opportunities, Strategic Opportunities, Equity
Income, and Income & Growth , the p ortion of this amount paid to
firms providing research and the fees paid to FBSI and FBS (formerly
FBSL) for the past three fiscal years are listed in the following
table. The second table shows the approximate dollar amount of the
transactions on which brokerage commissions were paid for fiscal 1994.
The third table shows the percentage of brokerage commissions
paid to, and the amount of transactions effected through, FBSI and FBS for
fiscal 1994. Each fund pays both commissions and spreads in connection with
the placement of portfolio transactions; FBSI and FBS are paid on a
commission basis. The difference between the percentage of brokerage
commissions paid and the percentage of the dollar amount of transactions
effected through FBSI and FBS is a result of the low commission
rates charged by FBSI and FBS . The other funds paid no brokerage
commissions for the fiscal years 1992 through 1994.
<TABLE>
<CAPTION>
FISCAL TOTAL AMOUNT PAID TO FBSI TO FBS
PERIOD AMOUNT TO FIRMS
ENDED PAID PROVIDING
RESEARCH *
<S> <C> <C> <C> <C> <C> <C>
OVERSEAS October 31
1994 $ 1,601,660 $ 1,358,208 $ 685 $ 0
1993 500,186 435,162 800 0
1992 119,400 106,266 30 1,179
EQUITY PORTFOLIO
GROWTH November 30
1994 2,086,370 1,224,699 729,903 0
1993 915,767 503,672 362,158 0
1992 424,364 233,400 148,571 0
GLOBAL RESOURCES October 31
1994 630,752 401,789 195,272 0
1993 147,017 97,472 41,286 0
1992 58,180 42,471 13,864 0
GROWTH
OPPORTUNITIES October 31
199 4 3,589,080 1,970,405 1,368,574 0
1993 2,583,165 1,529,234 899,767 0
1992 1,147,967 747,327 334,189 925
STRATEGIC
OPPORTUNITIES December 31
10/1/94 - 12/31/94 403,617 295,089 70,46 5 0
10/1/93 - 9/30/94 1,1 66,854 974,489 151,233 96
1993 1,068,788 876,406 103,206 0
1992 1,087,115 851,211 126,298 0
EQUITY INCOME November 30
1994 827,499 489,052 290,182 0
1993 557,493 382,440 126,832 0
1992 342,397 205,781 107,503 441
INCOME & GROWTH October 31
1994 7,338,038 5,584,247 1,104,577 0
1993 2,998,137 1,945,791 796,821 0
1992 767,720 483,664 143,974 0
</TABLE>
* The provision of research services was not necessarily a factor in
the placement of all this business with such firms.
The table below depicts the total amount of transactions on which
brokerage commissions were paid for the fiscal periods ending 1994:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL PERIOD
TOTAL AMOUNT OF
ENDED TRANSACTIONS
Overseas October 31 $ 593,714,765
Equity Portfolio Growth November 30 1,928,842,370
Global Resources October 31 306,587,110
Growth Opportunities October 31 3,131,464,670
Strategic Opportunities December 31* 302,116,639
September 30** 772,540,571
Equity Income November 30 632,935,142
Income & Growth October 31 4,083,654,796
</TABLE>
* Period of October 1, 1994 through December 31, 1994.
** Period of October 1, 1993 through September 30, 1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FISCAL PERIOD % OF % OF % OF % OF
ENDED COMMISSIONS COMMISSIONS TRANSACTIONS TRANSACTIONS
PAID TO FBSI PAID TO FBS EFFECTED EFFECTED
1994 1994 THROUGH THROUGH FBS
TO FBSI 1994
1994
Overseas October 31 .04 0 17.46 0
Equity Portfolio Growth November 30 35.0 0 49.2 0
Global Resources October 31 31.0 0 52.7 0
Growth Opportunities October 31 38.1 0 50.1 0
Strategic Opportunities December 31 17.5 0 2 9.9 0
Equity Income November 30 35.1 0 45.6 0
Income & Growth October 31 15.1 0 20.7 0
</TABLE>
From time to time, the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds or accounts are simultaneously engaged in the
purchase or sale of the same security, the prices and amounts are allocated
in accordance with procedures believed to be appropriate and equitable for
each fund and account. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to participate
in volume transactions will produce better executions and prices for the
funds. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to each fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Most equity securities for which
the primary market is the United States are valued at last sale price or,
if no sale has occurred, at the closing bid price. Most equity securities
for which the primary market is outside the United States are valued using
the official closing price or the last sale price in the principal market
in which they are traded. If the last sale price (on the local exchange) is
unavailable, the last evaluated quote or last bid price normally is used.
Fixed-income securities and other assets for which market quotations are
readily available may be valued at market values determined by such
securities' most recent bid prices (sales prices if the principal market is
an exchange) in the principal market in which they normally are traded, as
furnished by recognized dealers in such securities or assets. Short-term
securities are valued either at amortized cost or at original cost plus
accrued interest, both of which approximate current value.
Fixed-income and convertible securities may also be valued on the basis of
information furnished by a pricing service that uses a valuation matrix
which incorporates both dealer-supplied valuations and electronic data
processing techniques. Use of pricing services has been approved by the
Board of Trustees. A number of pricing services are available, and the
Trustees, on the basis of an on-going evaluation of these services, may use
various pricing services or discontinue the use of any pricing service.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. Fidelity Service Company (FSC) gathers all exchange
rates daily at the close of the New York Stock Exchange
( NYSE ) using the last quoted price on the local currency and
then translates the value of foreign securities from their local currencies
into U.S. dollars. If an extraordinary event that is expected to materially
affect the value of a portfolio security occurs after the close of an
exchange on which that security is traded, then that security will be
valued as determined in good faith by a committee appointed by the Board of
Trustees.
Futures contracts and options are valued on the basis of market quotations,
if available.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by a fund if, in the opinion of a committee appointed
by the Board of Trustees, some other method (e.g., closing over-the-counter
bid prices in the case of debt instruments traded on an exchange) would
more accurately reflect the fair market value of such securities.
PERFORMANCE
Each class of shares may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Share price, yield, and total return
fluctuate in response to market conditions and other factors, and the value
of shares when redeemed may be more or less than their original cost.
YIELD CALCULATIONS. Yields for a class are computed by dividing the class's
pro rata share of the applicable interest and dividend income, if any, for
a given 30-day or one-month period, net of expenses, by the average number
of shares of that class entitled to receive distributions during the
period, dividing this figure by the class's net asset value (NAV) or
offering price, as appropriate, at the end of the period, and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. Dividends from equity investments are treated as if they were
accrued on a daily basis, solely for the purposes of yield calculations. In
general, interest income is reduced with respect to bonds trading at a
premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at
a discount by adding a portion of the discount to daily income. For a
fund's investments denominated in foreign currencies, income and expenses
are calculated first in their respective currencies, and are then converted
to U.S. dollars, either when they are actually converted or at the end of
the 30-day or one month period, whichever is earlier. Capital gains and
losses generally are excluded from the calculation as are gains and losses
from currency exchange rate fluctuations.
Income calculated for the purposes of calculating a class's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a class's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
In calculating a class's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in order
to reflect the risk premium on that security. This practice will have the
effect of reducing a class's yield.
Yield information may be useful in reviewing a class's performance and in
providing a basis for comparison with other investment alternatives.
However, each class's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates, a
class's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the class's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the class's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
Tax-equivalent yield is the rate an investor would have to earn from a
fully taxable investment to equal a class's tax-free yield. Tax-equivalent
yields are calculated by dividing a class's yield by the result of one
minus a stated federal or combined federal and state tax rate. If any
portion of a class's yield is tax-exempt, only that portion is adjusted in
the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1995. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2.00% to 8.00%. Of course, no
assurance can be given that a class will achieve any specific tax-exempt
yield. While the tax-exempt funds invest principally in obligations whose
interest is exempt from federal income tax, other income received by the
funds may be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 TAX RATES AND TAX-EQUIVALENT YIELDS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Income
</TABLE>
Tax 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single
Return * Joint Return* Bracket ** Then t axable equivalent yield is:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 23,351 - $ 36,001 - 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
$ 56,500 $ 94,250
$ 56,551 - $ 94,251 - 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59%
$117,950 $143,600
$117,951 - $143,601 - 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50%
$256,500 $256,500
$256,501 - $256,501 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
A tax-exempt fund may invest a portion of its assets in obligations that
are subject to federal income tax. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a class's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in a class's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment over
a stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative total return of 100% over ten years would produce an average
annual return of 7.18%, which is the steady annual rate of return that
would equal 100% growth on a compounded basis in ten years. Average annual
returns covering periods of less than one year are calculated by
determining the class's total return for the period, extending that return
for a full year (assuming that return remains constant over the year), and
quoting the result as an annual return. While average annual returns are a
convenient means of comparing investment alternatives, investors should
realize that performance is not constant over time, but changes from year
to year, and that average annual returns represent averaged figures as
opposed to the actual year-to-year performance.
In addition to average annual total returns, unaveraged or cumulative total
returns reflecting the simple change in value of an investment over a
stated period may be quoted. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount, and may be calculated
for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis and may be quoted with or without taking a
class's maximum sales charge into account. Excluding a sales charge
from a total return calculation produces a higher total return figure.
Total returns, yield, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using NAVs, adjusted NAVs, and benchmark
indices may be used to exhibit performance. An adjusted NAV includes any
distributions paid and reflects all elements of its return. Unless
otherwise indicated, adjusted NAVs are not adjusted for sales charges, if
any.
MOVING AVERAGES. A growth or growth and income fund may illustrate
performance using moving averages. A long-term moving average is the
average of each week's adjusted closing NAV for a specified period. A
short-term moving average is the average of each day's adjusted closing NAV
for a specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving averages
for a specified period to produce indicators showing when a NAV has
crossed, stayed above, or stayed below its moving average.
The 13-week and 39-week long-term moving averages are shown below:*
Fund As of 13-Week 39-Week
Overseas 10/28/94 $14.01 $13.88
Equity Portfolio Growth - Class A 11/25/94 28.83 28.55
Equity Portfolio Growth - Institutional 11/25/94 29.17 28.84
Global Resources 10/28/94 17.65 17.17
Growth Opportunities 10/28/94 26.30 25.87
Strategic Opportunities - Class A 12/30/94 18.79 19.08
Strategic Opportunities - Class B 12/30/94 18.65 18.96
Equity Income - Class A 11/25/94 16.24 15.65
Equity Income - Class B 11/25/94 16.23 15.64
Equity Income - Institutional 11/25/94 16.33 15.70
Income & Growth 10/28/94 14.77 14.84
* Moving averages are shown for those classes that had commenced operations
prior to June 30, 1995 (the date of this SAI).
The follow tables and charts show performance for each class of shares of
each fund, and reflect the following information.
INSTITUTIONAL CLASS CHARTS. Institutional Class shares are sold to eligible
investors without a sales charge or a 12b-1 fee. The initial offering of
Institutional Class shares for all funds except Equity Portfolio Growth,
Equity Income, Limited Term Bond, and Limited Term Tax-Exempt was July 3,
1995.
CLASS A CHARTS. Class A shares are sold to eligible investors with a
maximum 4.75% (1.50% for Short Fixed-Income and Short-Intermediate
Tax-Exempt) front-end sales charge, which is reflected in the figures set
forth in the charts below. On September 10, 1992, a 0.65% (for equity
funds) or a 0.25% (for fixed-income funds, except Short Fixed-Income and
Short-Intermediate Tax-Exempt, which have a 0.15% 12b-1 fee) 12b-1 fee for
all Class A shares was imposed. The initial offering of Class A shares for
Equity Portfolio Growth, Equity Income, Limited Term Tax-Exempt, and
Limited Term Bond was September 10, 1992.
CLASS B CHARTS. Class B shares are sold to eligible investors with a 1.00%
12b-1 fee and may be subject to the contingent deferred sales charge upon
redemption (maximum 4.00%). For all funds except Overseas, Global
Resources, Short Fixed-Income, and Short-Intermediate Tax-Exempt, the
initial offering date of Class B shares was June 30, 1994. The initial
offering of Class B shares for Overseas and Global Resources was July 3,
1995.
HISTORICAL BOND FUND RESULTS. The following tables show yields,
tax-equivalent yields (for tax-exempt funds), and total returns for each
class of each fixed-income fund for the 1994 fiscal periods ended as
indicated. The tax-equivalent yield is based on a 31% federal income tax
rate. Note that each fund may invest in securities whose income is subject
to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C>
FISCAL PERIOD ENDED: Average Annual Total Returns 1 Cumulative Total Returns 2
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/31 - * Tax- Ten Ten Years/
11/30 - ** Equiva- One Five Years/Life One Five Life of
12/31 - *** Yield3 lent Yield Year Years of F und+ Year Years F und+
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Emerging Markets
Income-Class A*** 8.71% N/A N/A N/A N/A N/A N/A 2.47%
Emerging Markets
Income-Class B*** 8.19% N/A N/A N/A N/A N/A N/A 1.96%
Emerging Markets
Income-Institutional 8.71% N/A N/A N/A N/A N/A N/A 2.47%
Class***
High Yield- Class A* 7.33% N/A -2.23% 15.75% 12.99% 2.64% 118.17% 1 73.14%
High Yield-Class B* 7.04% N/A - 1.60% 16.66% 13.63% 2.14% 117.09% 171.80%
High
Yield-Institutional 7.33% N/A 2.64% 16.88% 13.70% 2.64% 118.17% 173.14%
Class*
Strategic Income-
Class A 4 7.61% N/A N/A N/A N/A N/A N/A 13.24 %
Strategic Income-
Class B 4 7.27% N/A N/A N/A N/A N/A N/A 12.86 %
Strategic Income-
Institutional Class4 7.61% N/A N/A N/A N/A N/A N/A 13.24%
Government
Investment-Class A* 6.46% N/A -9.77% 5.73% 5.77% -5.27% 38.71% 62.83%
Government
Investment-Class B* 6.02% N/A -9.20% 6.53% 6.37% -5.66% 38.13% 62.15%
Government Investment
Institutional Class* 6.46% N/A -5.27% 6.76% 6.43% -5.27% 38.71% 62.83%
Limited
Term Bond-Class A** 5.98% N/A -7.07% 6.59% 8.90% -2.44% 44.42% 146.17%
Limited
Term Bond-Class B** 5.47% N/A -6.59% 7.38% 9.37% -2.91% 43.72% 144.98%
Limited
Term Bond-Institutional
Class** 6.53% N/A -2.10% 7.86% 9.55% -2.10% 46.01% 148.89%
Short Fixed
Income-Class A* 6.10% N/A -1.72% 6.82% 7.32% -0.22% 41.17% 68.00%
Short Fixed Income-
Institutional Class* 6.10% N/A -0.22% 7.14% 7.55% -0.22% 41.17% 68.00%
High Income
Municipal-Class A* 5.99% 8.68% -10.49% 7.15% 8.56% -6.03% 48.27% 88.65%
High Income
Municipal-Class B* 5.30% 7.68% -10.00% 7.95% 9.23% -6.47% 47.57% 87.76%
High Income Municipal
Institutional Class* 5.99% N/A -6.03% 8.20% 9.31% -6.03% 48.27% 88.65%
Limited Term Tax-
Exempt-Class A** 4.97% 7.20% -10.25% 4.05% 5.93% -5.78% 28.03% 78.39%
Limited Term Tax-
Exempt-Class B** 4.35% 6.30% -9.74% 4.84% 6.44% -6.15% 27.53% 77.69%
Limited Term Tax-
Exempt-Institutional
Class** 5.47% 7.93% -5.43% 5.21% 6.57% -5.43% 28.90% 79.59%
Short Intermediate
Tax-Exempt-Class A** 4.83% 7.00% N/A N/A N/A N/A N/A 0.27%
Short Intermediate
Tax-Exempt-
Institutiona
l Class** 4.83% N/A N/A N/A N/A N/A N/A 0.27%
</TABLE>
+ Life of fund figures are from commencement of operations (March 10, 1994
for Emerging Markets Income; January 5, 1987 for High Yield; January 7,
1987 for Government Investment; September 16, 1987 for Short Fixed-Income
and High Income Municipal; September 19, 1985 for Limited Term Tax-Exempt;
and March 16, 1994 for Short-Intermediate Tax-Exempt) through the 1994
fiscal year end.
1 Average annual total return figures include the effect of Class
A' s maximum 4.75% front-end sales charge (1.50% for Short
Fixed-Income and Short-Intermediate Tax-Exempt) in effect for the
periods shown. Average annual total return figures include the effect of
Class B's maximum 4.00% contingent deferred sales charge. The figures for
Institutional Class shares of all funds except Limited Term Bond and
Limited Term Tax-Exempt reflect Class A data, including the applicable
Class A 12b-1 fee but not the Class A front-end sales charge. The figures
for Class B shares of all other funds prior to June 30, 1994, and for Short
Fixed-Income and Short-Intermediate Tax-Exempt prior to June 30, 1995,
reflect Class A data, including the applicable Class A 12b-1 fee but not
the Class A front-end sales charge. However, the Class B contingent
deferred sales charge applicable at the end of each stated period is
included for Class B shares. Figures for Institutional Class shares of
these funds would have been higher and figures for Class B shares would
have been lower if the Class A 12b-1 fee had not be included.
2 The figures for each new class of shares of each fund reflect the
performance of Class A shares of that fund, including the Class A 12b-1 fee
but not including any applicable sales charge. Figures would have been
higher for Institutional Class shares and lower for Class B shares if the
Class A 12b-1 fee had not been included.
3 The yields shown for each new class reflect the performance of Class A
shares, including the Class A 12b-1 fee but not the front-end sales charge.
Yields for Institutional Class shares would have been higher and yields for
Class B shares lower if the Class A 12b-1 fee had not been included.
4 For each class of Strategic Income Fund, the yield is for the 30-day
period ended May 31, 1995 and the total returns are from October 31, 1994
(commencement of operations) through May 31, 1995.
Note: If FMR had not reimbursed certain fund expenses during certain of
these periods, the yields and total returns for those periods for Emerging
Markets Income, High Yield, Strategic Income, Government Investment,
Limited Term Bond, Short Fixed-Income, High Income Municipal, Limited Term
Tax-Exempt, and Short-Intermediate Tax-Exempt would have been lower. If the
following funds had not been in reimbursement, their yields and
tax-equivalent yields (if applicable) would have been as follows: Emerging
Markets Income - Class A and Class B (8.06% and 7.84%); Strategic Income -
Class A and Class B ( 7.38 % and 7.05 %); Limited Term Bond -
Class A and Class B (5.91% and 4.71%); Government Investment - Class A and
Class B (5.73% and 5.10%); Limited Term Tax-Exempt - Class A, Class B, and
Institutional Class (4.83%/7.00%, 3.64%/5.28%, and 5.36%/7.77%); and
Short-Intermediate Tax Exempt - Class A (4.04%/5.86%).
HISTORICAL EQUITY FUND RESULTS. The following table shows the total returns
for 1994 fiscal periods ended as indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual Total Returns 1 Cumulative Total Returns 2
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal One Five Ten Years/ One Five Ten Years/
Period Year Years Life of F und+ Year Years Life of F und+
Ended
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Overseas - Class A 10/31 3.74% N/A 7.50% 8.91% N/A 45.67%
Overseas - Class B 4.91% N/A 8.16% 8.91% N/A 45.67%
Overseas - Institutional Class 8.91% N/A 8.66% 8.91% N/A 45.67%
E quity Portfolio Growth - Class 11/30 -3.24% 16.55% 19.14% 1.58% 125.75% 504.83%
A
E quity Portfolio Growth -
Institutional Class 2.46% 18.10% 19.93% 2.46% 129.70% 515.42%
Global Resources - Class A 10/31 -0.97% 13.48% 14.86% 3.97% 97.54% 171.05%
Global Resources - Class B -0.02% 15.08% 14.47% 3.97% 97.54% 171.05%
Global Resources -
Institutional Class 3.97% 14.59% 15.68% 3.97% 97.54% 171.05%
Growth Opportunities - Class A 10/31 3.55% 15.15% 19.94% 8.71% 112.51% 272.05%
Global Opportunities -
Institutional Class 8.71% 16.27% 20.78% 8.71% 112.51% 272.05%
Strategic Opportunities - Class A 12/31 -11.58% 6.55% 13.88% -7.17% 44.18% 285.19%
Strategic Opportunities - Class B -10.79% 7.44% 14.43% -7.22% 44.11% 285.00%
Strategic Opportunities -
Institutional Class -6.35 % 8.25 % 14.94 % -6.35 % 48.64% 302.39%
Equity Income - Class A 11/30 3.67% 9.10% 12.68% 8.84% 62.28% 246.39%
Equity Income - Class B 4.77% 10.02% 13.22% 8.77% 62.17% 246.17%
Equity Income -
Institutional Class 9.82% 10.56% 13.43% 9.82% 65.21% 252.65%
Income & Growth - Class A 10/31 -7.31% 9.99% 11.34% -2.69% 68.98% 143.26%
Income & Growth -
Institutional Class -2.69% 11.06% 12.03% -2.69% 68.98% 143.26%
</TABLE>
+ Life of fund figures are from commencement of operations (April 23, 1990
for Overseas; December 29, 1987 for Global Resources; November 18, 1987 for
Growth Opportunities; and January 6, 1987 for Income & Growth) through the
1994 fiscal year end.
1 Average annual total return figures include the effect of
Class
A's maximum 4.75% front-end sales charge in effect for the periods
shown. Average annual total return figures include the effect of Class
B's maximum 4.00% contingent deferred sales charge. The figures for
Institutional Class shares of all funds except Equity Income and Equity
Portfolio Growth reflect Class A data, including the applicable Class A
12b-1 fee but not the Class A front-end sales charge. The figures for Class
B shares of all other funds prior to June 30, 1994, and for Overseas and
Global Resources prior to June 30, 1995, reflect Class A data, including
the applicable Class A 12b-1 fee but not the Class A front-end charge.
However, the Class B contingent deferred sales charge applicable at the end
of each stated period is included for Class B shares. Figures would have
been higher for Institutional Class shares and lower for Class B shares if
the Class A 12b-1 fee had not been included.
2 The figures for each new class of shares of each fund reflect the
performance of Class A shares of that fund, including the Class A 12b-1 fee
but not including any applicable sales charge. Figures would have been
higher for Institutional Class shares and lower for Class B shares if the
Class A 12b-1 fee had not been included.
Note: If FMR had not reimbursed certain fund expenses during certain of
these periods, the total returns for those periods for Overseas, Global
Resources, Equity Income, and Growth Opportunities would have been lower.
The following charts show the growth of a hypothetical $10,000
investment in each class, assuming all distributions were reinvested. This
was a period of fluctuating interest rates, bond prices, and stock prices
and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in the class today. Tax consequences of different investments
have not been factored into the figures.
INSTITUTIONAL CHARTS. The figures for Institutional Class shares of each
fund except Equity Portfolio Growth, Equity Income, and Limited Term
Tax-Exempt reflect the performance of Class A shares from the fund's
commencement of operations, including the applicable Class A 12b-1 fee but
not the front-end sales charge. The figures would have been higher if the
Class A 12b-1 fee were not included.
CLASS A CHARTS. The figures for Class A shares after September 10, 1992
reflect Class A's maximum 4.75% front-end sales charge (1.50% for Short
Fixed-Income and Short-Intermediate Tax-Exempt) and the applicable Class A
12b-1 fee. Prior to September 10, 1992, the figures for Equity Portfolio
Growth, Equity Income, Limited Term Tax-Exempt, and Limited Term Bond
reflect Institutional Class performance (i.e., no sales charge or 12b-1
fee), and the figures for Strategic Opportunities reflect Initial Class
performance (i.e., a 4.75% front-end sales charge and no 12b-1 fee).
CLASS B CHARTS. The figures for Class B shares of all funds except
Overseas, Global Resources, Short Fixed-Income and Short-Intermediate
Tax-Exempt prior to June 30, 1994, and for Overseas, Global Resources,
Short Fixed-Income and Short-Intermediate Tax-Exempt prior to June 30,
1995, reflect the performance of Class A shares of each fund, including the
applicable Class A 12b-1 fee but not the Class A front-end charge. The
figures would have been lower if Class B's higher 12b-1 fee had been
included.
DOMESTIC FUND RETURNS. The following tables show the income and capital
elements of the cumulative total return for each class of each fund. The
table compares each class's return to the record of the S&P 500, the Dow
Jones Industrial Average (DJIA), and the cost of living (measured by the
Consumer Price Index or CPI) over the same period. The CPI
information is as of the month-end closest to the initial investment date
for each fund. The S&P 500 and DJIA comparisons are provided to show how
each class's total return compared to the record of a broad average of
common stock prices and a narrower set of stocks of major industrial
companies, respectively, over the same period. Of course, since bond funds
invest in fixed-income securities, common stocks represent a different type
of investment from those funds. Common stocks generally offer greater
growth potential than bonds, but generally experience greater price
volatility, which means greater potential for loss. In addition, common
stocks generally provide lower income than a fixed-income investment such
as the bond funds. Each fund has the ability to invest in securities not
included in either index, and its investment portfolio may or may not be
similar in composition to the indices. Figures for the S&P 500 and DJIA are
based on the prices of unmanaged groups of stocks and, unlike the classes'
returns, do not include the effect of paying brokerage commissions or other
costs of investing. Each class of the fixed-income funds may compare its
performance to the Aggregate Bond Index Portfolio. These comparisons show a
class's total returns compared to the record of a broad average of debt
security prices. The Aggregate Bond Index is a total return index that
measures both the capital price changes and the income underlying the
universe of debt securities weighted by market value outstanding, and
unlike a class's returns, its returns do not include the effect of paying
brokerage commissions and other costs of investing.
In addition, certain funds may compare the performance of each class of
their shares to the performance of specific indices of securities of the
same class as those in which a fund invests. The following tables show the
performance of each class of Strategic Income and High Yield compared to
the Merrill Lynch High Yield Master Index; each class of Government
Investment compared to the Salomon Treasury/Agency Index; each class of
Limited Term Bond compared to the Lehman Intermediate Government/Corporate
Index;and each class of Short Fixed-Income compared to the Lehman 1-3
Government/Corporate Index. Each class of Strategic Income may also compare
its performance to a customized composite index equally comprised of the
J.P. Morgan Index ex-United States, a broad measure of bond performance in
foreign countries; the Merrill Lynch High Yield Master Index, a broad
measure of higher yielding bonds; and the Lehman Brothers Government
Treasury Long Term Index, a broad measure of the performance of long-term
U.S. government bonds.
EQUITY PORTFOLIO GROWTH - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 13,155 $ 0 $ 0 $ 13,155 $ 12,899 $ 12,966 $ 10,351
1986 15,634 28 459 16,121 16,469 17,477 10,484
1987 11,767 31 1,564 13,362 15,699 17,258 10,959
1988 14,258 52 3,029 17,339 19,361 20,628 11,425
1989 20,545 611 4,364 25,520 25,333 27,398 11,956
1990 18,445 674 7,102 26,221 24,451 26,939 12,707
1991 28,800 1,052 11,089 40,941 29,428 31,509 13,086
1992 31,232 1,199 17,090 49,521 34,872 37,054 13,485
1993 34,992 1,512 20,207 56,711 38,394 42,501 13,846
1994 33,830 1,462 22,318 57,610 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
EQUITY PORTFOLIO GROWTH - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 13,811 $ 0 $ 0 $ 13,811 $ 12,899 $ 12,966 $ 10,351
1986 16,413 29 482 16,924 16,469 17,477 10,484
1987 12,354 32 1,641 14,027 15,699 17,258 10,959
1988 14,969 55 3,180 18,204 19,361 20,628 11,425
1989 21,569 642 4,582 26,793 25,333 27,398 11,956
1990 19,365 707 7,456 27,528 24,451 26,939 12,707
1991 30,237 1,104 11,642 42,983 29,428 31,509 13,086
1992 32,839 1,261 17,970 52,070 34,872 37,054 13,485
1993 37,036 1,645 21,386 60,067 38,394 42,501 13,846
1994 35,990 1,822 23,731 61,543 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
GLOBAL RESOURCES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 10,925 $ 0 $ 0 $ 10,925 $ 11,702 $ 11,395 $ 10,416
1989 12,002 0 1,068 13,070 14,791 14,557 10,884
1990 11,716 81 2,106 13,903 13,683 13,970 11,568
1991 13,440 93 3,081 16,614 18,268 18,172 11,906
1992 13,221 91 4,293 17,605 20,090 19,672 12,288
1993 16,754 116 7,961 24,831 23,093 23,104 12,626
1994 16,726 116 8,975 25,817 23,986 25,207 12,955
</TABLE>
* From December 29, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GLOBAL RESOURCES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 11,470 $ 0 $ 0 $ 11,470 $ 11,702 $ 11,395 $ 10,416
1989 12,600 0 1,121 13,721 14,791 14,557 10,884
1990 12,300 85 2,211 14,596 13,683 13,970 11,568
1991 14,110 98 3,235 17,443 18,268 18,172 11,906
1992 13,880 96 4,508 18,484 20,090 19,672 12,288
1993 17,590 122 8,358 26,070 23,093 23,104 12,626
1994 17,560 121 9,424 27,105 23,986 25,207 12,955
</TABLE>
* From December 29, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GLOBAL RESOURCES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 11,470 $ 0 $ 0 $ 11,470 $ 11,702 $ 11,395 $ 10,416
1989 12,600 0 1,121 13,721 14,791 14,557 10,884
1990 12,300 85 2,211 14,596 13,683 13,970 11,568
1991 14,110 98 3,235 17,443 18,268 18,172 11,906
1992 13,880 96 4,508 18,484 20,090 19,672 12,288
1993 17,590 122 8,358 26,070 23,093 23,104 12,626
1994 17,560 121 9,424 27,105 23,986 25,207 12,955
</TABLE>
* From December 29, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GROWTH OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 13,592 $ 0 $ 0 $ 13,592 $ 11,872 $ 11,566 $ 10,416
1989 15,745 35 896 16,676 15,006 14,775 10,884
1990 12,373 71 1,721 14,165 13,882 14,179 11,568
1991 19,602 371 2,727 22,700 18,534 18,444 11,906
1992 20,136 499 4,810 25,445 20,383 19,966 12,288
1993 24,184 790 7,623 32,597 23,430 23,449 12,626
1994 25,356 925 9,157 35,438 24,336 25,585 12,955
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $ 14,270 $ 0 $ 0 $ 14,270 $ 11,872 $ 11,566 $ 10,416
1989 16,530 37 940 17,507 15,006 14,775 10,884
1990 12,990 75 1,807 14,872 13,882 14,179 11,568
1991 20,580 390 2,863 23,833 18,534 18,444 11,906
1992 21,140 524 5,050 26,714 20,383 19,966 12,288
1993 25,390 830 8,003 34,223 23,430 23,449 12,626
1994 26,620 972 9,614 37,205 24,336 25,585 12,955
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
STRATEGIC OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Dec. 31 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,799 $ 233 $ 1,079 $ 13,101 $ 13,175 $ 13,356 $ 10,380
1986 14,178 355 2,227 16,760 15,636 16,967 10,494
1987 11,388 535 3,776 15,699 16,459 17,889 10,959
1988 13,435 1,302 4,454 19,191 19,193 20,737 11,443
1989 17,327 2,375 5,745 25,447 25,274 27,323 11,975
1990 15,429 3,078 5,116 23,623 24,486 27,176 12,707
1991 16,172 4,106 8,796 29,074 31,951 33,791 13,096
1992 16,662 5,147 11,008 32,817 34,393 36,257 13,476
1993 18,193 6,361 14,969 39,523 37,859 42,418 13,846
1994 16,356 6,383 13,951 36,690 38,358 44,527 14,217
</TABLE>
* From month-end closest to initial investment date.
STRATEGIC OPPORTUNITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Dec. 31 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 12,388 $ 234 $ 1,133 $ 13,755 $ 13,175 $ 13,356 $ 10,380
1986 14,885 372 2,338 17,595 15,636 16,967 10,494
1987 11,956 561 3,964 16,481 16,459 17,889 10,959
1988 14,105 1,367 4,677 20,149 19,193 20,737 11,443
1989 18,191 2,493 6,031 26,715 25,274 27,323 11,975
1990 16,198 3,231 5,371 24,800 24,486 27,176 12,707
1991 16,979 4,311 9,235 30,525 31,951 33,791 13,096
1992 17,493 5,403 11,557 34,453 34,393 36,257 13,476
1993 19,100 6,678 15,716 41,494 37,859 42,418 13,846
1994 17,052 6,899 14,549 38,500 38,358 44,527 14,217
</TABLE>
* From month-end closest to initial investment date.
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Dec. 31 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 12,388 $ 234 $ 1,133 $ 13,755 $ 13,175 $ 13,356 $ 10,380
1986 14,885 372 2,338 17,595 15,636 16,967 10,494
1987 12,039 574 3,977 16,590 16,459 17,889 10,959
1988 14,224 1,434 4,699 20,357 19,193 20,737 11,443
1989 18,255 2,785 6,031 27,071 25,274 27,323 11,975
1990 16,272 3,638 5,375 25,285 24,486 27,176 12,707
1991 17,071 4,906 9,299 31,276 31,951 33,791 13,096
1992 17,576 6,256 11,658 35,490 34,393 36,257 13,476
1993 19,238 7,795 15,936 42,969 37,859 42,418 13,846
1994 17,319 8,042 14,879 40,239 38,358 44,527 14,217
</TABLE>
* From month-end closest to initial investment date.
EQUITY INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,116 $ 777 $ 0 $ 11,893 $ 12,899 $ 12,966 $ 10,351
1986 12,595 1,711 380 14,686 16,469 17,477 10,484
1987 10,167 2,077 1,373 13,617 15,699 17,258 10,959
1988 10,325 3,242 3,725 17,292 19,361 20,628 11,425
1989 11,413 4,801 4,118 20,332 25,333 27,398 11,956
1990 8,855 4,848 3,598 17,301 24,451 26,939 12,707
1991 10,306 6,782 4,188 21,276 29,428 31,509 13,086
1992 11,962 8,862 4,860 25,684 34,872 37,054 13,485
1993 13,822 10,876 5,616 30,314 38,394 42,501 13,846
1994 14,846 12,116 6,032 32,994 38,795 44,332 14,236
</TABLE>
** From month-end closest to initial investment date.
EQUITY INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,670 $ 816 $ 0 $ 12,486 $ 12,899 $ 12,966 $ 10,351
1986 13,223 1,797 398 15,418 16,469 17,477 10,484
1987 10,674 2,180 1,441 14,295 15,699 17,258 10,959
1988 10,840 3,403 3,911 18,154 19,361 20,628 11,425
1989 11,982 5,040 4,323 21,345 25,333 27,398 11,956
1990 9,297 5,090 3,777 18,164 24,451 26,939 12,707
1991 10,820 7,120 4,396 22,336 29,428 31,509 13,086
1992 12,559 9,304 5,103 26,966 34,872 37,054 13,485
1993 14,512 11,418 5,896 31,826 38,394 42,501 13,846
1994 15,566 12,725 6,325 34,616 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
EQUITY INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Nov. 30 Investment Distributions Distributions Value 500 DJIA Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 11,670 $ 816 $ 0 $ 12,486 $ 12,899 $ 12,966 $ 10,351
1986 13,223 1,797 398 15,418 16,469 17,477 10,484
1987 10,674 2,180 1,441 14,295 15,699 17,258 10,959
1988 10,840 3,403 3,911 18,154 19,361 20,628 11,425
1989 11,982 5,040 4,323 21,345 25,333 27,398 11,956
1990 9,297 5,090 3,777 18,164 24,451 26,939 12,707
1991 10,820 7,120 4,396 22,336 29,428 31,509 13,086
1992 12,578 9,318 5,111 27,007 34,872 37,504 13,485
1993 14,580 11,608 5,924 32,112 38,394 42,501 13,846
1994 15,693 13,195 6,376 35,264 38,795 44,332 14,236
</TABLE>
* From month-end closest to initial investment date.
INCOME & GROWTH - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987 $ 8,992 $ 161 $ 0 $ 9,153 $ 10,232 $ 10,358 $ 10,434
1988 10,544 774 0 11,318 11,747 11,572 10,878
1989 12,163 1,549 0 13,712 14,849 14,782 11,367
1990 9,916 2,328 488 12,732 13,736 14,187 12,081
1991 13,459 3,924 663 18,046 18,339 18,454 12,434
1992 13,726 4,641 1,532 19,899 20,169 19,977 12,833
1993 15,154 6,002 2,653 23,809 23,183 23,462 13,186
1994 13,973 6,056 3,141 23,170 24,080 25,598 13,529
</TABLE>
* From January 6, 1987 (commencement of operations).
** From month-end closest to initial investment date.
INCOME & GROWTH - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total S&P of
Ended Oct. 31 Investment Distributions Distributions Value 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987 $ 9,440 $ 170 $ 0 $ 9,610 $ 10,232 $ 10,358 $ 10,434
1988 11,070 813 0 11,883 11,747 11,572 10,878
1989 12,770 1,626 0 14,396 14,849 14,782 11,367
1990 10,410 2,445 513 13,367 13,736 14,187 12,081
1991 14,130 4,119 696 18,945 18,339 18,454 12,434
1992 14,410 4,872 1,608 20,891 20,169 19,977 12,833
1993 15,910 6,302 2,786 24,998 23,183 23,462 13,186
1994 14,670 6,358 3,298 24,326 24,080 25,598 13,529
</TABLE>
* From January 6, 1987 (commencement of operations).
** From month-end closest to initial investment date.
HIGH YIELD - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Oct. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 8,658 $ 790 $ 0 $ 9,448 $ 9,798 $ 9,917 $ 10,434
1988 9,392 2,148 0 11,540 11,459 11,054 10,878
1989 8,544 3,381 0 11,925 12,023 12,369 11,367
1990 7,763 4,589 0 12,352 11,257 13,150 12,081
1991 9,639 7,613 0 17,252 15,144 15,229 12,434
1992 10,544 10,496 0 21,040 17,826 16,727 12,833
1993 11,440 13,420 488 25,348 21,130 18,712 13,186
1994 10,687 14,350 980 26,017 21,542 18,025 13,529
</TABLE>
* From January 5, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH YIELD - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Oct. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,090 $ 829 $ 0 $ 9,919 $ 9,798 $ 9,917 $ 10,434
1988 9,860 2,256 0 12,116 11,459 11,054 10,878
1989 8,970 3,550 0 12,520 12,023 12,369 11,367
1990 8,150 4,818 0 12,968 11,257 13,150 12,081
1991 10,120 7,992 0 18,112 15,144 15,229 12,434
1992 11,070 11,020 0 22,090 17,826 16,727 12,833
1993 12,010 14,089 512 26,611 21,130 18,712 13,186
1994 11,210 14,942 1,028 27,180 21,542 18,025 13,529
</TABLE>
* From January 5, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH YIELD - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Oct. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,090 $ 829 $ 0 $ 9,919 $ 9,798 $ 9,917 $ 10,434
1988 9,860 2,256 0 12,116 11,459 11,054 10,878
1989 8,970 3,550 0 12,520 12,023 12,369 11,367
1990 8,150 4,818 0 12,968 11,257 13,150 12,081
1991 10,120 7,992 0 18,112 15,144 15,229 12,434
1992 11,070 11,020 0 22,090 17,826 16,727 12,833
1993 12,010 14,089 512 26,611 21,130 18,712 13,186
1994 11,220 15,065 1,029 27,314 21,542 18,025 13,529
</TABLE>
* From January 5, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
STRATEGIC INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Dec. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,449 $ 93 $ 0 $ 9,542 $ 9,845 $ 10,047 $ 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
STRATEGIC INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Dec. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,910 $ 84 $ 0 $ 9,994 $ 9,845 $ 10,047 $ 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
STRATEGIC INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Merrill Lynch
Period Initial Reinvested Reinvested High Yield Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Master Bond of
Dec. 31 Investment Distributions Distributions Value Index+ Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,920 $ 97 $ 0 $ 10,017 $ 9,845 $ 10,047 $ 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
GOVERNMENT INVESTMENT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Salomon
Period Initial Reinvested Reinvested Treasury/ Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Agency Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 8,763 $ 587 $ 0 $ 9,350 $ 9,948 $ 9,917 $ 10,434
1988 8,820 1,403 0 10,223 10,908 11,054 10,878
1989 8,868 2,313 0 11,181 12,230 12,369 11,367
1990 8,715 3,190 0 11,905 12,960 13,150 12,081
1991 9,134 4,277 0 13,411 14,839 15,229 12,434
1992 9,268 5,281 0 14,549 16,383 16,727 12,833
1993 9,658 6,395 318 16,371 18,538 18,712 13,186
1994 8,534 6,472 503 15,509 17,707 18,025 13,529
</TABLE>
* From January 7, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
GOVERNMENT INVESTMENT - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Salomon
Period Initial Reinvested Reinvested Treasury/ Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Agency Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,200 $ 616 $ 0 $ 9,816 $ 9,948 $ 9,917 $ 10,434
1988 9,260 1,473 0 10,733 10,908 11,054 10,878
1989 9,310 2,429 0 11,739 12,230 12,369 11,367
1990 9,150 3,349 0 12,499 12,960 13,150 12,081
1991 9,590 4,490 0 14,080 14,839 15,229 12,434
1992 9,730 5,545 0 15,275 16,383 16,727 12,833
1993 10,140 6,714 334 17,189 18,538 18,712 13,186
1994 8,950 6,737 528 16,215 17,707 18,025 13,529
</TABLE>
* From January 7, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Salomon
Period Initial Reinvested Reinvested Treasury/ Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Agency Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,200 $ 616 $ 0 $ 9,816 $ 9,948 $ 9,917 $ 10,434
1988 9,260 1,473 0 10,733 10,908 11,054 10,878
1989 9,310 2,429 0 11,739 12,230 12,369 11,367
1990 9,150 3,349 0 12,499 12,960 13,150 12,081
1991 9,590 4,490 0 14,080 14,839 15,229 12,434
1992 9,730 5,545 0 15,275 16,383 16,727 12,833
1993 10,140 6,714 334 17,189 18,538 18,712 13,186
1994 8,960 6,794 528 16,283 17,707 18,025 13,529
</TABLE>
* From January 7, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM BOND - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested Intermediate Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Nov. 30 Investment Distributions Distributions Value Index Index+ Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 10,089 $ 1,093 $ 0 $ 11,182 $ 12,988 $ 13,436 $ 10 , 351
1986 10,749 2,315 22 13,086 14,983 15,900 10,484
1987 9,802 3,257 260 13,319 15,422 16,180 10,959
1988 9,735 4,499 258 14,492 16,611 17,674 11,425
1989 9,955 6,016 264 16,235 18,696 20,211 11,956
1990 9,697 7,330 257 17,284 20,191 21,741 12,707
1991 10,089 9,235 268 19,592 22,902 24,875 13,086
1992 10,175 10,919 270 21,364 24,811 27,079 13,485
1993 10,653 13,098 283 24,034 27,226 30,029 13,846
1994 9,812 13,376 260 23,448 26,730 29,110 14,236
</TABLE>
* From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM BOND - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested Intermediate Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Nov. 30 Investment Distributions Distributions Value Index Index+ Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 10,592 $ 1,147 $ 0 $ 11,739 $ 12,988 $ 13,436 $ 10,351
1986 11,285 2,431 24 13,740 14,983 15,900 10,484
1987 10,291 3,419 273 13,983 15,422 16,180 10,959
1988 10,221 4,723 271 15,215 16,611 17,674 11,425
1989 10,452 6,316 277 17,045 18,696 20,211 11,956
1990 10,181 7,696 270 18,147 20,191 21,741 12,707
1991 10,592 9,695 281 20,568 22,902 24,875 13,086
1992 10,683 11,463 283 22,429 24,811 27,079 13,485
1993 11,185 13,751 297 25,233 27,226 30,029 13,846
1994 10,291 13,934 273 24,498 26,730 29,110 14,236
</TABLE>
* From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM BOND - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested Intermediate Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Nov. 30 Investment Distributions Distributions Value Index Index+ Living*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 $ 10,592 $ 1,147 $ 0 $ 11,739 $ 12,988 $ 13,436 $ 10,351
1986 11,285 2,431 24 13,7 4 0 14,983 15,900 10,484
1987 10,291 3,419 273 13,983 15,422 16,180 10,959
1988 10,221 4,723 271 15,215 16,611 17,674 11,425
1989 10,452 6,316 277 17,045 18,696 20,211 11,956
1990 10,181 7,696 270 18,147 20,191 21,741 12,707
1991 10,592 9,695 281 20,568 22,902 24,875 13,086
1992 10,683 11, 498 283 22, 464 24,811 27,079 13,485
1993 11, 205 13, 920 297 25, 422 27,226 30,029 13,846
1994 10, 311 14, 304 273 24, 889 26,730 29,110 14,236
</TABLE>
* From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT FIXED-INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested 1 - 3 Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 9,909 $ 100 $ 0 $ 10,009 $ 10,198 $ 10,356 $ 10,026
1988 9,791 974 0 10,765 10,993 11,543 10,452
1989 9,801 1,921 0 11,722 12,040 12,917 10,922
1990 9,476 2,902 0 12,378 13,097 13,732 11,609
1991 9,722 4,165 0 13,887 14,594 15,903 11,948
1992 9,801 5,397 0 15,198 15,789 17,467 12,330
1993 9,939 6,645 0 16,584 16,726 19,540 12,670
1994 9,338 7,211 0 16,549 16,931 18,823 13,000
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT FIXED-INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Lehman
Period Initial Reinvested Reinvested 1 - 3 Aggregate Cost
Ended $10,000 Dividend Capital Gain Total Govt./Corp. Bond of
Oct. 31 Investment Distributions Distributions Value Index Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1987* $ 10,060 $ 101 $ 0 $ 10,161 $ 10,198 $ 10,356 $ 10,026
1988 9,940 989 0 10,929 10,993 11,543 10,452
1989 9,950 1,951 0 11,901 12,040 12,917 10,922
1990 9,620 2,946 0 12,566 13,097 13,732 11,609
1991 9,870 4,228 0 14,098 14,594 15,903 11,948
1992 9,950 5,479 0 15,429 15,789 17,467 12,330
1993 10,090 6,748 0 16,838 16,726 19,540 12,670
1994 9,480 7,320 0 16,800 16,931 18,823 13,000
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH INCOME MUNICIPAL - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Oct. 31 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1987* $ 9,382 $ 87 $ 0 $ 9,469 $ 10,356 $ 10,026
1988 9,963 852 0 10,815 11,543 10,452
1989 10,306 1,759 54 12,119 12,917 10,922
1990 10,354 2,722 168 13,244 13,732 11,609
1991 10,868 3,903 330 15,101 15,903 11,948
1992 11,097 5,044 351 16,492 17,467 12,330
1993 12,116 6,577 429 19,122 19,540 12,670
1994 10,687 6,808 473 17,968 18,823 13,000
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH INCOME MUNICIPAL - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Oct. 31 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1987* $ 9,850 $ 92 $ 0 $ 9,942 $ 10,356 $ 10,026
1988 10,460 895 0 11,355 11,543 10,452
1989 10,820 1,847 57 12,724 12,917 10,922
1990 10,870 2,858 176 13,904 13,732 11,609
1991 11,410 4,097 347 15,854 15,903 11,948
1992 11,650 5,296 368 17,314 17,467 12,330
1993 12,720 6,905 450 20,075 19,540 12,670
1994 11,210 7,069 496 18,775 18,823 13,000
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
HIGH INCOME MUNICIPAL - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Oct. 31 Investment Distributions Distributions Value Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1987* $ 9,850 $ 92 $ 0 $ 9,942 $ 10,356 $ 10,026
1988 10,460 895 0 11,355 11,543 10,452
1989 10,820 1,847 57 12,724 12,917 10,922
1990 10,870 2,858 176 13,904 13,732 11,609
1991 11,410 4,097 347 15,854 15,903 11,948
1992 11,650 5,296 368 17,314 17,467 12,330
1993 12,720 6,905 450 20,075 19,540 12,670
1994 11,220 7,148 497 18,865 18,823 13,000
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM TAX-EXEMPT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1985* $ 9,792 $ 126 $ 0 $ 9,918 $ 10,455 $ 10,065
1986 10,468 826 51 11,345 12,372 10,194
1987 9,887 1,451 117 11,455 12,590 10,656
1988 10,020 2,207 118 12,345 13,752 11,108
1989 10,106 3,046 119 13,271 15,726 11,625
1990 10,135 3,951 120 14,206 16,917 12,355
1991 10,287 4,955 122 15,364 19,356 12,724
1992 10,554 6,062 125 16,741 21,071 13,112
1993 9,963 6,581 1,489 18,033 23,366 13,463
1994 8,954 6,669 1,369 16,992 22,651 13,841
* From September 19, 1985 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM TAX-EXEMPT - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1985* $ 10,280 $ 132 $ 0 $ 10,412 $ 10,455 $ 10,065
1986 10,990 867 53 11,910 12,372 10,194
1987 10,380 1,524 123 12,027 12,590 10,656
1988 10,520 2,317 124 12,961 13,752 11,108
1989 10,610 3,198 125 13,933 15,726 11,625
1990 10,640 4,148 126 14,914 16,917 12,355
1991 10,800 5,202 128 16,130 19,356 12,724
1992 11,080 6,365 131 17,576 21,071 13,112
1993 10,460 6,909 1,564 18,933 23,366 13,463
1994 9,400 6,931 1,437 17,768 22,651 13,841
* From September 19, 1985 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
LIMITED TERM TAX-EXEMPT-INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1985* $ 10,280 $ 132 $ 0 $ 10,412 $ 10,455 $ 10,065
1986 10,990 867 53 11,910 12,372 10,194
1987 10,380 1,524 123 12,027 12,590 10,656
1988 10,520 2,317 124 12,961 13,752 11,108
1989 10,610 3,198 125 13,933 15,726 11,625
1990 10,640 4,148 126 14,914 16,917 12,355
1991 10,800 5,202 128 16,130 19,356 12,724
1992 11,080 6,371 131 17,582 21,071 13,112
1993 10,460 6,967 1,564 18,991 23,366 13,463
1994 9,410 7,110 1,440 17,960 22,651 13,841
* From September 19, 1985 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT-INTERMEDIATE TAX-EXEMPT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
1994 $ 9,623 $ 254 $ 0 $ 9,877 $ 9,926 $ 10,183
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
SHORT-INTERMEDIATE TAX-EXEMPT - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Aggregate Cost
Period $10,000 Dividend Capital Gain Total Bond of
Ended Nov. 30 Investment Distributions Distributions Value Index+ Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1994 $ 9,770 $ 257 $ 0 $ 10,027 $ 9,926 $ 10,183
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
+ From month-end following initial investment date.
The yield for the S&P 500 for the year ended December 31, 1994 was 2.93%,
calculated by dividing the dollar value of dividends paid by the S&P 500
stocks during the period by the average value of the S&P 500 on December
31, 1994. The S&P 500 yield is calculated differently from each class's
yield. For example, a class's yield calculation treats dividends as accrued
in anticipation of payment, rather than recording them when paid.
INTERNATIONAL FUND RETURNS. The following tables show the income and
capital elements of the total return for each class of Overseas and
Emerging Markets Income from the date each fund commenced operations
through the 1994 fiscal period, ended as indicated. The classes may compare
their total returns to the record of the following Morgan Stanley Capital
International indices: the World Index; EAFE Index; the Europe Index; the
Pacific Index, the Combined Far East ex-Japan Free Index; and the Latin
America Free Index. The EAFE Index combines the Europe and Pacific indices.
The addition of Canada, the United States, and South African Gold Mines to
the EAFE index compiles the World Index which includes over 1400 companies.
The Europe Index and Pacific Index are subsets of the Morgan Stanley
Capital International World Index, which is also published by Morgan
Stanley Capital International, S.A. The Europe and Pacific Indices are
weighted by the market value of each country's stock exchange(s). The
companies included in the indices change only in the event of mergers,
takeovers, failures and the like, and minor adjustments may be made when
Morgan Stanley Capital International, S.A. reviews the companies covered as
to suitability every three or four years.
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Comparative Index Description of Index
Overseas Morgan Stanley Capital International An unmanaged index of 900 foreign common
Europe, Australia, Far East Index stocks
(EAFE)
Emerging Markets J.P. Morgan Emerging An unmanaged index of fixed income securities
Income Market Bond Index from developing nations
</TABLE>
Each table below compares the returns for each class of Overseas and
Emerging Markets Income to the record of the S&P 500, the DJIA, a foreign
stock market index as described above, and the cost of living (measured by
the CPI) over the same period. The CPI information is as of the month-end
closest to the initial investment date for each fund. The S&P 500 and DJIA
comparisons are provided to show how each class's total return compared to
the record of a broad range of U.S. common stocks and a narrower set of
stocks of major U.S. industrial companies, respectively, over the same
period. The funds have the ability to invest in securities not included in
the indices, and their investment portfolios may or may not be similar in
composition to the indices. The EAFE Index, Emerging Market Bond Index, S&P
500, and DJIA are based on the prices of unmanaged groups of stocks and,
unlike each class's returns, their returns do not include the effect of
paying brokerage commissions and other costs of investing.
The following charts show the growth of a hypothetical $10,000 investment
in each class, assuming all distributions were reinvested. This was a
period of fluctuating interest rates, bond prices, and stock prices and the
figures below should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the class today. Tax consequences of different investments have not been
factored into the figures.
OVERSEAS-CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total EAFE S&P of
Ended Oct. 31 Investment Distributions Distributions Value Index 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990* $ 9,096 $ 0 $ 0 $ 9,096 $ 9,968 $ 9,246 $ 9,246 $ 10,357
1991 9,315 77 0 9,392 10,661 12,344 12,027 10,659
1992 8,639 200 0 8,839 9,252 13,575 13,020 11,001
1993 12,316 424 0 12,740 12,717 15,604 15,291 11,303
1994 13,392 483 0 13,875 14,002 16,208 16,684 11,598
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
OVERSEAS-CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total EAFE S&P of
Ended Oct. 31 Investment Distributions Distributions Value Index 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990* $ 9,550 $ 0 $ 0 $ 9,550 $ 9,968 $ 9,246 $ 9,246 $ 10,357
1991 9,780 80 0 9,860 10,661 12,344 12,027 10,659
1992 9,070 210 0 9,280 9,252 13,575 13,020 11,001
1993 12,930 445 0 13,375 12,717 15,604 15,291 11,303
1994 14,060 507 0 14,567 14,002 16,208 16,684 11,598
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
OVERSEAS-INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total EAFE S&P of
Ended Oct. 31 Investment Distributions Distributions Value Index 500 DJIA Living**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990* $ 9,550 $ 0 $ 0 $ 9,550 $ 9,968 $ 9,246 $ 9,246 $ 10,357
1991 9,780 80 0 9,860 10,661 12,344 12,027 10,659
1992 9,070 210 0 9,280 9,252 13,575 13,020 11,001
1993 12,930 445 0 13,375 12,717 15,604 15,291 11,303
1994 14,060 507 0 14,567 14,002 16,208 16,684 11,598
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
EMERGING MARKETS INCOME-CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of J.P. Morgan
Initial Reinvested Reinvested Emerging Cost
Period $10,000 Dividend Capital Gain Total Market Bond S&P of
Ended Dec. Investment Distributions Distributions Value Index 500 DJIA Living**
31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,068 $ 457 $ 235 $ 9,760 $ 9,989 $ 10,067 $ 10,173 $ 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
EMERGING MARKETS INCOME-CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of J.P. Morgan
Initial Reinvested Reinvested Emerging Cost
Period $10,000 Dividend Capital Gain Total Market Bond S&P of
Ended Dec. Investment Distributions Distributions Value Index 500 DJIA Living**
31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,068 $ 457 $ 235 $ 9,760 $ 9,989 $ 10,067 $ 10,173 $ 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
EMERGING MARKETS INCOME- INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of J.P. Morgan
Initial Reinvested Reinvested Emerging Cost
Period $10,000 Dividend Capital Gain Total Market Bond S&P of
Ended Dec. Investment Distributions Distributions Value Index 500 DJIA Living**
31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* $ 9,520 $ 480 $ 247 $ 10,247 $ 9,989 $ 10,067 $ 10,173 $ 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
The following table reflects the cost of the initial $10,000 investment in
each of the classes, together with the aggregate cost of reinvested
dividends and capital gain distributions, if any, for the period covered.
If distributions had not been reinvested, the amount of distributions
earned from the applicable class over time would have been smaller and the
cash payments from these classes for the periods noted would have come to
the amounts shown in column (A) for capital gain distributions, and the
amounts shown in column (B) for income dividends. Tax consequences of
different investments (with the exception of foreign tax withholdings) have
not been factored into the figures below.
(A) (B)
CAPITAL GAIN INCOME
FUND COST DISTRIBUTIONS DIVIDENDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Overseas-A $ 24,857 $ 10,557 $ 581
Equity Portfolio Growth-A 25,863 11,083 772
Equity Portfolio Growth-Institutional 16,456 5,229 76
Global Resources-A 16,797 5,296 514
Growth Opportunities-A 28,518 8,432 3,848
Strategic Opportunities-A 29,681 8,852 4,151
Strategic Opportunities-B 23,178 3,191 5,609
Equity Income-A 23,857 3,350 5,898
Equity Income-B 24,205 3,350 6,055
Equity Income-Institutional 18,033 2,105 4,086
Income & Growth-A 10,750 248 479
Emerging Markets Income-A 10,731 260 451
Emerging Markets Income-B 23,956 467 8,089
High Yield-A 25,541 490 8,447
High Yield-B 10,093 0 93
Strategic Income-A 10,084 0 84
Strategic Income-B 17,342 333 5,038
Government Investment-A 17,657 350 5,261
Government Investment-B 23,973 230 8,552
Limited Term Bond-A 24,573 241 8,938
Limited Term Bond-B 24,933 241 9,089
Limited Term Bond-Institutional 17,505 0 5,582
Short Fixed-Income-A 17,299 362 5,171
High Income Municipal-A 17,588 380 5,384
High Income Municipal-B 18,965 972 5,489
Limited Term Tax-Exempt-A 19,339 1,020 5,724
Limited Term Tax-Exempt-B 19,522 1,020 5,820
Limited Term Tax-Exempt-Institutional 10,258 0 255
Short-Intermediate Tax-Exempt-A 10,328 0 324
</TABLE>
INTERNATIONAL INDICES, MARKET CAPITALIZATION, AND NATIONAL STOCK MARKET
RETURN. The following tables show the indexed market capitalization of
certain countries included in the Morgan Stanley Capital International
Indices (MSCI) database as of December 31, 1994 and the performance of
national stock markets as measured in U.S. dollars and in local currency by
the Morgan Stanley Capital International stock market indices for the
twelve months ended October 31, 1994. Of course, these results are not
indicative of future stock market performance or the classes' performance.
Market conditions during the periods measured fluctuated widely. Brokerage
commissions and other fees are not factored into the values of the indices.
MARKET CAPITALIZATION. Companies outside the United States now make up
nearly two-thirds of the world's stock market capitalization. According to
Morgan Stanley Capital International, the size of the markets as measured
in U.S. dollars grew from $2,011 billion in 1982 to $7,659 billion in
1994.The following table measures the indexed market capitalization of
certain countries according to the Morgan Stanley Capital International
Indices database. The value of the markets are measured in billions of U.S.
dollars as of December 31, 1994.
MSCI INDEX MARKET CAPITALIZATION
Australia $125.10 Japan $2,145.70
Austria 18.00 Netherlands 167.90
Belgium 49.30 Norway 19.90
Canada 171.10 Singapore/Malaysia 175.00
Denmark 35.30 Spain 74.30
France 265.60 Sweden 76.10
Germany 300.10 Switzerland 215.00
Hong Kong 196.50 United Kingdom 731.00
Italy 102.90 United States 2,784.70
The following table measures the total market capitalization of certain
Latin American countries according to the MSCI Index database. The value of
the markets is measured in billions of U.S. dollars as of December 31,
1994.
MSCI INDEX MARKET CAPITALIZATION - LATIN AMERICA
Argentina $ 23,742
Brazil 95,841
Chile 38,160
Colombia 7,764
Mexico 70,281
Venezuela 3,328
Total Latin America $ 239,116
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents the
performance of national stock markets as measured in U.S. dollars by the
Morgan Stanley Capital International stock market indices for the twelve
months ended October 31, 1994. The second table shows the same performance
as measured in local currency. Each table measures total return based on
the period's change in price, dividends paid on stocks in the index, and
the effect of reinvesting dividends net of any applicable foreign taxes.
These are unmanaged indices composed of a sampling of selected companies
representing an approximation of the market structure of the designated
country.
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN U.S. DOLLARS
Australia 2.932% Japan 8.122%
Austria -5.91 Netherlands 14.089
Belgium 13.47 Norway 15.120
Canada 1.173 Singapore/Malaysia 33.750/7.946
Denmark 7.285 Spain -1.426
France 2.592 Sweden 19.165
Germany 8.752 Switzerland 11.086
Hong Kong 2.047 United Kingdom 7.843
Italy 17.332 United States 1.679
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN LOCAL CURRENCY
Australia -2.232% Japan -3.213%
Austria -15.340 Netherlands 2.517
Belgium -3.057 Norway 3.208
Canada 3.599 Singapore/Malaysia 23.794/7.963
Denmark -6.058 Spain -7.860
France -9.690 Sweden 5.680
Germany -2.090 Switzerland 5.573
Hong Kong 2.034 United Kingdom -1.884
Italy 11.405 United States 1.679
The following table shows the average annualized stock market returns as of
October 31, 1994.
STOCK MARKET PERFORMANCE MEASURED IN U.S. DOLLARS
Five Years Ended Ten Years Ended
Germany 11.01% 18.19%
Hong Kong 31.98 30.82
Japan -1.87 17.68
Spain 1.52 19.61
United Kingdom 12.81 18.64
United States 9.51 13.60
Performance may be compared to the performance of other mutual funds in
general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service located in
Summit, New Jersey that monitors the performance of mutual funds. Lipper
generally ranks funds on the basis of total return, assuming reinvestment
of distributions, but does not take sales charges or redemption fees into
consideration, and is prepared without regard to tax consequences. Lipper
may also rank bond funds based on yield. In addition to mutual fund
rankings, performance may be compared to stock, bond, and money market
mutual fund performance indices prepared by Lipper or other organizations.
When comparing these indices, it is important to remember the risk and
return characteristics of each type of investment. For example, while stock
mutual funds may offer higher potential returns, they also carry the
highest degree of share price volatility. Likewise, money market funds may
offer greater stability of principal, but generally do not offer the higher
potential returns available from stock mutual funds.
From time to time, performance may also be compared to other mutual funds
tracked by financial or business publications and periodicals. For example,
a class may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare the
performance of Fidelity funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
A class may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC-insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to assess savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the classes.
Performance comparisons may also be made to other compilations or indices
that may be developed and made available in the future.
Each class of a fixed-income fund may compare its performance or the
performance of securities in which that fixed-income fund may invest to
averages published by IBC USA (Publications), Inc. of Ashland,
Massachusetts. These averages assume reinvestment of distributions. The
Bond Fund Report Averages TM /All Taxable (Strategic Income,
Government Investment, Limited Term Bond, High Yield, Short-Fixed Income)
covers over 488 taxable bond funds and The Bond Fund Report
Averages TM /Municipal (Limited Term Tax-Exempt, High Income
Municipal, Short-Intermediate Tax-Exempt) covers over 433 tax-exempt bond
funds. The averages are reported in the BOND FUND REPORT(Registered
trademark). Each class of a fixed-income fund may also compare its
performance or the performance of securities in which it may invest to the
IBC/Donohgue's Money Fund Averages, reported in the MONEY FUND
REPORT(Registered trademark), which monitor the performance of money market
funds. When evaluating comparisons to money market funds, investors should
consider the relevant differences in investment objectives and policies.
Specifically, money market funds invest in short-term, high-quality
instruments and seek to maintain a stable $1.00 share price. A bond fund,
however, invests in longer-term instruments and its share price changes
daily in response to a variety of factors.
A tax-exempt fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual municipal
bond. Unlike tax-exempt mutual funds, individual municipal bonds offer a
stated rate of interest and, if held to maturity, repayment of principal.
Although some individual municipal bonds might offer a higher return, they
do not offer the reduced risk of a mutual fund that invests in many
different securities. The initial investment requirements and sales charges
of many tax-exempt mutual funds are lower than the purchase cost of
individual municipal bonds, which are generally issued in $5,000
denominations and are subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
model portfolios or allocations ; and saving for college or other
goals. In addition, Fidelity may quote or reprint financial or business
publications or periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products.
Each fund may present its fund number, Quotron number and CUSIP number, and
discuss or quote its current portfolio manager.
Each fund may be advertised as part of certain asset allocation programs
involving other Fidelity or non-Fidelity mutual funds. These asset
allocation programs may advertise a model portfolio and its performance
results.
Each fund may be advertised as part of a no transaction fee (NTF) program
in which Fidelity and non-Fidelity mutual funds are offered. A NTF program
may advertise performance results.
VOLATILITY. Various measures of volatility and benchmark correlation may be
quoted in advertising. In addition, a fund may compare these measures to
those of other funds. Measures of volatility seek to compare a class'
historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data. In advertising, a fund
may also discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a class's price movements over specific
periods of time. Each point on the momentum indicator represents the
class's percentage change in price movements over that period.
Examples of the effects of periodic investment plans, including the
principle of dollar cost averaging may be advertised. In such a program, an
investor invests a fixed dollar amount in a class at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of December 31, 1994, FMR advised over $25 billion in tax-free fund
assets, $55 billion in money market fund assets, $165 billion in equity
fund assets, and $19 billion in international fund assets. The funds may
reference the growth and variety of money market mutual funds and the
adviser's innovation and participation in the industry. The "equity funds
under management" figure represents the largest amount of equity fund
assets under management by a mutual fund investment adviser in the United
States, making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each class of each fixed-income
fund may compare its total expense ratio to the average total expense ratio
of similar funds tracked by Lipper. A class's total expense ratio is a
significant factor in comparing bond and money market investments because
of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE, AND REDEMPTION INFORMATION
CLASS A SHARES ONLY
Pursuant to Rule 22d-1 under the 1940 Act , FDC exercises its right
to waive Class A' s maximum 4.75% (all funds except Short
Fixed - Income and Short-Intermediate Tax-Exempt) or 1.50%
(Short Fixed - Income and Short-Intermediate Tax-Exempt)
front-end sales charge in connection with the fund's merger with or
acquisition of any investment company or trust. In addition, FDC has chosen
to waive Class A ' s front-end sales charge in certain instances
because of efficiencies involved in those sales of shares. The sales charge
will not apply:
1. to shares purchased by a bank trust officer, registered representative,
or other employee (and their immediate families) of Investment
Professionals under special arrangements in connection with FDC's sales
activities;
2. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity
Trustee or employee), the spouse of a Fidelity Trustee or employee, a
Fidelity Trustee or employee acting as custodian for a minor child, or a
person acting as trustee of a trust for the sole benefit of the minor child
of a Fidelity Trustee or employee;
3. to shares purchased by a charitable organization (as defined in Section
501(c)(3) of the Internal Revenue Code) investing $100,000 or more;
4. to shares purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined by
Section 501(c)(3) of the Internal Revenue Code);
5 . to shares in a Fidelity IRA or Fidelity Advisor IRA account
purchased (including purchases by exchange) with the proceeds of a
distribution from an employee benefit plan having more than 200 eligible
employees or a minimum of $3,000,000 in plan assets invested in Fidelity
mutual funds or $1,000,000 invested in Fidelity Advisor mutual funds;
6 . to shares purchased by an insurance company separate account used
to fund annuity contracts purchased by employee benefit plans (including
403(b) programs, but otherwise as defined in ERISA)), which, in the
aggregate, have either more than 200 eligible employees or a minimum of
$1,000,000 in assets invested in Fidelity Advisor funds;
7 . to shares purchased by any state, county, city, or government
instrumentality, department or authority or agency; or
8 . to shares purchased with redemption proceeds from other mutual
fund complexes on which the investor has paid a front-end or contingent
deferred sales charge;
9. to shares purchased by a trust institution or bank trust department,
excluding assets described in (11) and (12) below, that has executed a
Participation Agreement with FDC specifying certain asset minimums and
qualifications, and marketing program restrictions. Assets managed by third
parties do not qualify for this waiver.
10. to shares purchased for use in a broker-dealer managed account program,
provided the broker-dealer has executed a participation agreement with FDC
specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions. Employee benefit plan assets do not
qualify for this waiver.
11. to shares purchased as part of an employee benefit plan having more
than (i) 200 eligible employees or a minimum or $1 million in plan assets
invested in the Advisor funds, or (ii) 25 eligible employees or $250,000 in
plan assets invested in Fidelity Advisor Funds that subscribes to Fidelity
Advisor Retirement Connection or similar program sponsored by Fidelity
Investments Institutional Services Company, Inc.
12. to shares purchased as part of an employee benefit plan through an
intermediary that has signed a participation agreement with FDC specifying
certain asset minimums and qualifications, and marketing, program and
trading restrictions.
13. to shares purchased on a discretionary basis by a registered
investment adviser which is not part of an organization primarily engaged
in the brokerage business, that has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions. Employee benefit plan assets do not
qualify for this waiver.
In order to qualify for waivers (9), (10) and (13). eligible investors with
existing Class A accounts will be required to sign and comply with a
participation agreement. eligible investors that do not meet revised asset
requirements specified in the participation agreement will be allowed to
continue investing in Class A shares under the terms of their current
relationship until June 30, 1997, after which they will be prevented from
making new or subsequent purchases in Class A load waived, except that
employee benefit plans will be permitted to make additional purchases of
Class A shares load waived.
CLASS B SHARES ONLY
The contingent deferred sales charge (CDSC) on Class B shares may be waived
in the case of (1) disability or death, provided that the redemption is
made within one year following the death or initial determination of
disability, or (2) in connection with a total or partial redemption made in
connection with distributions from retirement plan accounts at age 70 1/2,
which are permitted without penalty pursuant to t he Internal Revenue
Code.
A sales load waiver form must accompany these transactions.
CLASS A AND CLASS B SHARES ONLY
QUANTITY DISCOUNTS. To obtain a reduction of the front-end sales charge on
Class A shares, you or your Investment Professional must notify the
transfer agent at the time of purchase whenever a quantity discount is
applicable to your purchase. Upon such notification, you will receive the
lowest applicable front-end sales charge.
For purposes of qualifying for a reduction in front-end sales charges under
the Combined Purchase, Rights of Accumulation or Letter of Intent programs,
the following may qualify as an individual or a "company" as defined in
Section 2(a)(8) of the 1940 Act: an individual, spouse, and their children
under age 21 purchasing for his, her, or their own account; a trustee,
administrator or other fiduciary purchasing for a single trust estate or a
single fiduciary account or for a single or a parent-subsidiary group of
"employee benefits plans" (as defined in Section 3(3) of ERISA); and
tax-exempt organizations as defined under Section 501(c)(3) of the Internal
Revenue Code.
RIGHTS OF ACCUMULATION permit reduced front-end sales charges on any future
purchases of Class A shares after you have reached a new breakpoint in a
fund's sales charge schedule. The value of currently held Fidelity Advisor
Fund Class A and Class B shares, Initial Class shares and Class B shares of
Daily Money Fund: U.S. Treasury Portfolio , and shares of Daily Money
Fund: Money Market Portfolio and Daily Tax-Exempt Money Fund acquired by
exchange from any Fidelity Advisor fund, is determined at the current day's
NAV at the close of business, and is added to the amount of your new
purchase valued at the current offering price to determine your reduced
front-end sales charge.
LETTER OF INTENT. You may obtain Class A shares at the same reduced
front-end sales charge by filing a non-binding Letter of Intent (the
Letter) within 90 days of the start of Class A purchases. Each Class A
investment you make after signing the Letter will be entitled to the
front-end sales charge applicable to the total investment indicated in the
Letter. For example, a $2,500 purchase of Class A shares toward a $50,000
Letter would receive the same reduced sales charge as if the $50,000
($1,000,000 for Short Fixed-Income or Short-Intermediate Tax-Exempt) had
been invested at one time. To ensure that the reduced front-end sales
charge will be received on future purchases, you or your Investment
Professional must inform the transfer agent that the Letter is in effect
each time Class A shares are purchased. Neither income nor capital gain
distributions taken in additional Class A or Class B shares will apply
toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you plan to
invest. Out of the initial purchase, 5% of the dollar amount specified in
the Letter will be registered in your name and held in escrow. The Class A
shares held in escrow cannot be redeemed or exchanged until the Letter is
satisfied or the additional sales charges have been paid. You will earn
income dividends and capital gain distributions on escrowed Class A shares.
The escrow will be released when your purchase of the total amount has been
completed. You are not obligated to complete the Letter
If you purchase more than the amount specified in the Letter and qualify
for a future front-end sales charge reduction, the front-end sales charge
will be adjusted to reflect your total purchase at the end of 13 months.
Surplus funds will be applied to the purchase of additional Class A shares
at the then - current offering price applicable to the total
purchase.
If you do not complete your purchase under the Letter within the 13-month
period, 30 days' written notice will be provided for you to pay the
increased front-end sales charges due. Otherwise, sufficient escrowed Class
A shares will be redeemed to pay such charges.
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM. You can make regular
investments in Class A or Class B shares of the funds with the Systematic
Investment Program by completing the appropriate section of the account
application and attaching a voided personal check with your bank's magnetic
ink coding number across the front. If your bank account is jointly owned,
be sure that all owners sign.
Your account will be drafted on or about the first business day of every
month. You may cancel your participation in the Systematic Investment
Program at any time without payment of a cancellation fee. You will receive
a confirmation from the transfer agent for every transaction, and a debit
entry will appear on your bank statement.
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM. If you own Class A shares
worth $10,000 or more, you can have monthly, quarterly or semiannual checks
sent from your account to you, to a person named by you, or to your bank
checking account. Your Systematic Withdrawal Program payments are drawn
from Class A share redemptions. If Systematic Withdrawal Plan redemptions
exceed income dividends earned on your shares, your account eventually may
be exhausted.
CLASS A, CLASS B, AND INSTITUTIONAL CLASS SHARES
Each fund is open for business and the NAV and, where applicable, the
offering price, for each class is calculated each day the New York
Stock Exchange (NYSE) is open for trading. The NYSE has designated the
following holiday closings for 1995: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Although FMR expects the same holiday schedule to be
observed in the future, the NYSE may modify its holiday schedule at any
time. Each class's NAV is calculated as of the close of the NYSE (normally
4:00 p.m. Eastern time). However, NAV may be calculated earlier if trading
on the NYSE is restricted or as permitted by the SEC. To the extent that
portfolio securities are traded in other markets on days when the NYSE is
closed, a class's NAV may be affected on days when investors do not have
access to the fund to purchase or redeem shares. In addition, trading in
some of a fund's portfolio securities may not occur on days when the fund
is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund suspends
the redemption of the shares to be exchanged as permitted under the 1940
Act or the rules and regulations thereunder, or the fund to be acquired
suspends the sale of its shares because it is unable to invest amounts
effectively in accordance with its investment objective and policies.
In the p rospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest effectively in accordance with its investment objective
and policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of each fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that a fund's income is derived from qualifying dividends. For any
fund that invests significantly in foreign securities, corporate
shareholders should not expect fund dividends to qualify for the
dividend s -received deduction . F or those funds that may also
earn other types of income, such as interest, income from securities loans,
non-qualifying dividends and short-term capital gains, the percentage of
dividends from the funds that qualify for the deduction will generally be
less than 100%. A fund will notify corporate shareholders annually of the
percentage of fund dividends which qualify for the dividends-received
deduction. A portion of a fund's dividends derived from certain U.S.
Government obligations may be exempt from state and local taxation. Gains
(losses) attributable to foreign currency fluctuations are generally
taxable as ordinary income and , therefore , will increase
(decrease) dividend distributions. As a consequence, FMR may adjust a
fund's income distributions to reflect the effect of currency fluctuations.
However, if foreign currency losses exceed a fund's net investment income
during a taxable year, all or a portion of the distributions made in the
same taxable year would be recharacterized as a return of capital to
shareholders, thereby reducing each shareholder's cost basis in his or her
fund. Short-term capital gains are distributed as dividend income.
For those funds whose income is primarily derived from interest, dividends
will not qualify for the dividends-received deduction available to
corporate shareholders. Mortgage security paydown gains (losses) are
generally taxable as ordinary income and, therefore, increase (decrease)
taxable dividend distributions. Gains (losses) attributable to foreign
currency fluctuations are generally taxable as ordinary income and
therefore will increase (decrease) dividend distributions.
To the extent that a fund's income is designated as federally tax-exempt
interest, the daily dividends declared by the fund are also federally
tax-exempt. Short-term capital gains are distributed as dividend
income, but do not qualify for the dividends-received deduction. These
gains will be taxed as ordinary income.
Each fund will send each of its shareholders a notice in January describing
the tax status of dividends and capital gain distributions, if any, for the
prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to 85% of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
E ach tax-exempt fund purchases securities that are free of
federal income tax based on opinions of counsel regarding the tax status.
These opinions will generally be based on covenants by the issuers or other
parties regarding continuing compliance with federal tax requirements. If
at any time the covenants are not complied with, distribution to
shareholders of interest on a security could become federally taxable
retroactive to the date the security was issued. For certain types of
structured securities, opinions of counsel may also be based on the effect
of the structure on the federal tax treatment of the income .
As a result of The Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities will be
considered tax-exempt for purposes of Limited Term Tax-Exempt's ,
Short-Intermediate Tax-Exempt's and High Income Municipal's policies of
investing so that 80% of each fund's net assets are invested in securities
whose interest is free from federal income tax. Interest from private
activity securities is a tax preference item for the purpose of determining
whether a taxpayer is subject to the AMT and the amount of AMT tax to be
paid, if any. Private activity securities issued after August 7, 1986 to
benefit a private or industrial user or to finance a private facility are
affected by this rule.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by a fund are
federally taxable to shareholders as dividends, not as capital gains.
Dividend distributions resulting from a recharacterization of gain from the
sale of bonds purchased at a discount after April 30, 1993 are not
considered income for the purposes of Limited Term Tax-Exempt's ,
Short-Intermediate Tax-Exempt's and High Income Municipal's policies of
investing so that 80% of each fund's net assets are invested in securities
whose interest is free from federal income tax.
Corporate investors should note that a tax preference item for purposes of
the corporate AMT is 75% of the amount by which adjusted current earnings
(which include tax-exempt interest) exceed the alternative minimum taxable
income of the corporation. If a shareholder receives an exempt interest
dividend and sells shares at a loss after holding them for a period of six
months or less, the loss will be disallowed to the extent of the amount of
the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by a fund on the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains , regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund, and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes. Short-term capital gains distributed by
each fund are taxable to shareholders as dividends, not as capital gains.
As of December 31, 1994, Strategic Opportunities had a capital loss
carry forward aggregating approximately $1,141,000 . This loss
carryforward, of which $1,141,000 will expire on December 31, 2002 ,
is available to offset future capital gains.
As of October 31, 1994, Income & Growth had a capital loss carryforward
aggregating approximately $18,212,000 . This loss carryforward, of
which $18,212,000 will expire on October 31, 2002 , is
available to offset future capital gains .
As of October 31, 1994, High Yield had a capital loss carryforward
aggregating approximately $9,447,000 . This loss carryforward, of
which $9,447,000 will expire on October 31, 2002 , is available to
offset future capital gains .
As of October 31, 1994, Government Investment had a capital loss
carryforward aggregating approximately $4,569,000 . This loss
carryforward, of which $4,569,000 will expire on October 31, 2002 ,
is available to offset future capital gains .
As of November 30, 1994, Limited Term Bond had a capital loss
carryforward aggregating approximately $6,852,000 . This loss
carryforward, of which $5,673,000, $1,034,000, and $145,000 will expire
on November 30, 1998, 1999, and 2002, respectively , is available to
offset future capital gains .
As of October 31, 1994, Short Fixed-Income had a capital loss
carryforward aggregating approximately $18,238,000 . This loss
carryforward, of which $1,000, $19,000, $128,000, $63,000, $286,000,
$38,000, $336,000, and $17,367,000 will expire between October 31, 1995 to
October 31, 2002 , is available to offset future capital gains .
As of October 31, 1994, High Income Municipal had a capital loss
carryforward aggregating approximately $3,173,000 . This loss
carryforward, of which $3,173,000 will expire on October 31,
2002 , is available to offset future capital gains .
As of November 30, 1994, Limited Term Tax-Exempt had a capital loss
carryforward aggregating approximately $627,000 . This loss
carryforward, of which $627,000 will expire on November 30,
2002 , is available to offset future capital gains .
As of November 30, 1994, Short-Intermediate Tax-Exempt had a capital loss
carryforward aggregating approximately $8,000 . This loss
carryforward, of which $8,000 will expire on November 30,
2002 , is available to offset future capital gains .
STATE AND LOCAL TAXES. For mutual funds organized as business trusts, state
law provides for a pass-through of the state and local income tax exemption
afforded to direct owners of U.S. government securities. Some states limit
this pass-through to mutual funds that invest a certain amount in U.S.
government securities, and some types of securities, such as repurchase
agreements and some agency-backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
government securities in each fund's portfolio. Because the income earned
on most U.S. government securities in which a fund invests is exempt from
state and local income taxes, the portion of your dividends from the fund
attributable to these securities will also be free from income taxes. The
exemption from state and local income taxation does not preclude states
from assessing other taxes on the ownership of U.S. government securities.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. government securities, whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes, so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and realized capital gains within each calendar year as well as on a
fiscal year basis. Each fund also intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held for less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some forward currency contracts, futures contracts, and options
are included in this 30% calculation, which may limit a fund's investments
in such instruments.
If a fund purchases shares in certain foreign investment entities, defined
as passive foreign investment companies (PFICs ) in the Internal
Revenue Code, it may be subject to U.S. federal income tax on a portion of
any excess distribution or gain from the disposition of such shares.
Interest charges may also be imposed on the fund with respect to deferred
taxes arising from such distributions or gains. Generally, a fund will
elect to mark - to - market any PFIC shares. Unrealized gains
will be recognized as income for tax purposes and must be distributed to
shareholders as dividends.
Each fund is treated as a separate entity from the other funds in its
Trust, if any, for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of a fund may be subject to
state and local personal property taxes. Investors should consult their tax
advisers to determine whether a fund is suitable for their particular tax
situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent company organized
in 1972. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Board of Trustees and executive officers of the Trusts are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. All persons
named as Trustees and officers also serve in similar capacities for other
funds advised by FMR. Unless otherwise noted, the business address of each
Trustee and officer is 82 Devonshire Street, Boston, Massachusetts 02109,
which is also the address of FMR. Those Trustees who are "interested
persons" (as defined in the 1940 Act) by virtue of their affiliation with
either a fund or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
a consultant to Western Mining Corporation (1994). Prior to February 1994,
he was President of Greenhill Petroleum Corporation (petroleum exploration
and production, 1990). 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) and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (63), P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and she 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.
RICHARD J. FLYNN (71), 77 Fiske Hill, Sturbridge, MA, Trustee, is a
financial consultant. Prior to September 1986, Mr. Flynn was Vice Chairman
and a Director of the Norton Company (manufacturer of industrial devices).
He is currently a Trustee of College of the Holy Cross and Old Sturbridge
Village, Inc. , and he previously served as a Director of Mechanics Bank
(1971-1995).
E. BRADLEY JONES (67), 3881-2 Lander Road, Chagrin Falls, OH, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. He is a Director of TRW Inc.
(original equipment and replacement products), Cleveland-Cliffs Inc.
(mining), Consolidated Rail Corporation, Birmingham Steel Corporation, and
RPM, Inc. (manufacturer of chemical products, 1990) , and he previously
served as a Director of NACCO Industries, Inc. (mining and marketing,
1985-1995) and Hyster-Yale Materials Handling, Inc. In addition, he
serves as a Trustee of First Union Real Estate Investments, a Trustee and
member of the Executive Committee of the Cleveland Clinic Foundation, a
Trustee and member of the Executive Committee of University School
(Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (62), One Harborside, 680 Steamboat Road, Greenwich, CT,
Trustee, is Executive-in-Residence (1995) 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 Vice Chairman of the Board of Directors of the National Arts
Stabilization Fund, Vice Chairman of the Board of Trustees of the Greenwich
Hospital Association, and as a Member of the Public Oversight Board of the
American Institute of Certified Public Accountants' SEC Practice Section
(1995).
*PETER S. LYNCH (52), Trustee (1990) is Vice Chairman and Director of 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 and Society for the
Preservation of New England Antiquities, and as an Overseer of the Museum
of Fine Arts of Boston (1990).
GERALD C. McDONOUGH (66), 135 Aspenwood Drive, Cleveland, OH, Trustee, is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration),
Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE (70), 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts,
and Rensselaer Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
MARVIN L. MANN (62), 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director 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
(1990).
THOMAS R. WILLIAMS (66), 21st Floor, 191 Peachtree Street, N.E., Atlanta,
GA, Trustee, is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), 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).
WILLIAM J. HAYES (61), Vice President (1994), is Vice President of
Fidelity's equity funds; Senior Vice President of FMR; and Managing
Director of FMR Corp.
ROBERT H. MORRISON (55), Manager of Security Transactions of Fidelity's
equity funds, is Vice President of FMR.
ROBERT A. LAWRENCE ( 42 ), Vice President (1994), is Vice President of
Fidelity's high income funds and Senior Vice President of FMR (1993). Prior
to joining FMR, Mr. Lawrence was Managing Director of the High Yield
Department for Citicorp (1984-1991).
MARGARET L. EAGLE (45), is Vice President of High Yield and an employee of
FMR.
DANIEL R. FRANK (38), is Vice President of Strategic Opportunities and an
employee of FMR.
MICHAEL S. GRAY (38), is Vice President of Limited Term Bond (1989)
and an employee of FMR.
ROBERT E. HABER (37), is Vice President of Income & Growth (1989)
and an employee of FMR.
ROBERT LAWRENCE ( 42 ) is Vice President of Emerging Markets Income
(1995) and an employee of FMR.
MALCOLM W. MacNAUGHT II (61), is Vice President of Global Resources (1991)
and an employee of FMR.
ROBERT STANSKY (39), is Vice President of Equity Portfolio Growth (1991)
and of other funds advised by FMR, and an employee of FMR.
GEORGE A. VANDERHEIDEN (49), is Vice President of Growth Opportunities
(1990) and an employee of FMR.
GUY E. WICKWIRE ( 48 ), is Vice President of High Income Municipal
(1994) and an employee of FMR.
ARTHUR S. LORING (47), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
STEPHEN P. JONAS (42), Treasurer (1995) is Treasurer and Vice President of
FMR (1993). Mr. Jonas is also Treasurer of FMR Texas Inc. (1994), Fidelity
Management & Research (U.K.) Inc. (1994), and Fidelity Management &
Research (Far East) Inc. (1994). Prior to becoming Treasurer of FMR, Mr.
Jonas was Senior Vice President, Finance - Fidelity Brokerage Services,
Inc. (1991-1992) and Senior Vice President, Strategic Business Systems -
Fidelity Investments Retail Marketing Company (1989-1991).
JOHN H. COSTELLO (48), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994); Chief Financial
Officer of Fidelity Brokerage Services, Inc. (1990-1993); and Vice
President, Assistant Controller, and Director of the Accounting Department
- - First Boston Corp. (1986-1990).
The following table sets forth information describing the compensation of
each current Trustee of each fund for his or her services as trustee for
the 1994 fiscal year ended as indicated.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C>
Fiscal
Period
Ended: J. Gary Ralph F. Phyllis Richard E. Edward Donald Gerald C. Peter S. Edward Marvin Thomas
10/31 - * Burkhe Cox Burke J. Flynn Bradley C. J. Kirk McDonoug Lynch(dagger) H. L. R.
11/30 - **ad(dagger)Davis Jones Johnson h Malone Mann William
12/31 - *** 3rd(dagger) s
Overseas*
$ 0 $ 190 $ 187 $ 229 $ 185 $ 0 $ 187 $ 191 $ 0 $ 194 $ 1 87 $ 188
Equity Portfolio
0 473 460 569 462 0 467 473 0 479 474 469
Growth**
Global Resources*
0 49 48 59 47 0 48 49 0 50 48 48
Growth
0 1,467 1,446 1,766 1,432 0 1,448 1,480 0 1,501 1,447 1,453
Opportunities*
Strategic
0 183 179 227 181 0 181 183 0 188 183 185
Opportunities***
Equity Income**
0 126 123 152 123 0 125 126 0 128 127 125
Income & Growth*
0 1,201 1,185 1,447 1,173 0 1,186 1,213 0 1,230 1,186 1,191
Emerging Markets
0 11 8 11 9 0 9 9 0 9 10 9
Income***+
High Yield*
0 296 292 356 288 0 292 299 0 303 292 292
Strategic Income***+
0 3 2 3 3 0 2 2 0 3 2 3
Government
0 43 42 52 42 0 42 43 0 44 42 42
Investment*
Limited Term Bond**
0 139 136 168 136 0 138 139 0 141 139 138
Short Fixed-Income*
0 400 395 481 391 0 396 405 0 410 395 396
High Income
0 275 271 330 268 0 271 278 0 281 271 271
Municipal*
Limited Term
0 34 33 41 33 0 33 34 0 34 34 33
Tax-Exempt**
Short-Intermediate
0 5 4 6 5 0 5 5 0 5 5 5
Tax-Exempt**+
</TABLE>
+ Estimated
(dagger) Interested trustees of each fund are compensated by FMR
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gary Burkhead(dagger) $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 125,000
Phyllis Burke Davis 5,200 52,000 122,000
Richard J. Flynn 0 52,000 154,500
Edward C. Johnson 3d(dagger) 0 0 0
E. Bradley Jones 5,200 49,400 123,500
Donald J. Kirk 5,200 52,000 125,000
Peter S. Lynch(dagger) 0 0 0
Gerald C. McDonough 5,200 52,000 125,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 125,000
Thomas R. Williams 5,200 52,000 126,500
</TABLE>
* Information is as of December 31, 1994 for 206 funds in the complex.
(dagger) Interested trustees of each fund are compensated by FMR
Under a retirement program that was adopted in July 1988 , the
non-interested Trustees, upon reaching age 72, become eligible to
participate in a retirement program under which they receive payments
during their lifetime from a fund based on their basic trustee fees and
length of service. The obligation of a fund to make such payments is
not secured or funded. Trustees become eligible if, at the time of
retirement, they have served on the Board for at least five years.
Currently, Messrs. Ralph S. Saul, William R. Spaulding, Bertram H. Witham,
and David L. Yunich, all former non-interested Trustees, receive retirement
benefits under the program.
On January 31, 1995 the trustees and officers owned in the aggregate less
than 1% of each fund's outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each 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 each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
the transfer agent and the pricing and bookkeeping agent, each fund pays
all of its expenses, without limitation, that are not assumed by those
parties. Each fund pays for the typesetting, printing, and mailing of its
proxy materials to shareholders, legal expenses, and the fees of the
custodian, auditor and non-interested Trustees. Although each fund's
current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices and reports to shareholders, each Trust, on behalf of
each of its funds , has entered into a revised transfer agent
agreement, pursuant to which the transfer agent bears the costs of
providing these services to existing shareholders. Other expenses paid by
each fund include interest, taxes, brokerage commissions, each fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each 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.
FMR is each fund's manager pursuant to management contracts approved by
shareholders on the dates shown in the table below.
Fund Date of Management Contract Date of Shareholder Approval
Overseas 1/1/93 12/1/92
Equity Portfolio Growth 12/1/90 11/14/90
Global Resources 12/ 1 / 94 11/16/94
Growth Opportunities 1/1/95 12/14/94
Strategic Opportunities 11/29/90 9 /19/90
Equity Income 8/1/86 7/23/86
Income & Growth 1/1/95 12/14/94
Emerging Markets Income 1/20/94 2/10/94
High Yield 1/1/95 12/14/94
Strategic Income 9/16/94 10/14/94
Government Investment 1/1/95 1 2/14/94
Limited Term Bond 1/1/95 12/14/94
Short Fixed - Income 1 /195 1 2/14/94
High Income Municipal 12/ 1/94 1 1/16/94
Limited Term Tax-Exempt 7/1/95 6/14/95
Short-Intermediate Tax-Exempt 1/1/9 5 6/14/95
For the services of FMR under its contract, Equity Income pays FMR a
monthly management fee at the annual rate of .50% of its average net assets
throughout the month. For the fiscal years ended November 30, 1994, 1993,
and 1992, FMR received $1,392,206, $933,830 and $736,344, respectively.
For the services of FMR under each contract, Equity Portfolio Growth,
Global Resources, Income & Growth, Emerging Markets Income, High Yield,
Strategic Income, Government Investment, Limited Term Bond, Short
Fixed-Income, High Income Municipal, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt each pay FMR a monthly management fee
composed of the sum of two elements: a group fee rate and an individual
fund fee rate (together, the basic fee rate) .
For the services of FMR under each contract, Overseas, Growth
Opportunities, and Strategic Opportunities pay FMR a monthly management fee
composed of the sum of two elements: a basic fee and a performance
adjustment based on a comparison of Overseas ' and Strategic
Opportunities' performance to that of the S&P 500 and Growth
Opportunities' performance to that of EAFE
COMPUTING THE BASIC FEE. The basic fee rate for each fund (except Equity
Income) 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 and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown below on the left. The schedule below on the right shows the
effective annual group fee rate at various asset levels, which is the
result of cumulatively applying the annualized rates on the left. For
example, the effective annual fee rate at $273 billion of group net assets
- - the approximate level for October 1994 - was 0.3191% for equity funds and
0.1561% for fixed - income funds, which is the weighted average of the
respective fee rates for each level of group net assets up $273 billion.
FIXED-INCOME FUNDS
The following fee schedule is the current fee schedule for all fixed-income
funds.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate
0 - $ 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200
This fee schedule has been approved by the shareholders of all the
fixed-income funds.
EQUITY FUNDS
The following fee schedule is the current fee schedule for all equity funds
(except Equity Income).
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
Over 390 .2700
This fee schedule was approved by shareholders of all equity funds except
Overseas, Equity Portfolio Growth, Strategic Opportunities, and Equity
Income (see chart indicating date of management contract and date of
shareholder approval.)
Under the current management contracts for Overseas and Strategic
Opportunities', the group fee rate is based on a schedule with breakpoints
ending at .3000% for average group net assets in excess of $174 billion.
Under the current management contract for Equity Portfolio Growth, the
group fee rate is based on a schedule with breakpoints ending at .3100% for
average group net assets in excess of $102 billion.
The following fee schedule is the fee schedule which was in effect through
August 1, 1994, and was either approved by shareholders or voluntarily
adopted by FMR.
Group fee rate breakpoints shown for average group net assets in excess of
$138 billion and under $228 billion were voluntarily adopted by FMR, and
went into effect on January 1, 1992. Additional breakpoints for average
group net assets in excess of $228 billion were voluntarily adopted by FMR
on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints.
Each revised group fee rate schedule provides for lower management fee
rates as FMR's assets under management increase.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
The individual fund fee rates for each fund (except Equity Income) are set
forth in the following chart. Based on the average group net assets of the
funds advised by FMR for December 1994, the annual basic fee rate would be
calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
Overseas .3193% + .45% = .7693%
Equity Portfolio Growth .3193% + .30%* = .6193%
Global Resources .3193% + .45% = .7693%
Growth Opportunities .3193% + .30% = .6193%
Strategic Opportunities .3193% + .30% = .6193%
Income & Growth .3193% + .20% = .5193%
Emerging Markets Income .1563% + .55% = .7063%
High Yield .1563% + .45% = .6063%
Strategic Income .1563% + .45% = .6063%
Government Investment .1563% + .30% = .4563%
Limited Term Bond .1563% + .30%** = .4563%
Short Fixed-Income .1563% + .30% = .4563%
High Income Municipal .1563% + .25% = .4063%
Limited Term Tax-Exempt .1563% + .25% = .4063%
Short-Intermediate Tax-Exempt .1563% + .25% = .4063%
* Effective August 1, 1994, FMR voluntarily agreed to reduce the individual
fund fee rate from 0.33% to 0.30%. If this reduction were not in effect
during fiscal 1994, the total management fee would have been 0.65%.
** On December 14, 1994, shareholders of the fund approved an increase for
the individual fund fee rate from 0.25% to 0.30% effective January
1 , 1995.
One-twelfth (1/12) of this annual basic fee or management fee, as
applicable, rate is applied to each fund's net assets averaged for the most
recent month, giving a dollar amount, which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Strategic
Opportunities, Overseas, and Growth Opportunities is subject to upward or
downward adjustment, depending upon whether, and to what extent, the
investment performance of Strategic Opportunities, Overseas, and Growth
Opportunities' for the performance period exceeds, or is exceeded by, the
record of the S&P 500, EAFE, and S&P 500, respectively (the
Indices) , 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
most recent 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 .02%. Thus,
the maximum annualized adjustment rate is +/- .20%. For each fund,
investment performance will be measured separately for each class
and the least of the results obtained will be 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 each 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.
Each class'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 each class are treated as if reinvested
in that class's shares at the net asset value as of the record date for
payment. The record of the each 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 each class's
performance compared to the investment record of the applicable Index, the
controlling factor is not whether each class'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 performance of each class is based solely
on the relevant performance period without regard to the cumulative
performance over a longer or shorter period of time.
The table below shows the management fees received by FMR for its services
as investment adviser to the funds as of the end of each fund's three most
recent fiscal years. The fees were equivalent to the percentage of the
average net assets of each fund, as indicated.
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED MANAGEMENT FEE AS
PERFORMANCE
A PERCENTAGE OF
MANAGEMENT FEE + ADJUSTMENT AVERAGE NET ASSETS
<S> <C> <C> <C> <C>
OVERSEAS 10/31
1994 $3,435,695 $133,032 (upward) .80%
1993 503,110 3,885 (downward) .77
1992 139,234 6,062 (downward) .75
EQUITY PORTFOLIO GROWTH 11/30
1994 6,567,305 N/A .64
1993 2,646,631 N/A .66
1992 860,709 N/A .67
GLOBAL RESOURCES 10/31
1994 890,892 N/A .77
1993 111,465 N/A .77
1992 49,323 N/A .79
GROWTH OPPORTUNITIES 10/31
1994 22,087,985 2,130,192 (upward) .69
1993 8,250,306 709,376 (upward) .68
1992 2,747,645 240,501 (upward) .69
STRATEGIC OPPORTUNITIES +++ 12/31
10/1/94 - 12/31/94 682,856 37,843 (upward) .67
(annualize
d)
10/1/93 - 9/30/94 2,582,584 359,674 (upward) .72
1993 1,291,906 81,040 (upward) .54
1992 1,087,250 268,871 (downward) .51
EQUITY INCOME 11/30
1994 1,392,206 N/A .50
1993 933,830 N/A .50
1992 ++++ 736,344 N/A .50
INCOME & GROWTH 10/31
1994 13,325,884 N/A .52
1993 4,578,813 N/A .53
1992 1,291,531 N/A .53
EMERGING MARKETS INCOME 12/31
1994 ++ 122,088 N/A .70
HIGH YIELD 11/30
1994 3,737,959 N/A .60
1993 1,539,682 N/A .51
1992 397,638 N/A .52
STRATEGIC INCOME 12/31
1994 ++ 10,348 N/A .60
GOVERNMENT INVESTMENT 11/30
1994 422,255 N/A .46
1993 186,973 N/A .46
1992 78,107 N/A .47
LIMITED TERM BOND 11/30
1994 1,180,785 N/A .41
1993 818,426 N/A .42
1992 963,611 N/A .42
SHORT FIXED - INCOME 10/31
1994 $3,713,144 N/A .46%
1993 1,674,841 N/A .47
1992 368,993 N/A .47
HIGH INCOME MUNICIPAL 11/30
1994 2,257,113 N/A .41
1993 1,314,060 N/A .42
1992 439,804 N/A .42
LIMITED TERM TAX-EXEMPT 11/30
1994 286,027 N/A .41
1993 156,087 N/A .42
1992 268,825 N/A .42
SHORT - INTERMEDIATE TAX-EXEMPT 11/30
1994++ 31,109 N/A .41
</TABLE>
+ Management fee includes performance adjustments for Overseas, Growth
Opportunities, and Strategic Opportunities.
++ Emerging Markets Income, Strategic Income, and
Short - Intermediate Tax-Exempt commenced operations on March 10,
1994, October 31, 1994, and March 16, 1994, respectively. Management fee
percentages for these funds are annualized.
+++ Strategic Opportunities' fiscal year end changed from September
30 to December 31 as of November 9, 1994 .
++++ Management fee does not include a voluntary reimbursement of 0.10% of
average net assets for the period December 1, 1991 to September 10, 1992.
FMR may, from time to time, voluntarily reimburse all or a portion of a
class' operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses) above a specified percentage of
average net assets. 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 reimbursement by FMR will increase each
class' total returns and yield and reimbursement by each class will lower
its total returns and yield.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that each fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISERS. On behalf of Equity Portfolio Growth, Global
Resources, Growth Opportunities, Strategic Opportunities, Equity Income,
Income & Growth, High Yield, Limited Term Bond, and Short Fixed-Income, FMR
has entered into sub-advisory agreements with FMR U.K. and FMR Far East. On
behalf of Overseas, 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. On behalf of Emerging Markets Income
and Strategic Income, FMR has entered into sub-advisory agreements with FMR
U.K., FMR Far East, FIJ, 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 Global Resources, Growth Opportunities, Strategic Income,
Income & Growth, High Yield, Limited Term Bond, Emerging Markets Income,
and Short Fixed-Income, FMR may also grant FMR U.K. and FMR Far East
investment management authority as well as the authority to buy and sell
securities if FMR believes it would be beneficial to the funds.
Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIAL U.K. each focuses
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. FIJ and FIIA are wholly owned subsidiaries 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. FIJ was organized in Japan in
1986. 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, FIJ, 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:
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.
FMR pays FIIA and FIJ 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.
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 Global Resources, Growth Opportunities, Income & Growth,
Emerging Markets Income, High Yield, Short Fixed-Income, and Limited Term
Bond, for providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50% of its
monthly management fee (including any performance adjustment, if
applicable) with respect to the fund's average net assets managed by the
sub-adviser on a discretionary basis.
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.
The table below shows the fees paid by FMR to FMR U.K., FMR Far East, FIIA,
and FIJ, and by FIIA to FIIAL U.K. for providing investment advice and
research services with respect to certain of the funds for the fiscal
periods ended 1994, 1993, and 1992.
The other funds paid no investment sub-advisory fees for the fiscal
periods ended 1992-1994.
FEES PAID TO FOREIGN SUB-ADVISERS
FUND FEES PAID BY FMR TO FMR U.K. FEES PAID BY FMR TO FMR FAR EAST
1994 1993 1992 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Overseas $ 153,288 $ 14,363 $ 13,189 $ 174,129 $ 22,357 $ 16,736
Equity Portfolio Growth 13,191 3,144 2,425 15,192 5,021 2,126
Global Resources 2,598 N/A N/A 2,932 N/A N/A
Growth Opportunities 67,818 N/A N/A 82,741 N/A N/A
Strategic Opportunities 7,794 N/A N/A 7,712 N/A N/A
(10/1/93 - 9/30/94)
Strategic Opportunities 7,352 4,560 88 7,701 11,267 117
(10/1/94 - 12/31/94)
Equity Income 12,197 4,669 5,237 13,970 7,199 6,544
Income & Growth 248,936 N/A N/A 299,094 N/A N/A
TOTAL $ 513,174 $ 26,736 $ 20,939 $603,471 $ 45,844 $ 25,523
</TABLE>
CONTRACTS WITH FMR AFFILIATES
State Street is transfer and shareholders' servicing agent for Class A
shares of the taxable funds. FIIOC is transfer and shareholders' servicing
agent for Class B and Institutional Class shares of the taxable funds. UMB
is the transfer and shareholders' servicing agent for Class A, Class B and
Institutional Class shares of the tax-exempt funds. On behalf of Class A
shares of the tax-exempt funds, UMB has entered into sub-arrangements with
State Street pursuant to which State Street performs as transfer and
shareholders' servicing agent. State Street has further delegated certain
transfer and shareholders' services for Class A shares of the tax-exempt
funds to FIIOC. On behalf of Class B and Institutional Class shares
of the tax-exempt funds, UMB has entered into sub-arrangements with
FIIOC pursuant to which FIIOC performs as transfer and shareholders'
servicing agent. For every account, Class A, Class B and Institutional
Class of each fund pay an annual fee and an asset-based fee based on
account size. The asset-based fees of the equity and growth and income
funds are subject to adjustment if the year-to-date total return of the
Standard & Poor's Composite Index of 500 Stocks is greater than positive or
negative 15%.
For accounts that State Street maintains on behalf of UMB, State Street
receives all such fees. For accounts that FIIOC maintains on behalf of UMB
or State Street, FIIOC receives all such fees. For accounts for which FIIOC
provides limited services, FIIOC receives a portion of related account fees
and asset-based fees, less applicable charges and expenses of State Street
for account maintenance and transactions.
State Street and FIIOC, as applicable, pay out-of-pocket expenses
associated with providing transfer agent services. In addition, FIIOC bears
the expense of typesetting, printing, and mailing prospectuses, statements
of additional information, and all other reports, notices, and statements
to shareholders, with the exception of proxy statements.
FSC performs the calculations necessary to determine NAV and dividends for
Class A, Class B, and Institutional Class of each taxable fund, maintains
each taxable fund's accounting records and administers each taxable fund's
securities lending program. UMB has sub-arrangements with FSC pursuant to
which FSC performs the calculations necessary to determine the NAV and
dividends for the Class A, Class B, and Institutional Class of each
tax-exempt fund, and maintains the accounting records for each tax-exempt
fund. The fee rates for pricing and bookkeeping services are based on each
fund's average net assets, specifically, 0.06% (equity funds) or 0.04%
(bond funds) for the first $500 million of average net assets and
0.03% (equity funds) or 0.02% (bond funds) for average net assets in
excess of $500 million. The fee is limited to a minimum of $45,000 and a
maximum of $750,000 per year. Pricing and bookkeeping fees, including
related out-of-pocket expenses, paid by the funds for the past three fiscal
years were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND 1994 1993 1992
Overseas $ 251,241 $ 57,711 $ 48,617
Equity Portfolio Growth $ 461,039 $ 234,813 $ 79,601
Global Resources $ 73,164 $ 45,425 $ 46,390
Growth Opportunities $ 758,343 $ 513,950 $ 236,689
Strategic Opportunities (10/1/94 - 12/31/94) $ 61,356 $ 145,494 $ 129,183
Strategic Opportunities (10/1/93 - 9/30/94) $ 215,648 N/A N/A
Equity Income $ 168,364 $ 113,026 $ 91,899
Income & Growth $ 750,743 $ 410,561 $ 148,775
Emerging Markets Income $ 36,412* N/A N/A
High Yield $ 223,567 $ 121,204 $ 46,036
Strategic Income $ 7,500* N/A N/A
Government Investment $ 46,218 $ 46,457 $ 45,676
Limited Term Bond $ 118,125 $ 81,106 $ 97,683
Short Fixed-Income $ 264,455 $ 143,813 $ 47,624
High Income Municipal $ 220,222 $ 157,559 $ 65,541
Limited Term Tax-Exempt $ 48,062 $ 45,724 $ 59,094
Short-Intermediate Tax-Exempt $ 31,953* N/A N/A
</TABLE>
* Emerging Markets Income, Strategic Income, and Short - Intermediate
Tax-Exempt commenced operations on March 10, 1994, October 31, 1994, and
March 16, 1994, respectively.
FSC also receives fees for administering Limited Term Bond's securities
lending program. Securities lending fees are based on the number and
duration of individual securities loans. For the fiscal years ended 1994,
1993, and 1992, Limited Term Bond incurred securities lending fees of $0,
$0, and $25, respectively.
For the tax-exempt funds, the transfer agent fees and charges, and pricing
and bookkeeping fees described above are paid to FIIOC and FSC,
respectively, by UMB, which is entitled to reimbursement from the fund for
these expenses.
Each fund has a d istribution a greement 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 National Association of Securities Dealers, Inc.
The distribution agreement s call for FDC to use all reasonable
efforts, consistent with its other business, to secure purchasers for
shares of e a ch fund, which are continuously offered.
Promotional and administrative expenses in connection with the offer and
sale of shares are paid by FDC. The table below shows the sales charge
revenue paid to FDC, and retained by FDC, for the following fiscal
periods.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SALES CHARGE REVENUE CDSC REVENUE
FISCAL YEAR AMOUNT PAID TO AMOUNT RETAINED AMOUNT PAID AMOUNT
ENDED FDC BY FDC TO FDC RETAINED BY
FDC
OVERSEAS Oct. 31, 1994 $ 9,596,831 $ 1,436,765 $ N/A $ N/A
1993 3,895,423 567,983 N/A N/A
1992 176,786 25,976 N/A N/A
EQUITY PORTFOLIO GROWTH Nov. 30, 1994 9,353,000 1,397,000 N/A N/A
1993 10,102,208 1,523,036 N/A N/A
1992 393,717 59,902 N/A N/A
GLOBAL RESOURCES Oct. 31, 1994 3,854,629 567,671 N/A N/A
1993 890,154 130,927 N/A N/A
1992 81,257 13,361 N/A N/A
GROWTH OPPORTUNITIES Oct. 31, 1994 47,564,000 7,108,000 N/A N/A
1993 27,663,060 4,141,156 N/A N/A
1992 10,628,462 1,504,730 N/A N/A
STRATEGIC OPPORTUNITIES Dec. 31, 1994 553,970* 231,911 12,307 12,307
2,986,131** 447,011 409 409
Sept. 30, 1993 1,299,291 196,365 N/A N/A
1992 438,508 49,558 N/A N/A
INCOME & GROWTH Oct. 31, 1994 37,018,000 6,291,000 N/A N/A
1993 28,877,882 4,215,606 N/A N/A
1992 7,728,127 1,103,118 N/A N/A
EMERGING MARKETS INCOME Dec. 31, 1994 406,046 59,134 2,877 2,877
1993 N/A N/A N/A N/A
1992 N/A N/A N/A N/A
HIGH YIELD Oct. 31, 1994 8,980,127 1,342,482 15,765 15,765
1993 10,465,950 1,524,348 N/A N/A
1992 3,752,490 352,707 N/A N/A
STRATEGIC INCOME Dec. 31, 1994 197,904 0 9,542 9,542
1993 N/A N/A N/A N/A
1992 N/A N/A N/A N/A
GOVERNMENT INVESTMENT Oct. 31, 1994 996,242 168,939 978 978
1993 993,386 145,628 N/A N/A
1992 398,144 42,904 N/A N/A
SHORT FIXED-INCOME Oct. 31, 1994 4,396,909 877,639 N/A N/A
1993 5,308,796 968,759 N/A N/A
1992 2,084,097 269,245 N/A N/A
HIGH INCOME MUNICIPAL Oct. 31, 1994 6,327,614 1,038,989 0 0
1993 9,918,856 1,417,733 N/A N/A
1992 3,334,908 286,876 N/A N/A
SHORT INTERMEDIATE
Nov. 30, 1994 122,128 13,369 N/A N/A
TAX-EXEMPT
1993 N/A N/A N/A N/A
1992 N/A N/A N/A N/A
EQUITY INCOME Nov. 30, 1994 2,450,544 352,678 30,093 30,093
1993 792,962 117,757 N/A N/A
1992 18,875 1,069 N/A N/A
LIMITED TERM BOND Nov. 30, 1994 1,598,883 237,647 1,279 1,279
1993 1,436,859 210,713 N/A N/A
1992 55,144 10,346 N/A N/A
LIMITED TERM TAX-EXEMPT Nov. 30, 1994 635,031 96,813 0 0
1993 669,395 97,441 N/A N/A
1992 9,846 3,808 N/A N/A
</TABLE>
* For the fiscal period October 1, 1994 through December 31, 1994.
** For the fiscal period October 1, 1993 through September 30, 1994.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of each
class of shares of the funds (the Plans) pursuant to Rule 12b-1 under the
1940 Act (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of a fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class A, Class B, and
Institutional Class shares of each fund and FMR to incur certain expenses
that might be considered to constitute direct or indirect payment by the
funds of distribution expenses.
Pursuant to the Class A Plans, FDC is paid a distribution fee as a
percentage of Class A's average net assets at an annual rate of up to 0.75%
for Equity Portfolio Growth and Strategic Opportunities; up to 0.40% for
each of Emerging Markets Income, High Yield, Strategic Income, Limited Term
Bond, Government Investment, High Income Municipal, and Limited Term
Tax-Exempt; up to 0.65% for each of Overseas, Growth Opportunities, Global
Resources, Equity Income, and Income & Growth; and up to 0.15% for Short
Fixed-Income and Short-Intermediate Tax-Exempt. Pursuant to the Class B
Plans, FDC is paid a distribution fee as a percentage of Class B's average
net assets at an annual rate of 0.75% for each fund with Class B shares.
For the purpose of calculating the distribution fees, average net assets
are determined as of the close of business on each day throughout the
month, but excluding assets attributable to Class A shares of Equity
Portfolio Growth, Equity Income, Emerging Markets Income, Strategic Income,
Strategic Opportunities, Short-Intermediate Tax-Exempt, Limited Term
Tax-Exempt, and Overseas purchased more than 144 months prior to such day.
Currently, the Trustees have approved a distribution fee for Class A of
Equity Portfolio Growth and Strategic Opportunities at an annual rate of
0.65%; and for Class A of Emerging Markets Income, Government Investment,
High Yield, High Income Municipal, Limited Term Bond, Limited Term
Tax-Exempt, and Strategic Income at an annual rate of 0.25%. This fee may
be increased only when, in the opinion of the Trustees, it is in the best
interests of the shareholders of Class A to do so. Class B of each fund
also pays Investment Professionals a service fee at an annual rate of 0.25%
of its average daily net assets determined as of the close of business on
each day throughout the month for personal service and/or the maintenance
of shareholder accounts.
The tables below show the distribution fees paid for Class A shares for the
fiscal years ended 1994, 1993, and 1992, and for Class B shares for the
fiscal periods ended 1994. (Class B shares commenced operations on June 30,
1994.)
CLASS A DISTRIBUTION FEES
1992 1993 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Paid to Paid to Paid to
Investment Investment Investment
Professionals Retained Professionals Retained Professionals Retained
by FDC Total Fees by FDC Total Fees by FDC Total Fees
FUND
Overseas $ 93,132 $ 27,492 $ 120,624 $ 325,181 $ 97,554 $ 422,735 $2,139,864 $ 641,958 $2,781,822
Equity Portfolio
Growth 9,477 2,843 12,320 258,713 883,141 1,141,854 3,312,525 999,987 4,312,512
Global Resources31,323 9,198 40,521 69,457 23,643 93,100 577,607 173,281 750,888
Growth
Opportunities 2,004,271 559,131 2,563,402 5,996,770 1,799,030 7,795,800 16,056,714 4,817,016 20,873,730
Strategic
Opportunities 993,375 273,263 1,266,638 1,092,965 330,491 1,423,456 470,225 141,067 611,292
Equity Income 614 136 750 94,623 28,435 123,058 441,208 132,362 573,570
Income & Growth 1,252,622 314,506 1,567,128 4,330,092 1,299,026 5,629,118 13,406,000 3,203,000 16,609,000
Emerging
Markets Income N/A N/A N/A N/A N/A N/A 31,604 8,331 39,935
High Yield 190,342 0 190,342 745,985 0 745,985 1,526,214 0 1,526,214
Strategic Income N/A N/A N/A N/A N/A N/A 1,626 488 2,144
Government
Investment 41,048 0 41,048 101,981 0 101,981 227,532 0 227,532
Limited Term
Bond 549 0 549 56,220 0 56,220 264,949 0 264,949
Short Fixed-
Income 117,265 0 117,265 538,933 0 538,933 1,212,008 0 1,212,008
High Income
Municipal 41,048 0 41,048 101,981 0 101,981 1,374,438 0 1,374,438
Limited Term Tax-
Exempt 576 0 576 38,552 0 38,552 138,512 0 138,512
Short-Intermediate
Tax-Exempt N/A N/A N/A N/A N/A N/A 11,446 0 11,446
</TABLE>
CLASS B DISTRIBUTION FEES
1994
FUND SHAREHOLDER RETAINED TOTAL FEES
SERVICE BY FDC
FEES
Strategic Opportunities $ 7,964 $ 23,892 $ 31,856
Equity Income 16,215 54,580 70,795
Emerging Markets Income 3,215 9,771 12,986
High Yield 7,052 21,157 28,209
Strategic Income 2,155 6,465 8,620
Government Investment 817 2,449 3,266
Limited Term Bond 1,689 5,070 6,759
High Income Municipal 3,238 9,713 12,951
Limited Term Tax-Exempt 965 2,893 3,858
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan also
specifically recognizes that FMR, either directly or through FDC, may use
its management fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection
with the offer and sale of shares of the applicable class of each fund. In
addition, each Plan provides that FMR may use its resources, including its
management fee revenues, to make payments to third parties that assist in
selling shares of the applicable class of each fund or to third parties,
including banks that render shareholder support services.
No third party payments were made by FMR in fiscal 1994, 1993, and 1992
under the Institutional Class Plan on behalf of the funds, and the Trustees
have not authorized such payments to date for any funds except
Institutional Class of Limited Term Bond, Equity Income, and Equity
Portfolio Growth.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of each Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
the applicable class and its shareholders. In particular, the Trustees
noted that the Institutional Class Plans do not authorize payments by the
Institutional Class of each fund other than those made to FMR under its
management contract with the fund. To the extent that each Plan gives FMR
and FDC greater flexibility in connection with the distribution of shares
of the applicable class of each fund, additional sales of fund shares may
result. Furthermore, certain shareholder support services may be provided
more effectively under the Plans by local entities with whom shareholders
have other relationships.
The Class A and Class B Plans do not provide for specific payments by the
applicable class of any of the expenses of FDC, or obligate FDC or FMR to
perform any specific type or level of distribution activities or incur any
specific level of expense in connection with distribution activities. After
payments by FDC for advertising, marketing and distribution, and payments
to third parties, the amounts remaining, if any, may be used as FDC may
elect.
The Plans were approved by the shareholders of each class on the dates
shown in the table below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DATE OF SHAREHOLDER APPROVAL
FUND CLASS A CLASS B INSTITUTIONAL
Overseas 10/90 0 6 /26/94 06/26/95
Equity Portfolio Growth 0 9/25/86 N/A 09/25/86
Global Resources 12/01/94 06/26/95 06/26/95
Growth Opportunities 0 1/ 0 1/95 N/A 06/26/95
Strategic Opportunities 0 8/25/87 0 6 /26/94 06/26/95
Equity Income 0 7/23/86 0 6 /26/94 07/23/86
Income & Growth 0 1/ 0 1/95 N/A 06/26/95
Emerging Markets Income 0 2/10/94 05/26/95 06/26/95
High Yield 0 1/ 0 1/95 0 1/ 0 1/95 06/26/95
Strategic Income 10/14/94 10/14/94 06/26/95
Government Investment 0 1/ 0 1/95 0 1/ 0 1/95 12/23/87
Limited Term Bond 0 1/ 0 1/95 0 1/ 0 1/95 12/23/87
Short Fixed - Income 0 1/ 0 1/95 N/A 06/26/95
High Income Municipal 12/ 0 1/94 12/ 0 1/94 06/26/95
Limited Term Tax-Exempt 07/01/95 06 /26/94 10/21/87
Short-Intermediate Tax-Exempt 07/01/95 N/A 06/26/95
</TABLE>
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Equity Portfolio Growth is a fund of Fidelity
Advisor Series I, an open-end management investment company organized as a
Massachusetts business trust by a Declaration of Trust dated June 24, 1983,
as amended and restated July 18, 1991, and as supplemented April 15, 1993.
On July 18, 1991, the name was changed from Equity Portfolio Growth to
Fidelity Broad Street Trust. On April 15, 1993, its name was changed by an
amendment to the Declaration of Trust from Fidelity Broad Street Trust:
Growth to Fidelity Advisor Series I.
Short Fixed - Income Fund, Government Investment Fund, High
Yield Fund, Growth Opportunities Fund, and Income & Growth Fund are
fund s of Fidelity Advisor Series II, an open-end management
investment company organized as a Massachusetts business trust by a
Declaration of Trust dated April 24, 1986. On April 7, 1993, the Board of
Trustees voted to change the name of the Trust from Fidelity Diversified
Trust to Fidelity Advisor Series II.
Equity Income Fund is a fund of Fidelity Advisor Series III, an
open-end management investment company organized as a Massachusetts
business trust by a Declaration of Trust dated May 17, 1982. On January 29,
1986, the name was changed from Equity Portfolio: Income to Fidelity
Franklin Street Trust. On April 15, 1993 the Trust's name was again changed
to Fidelity Advisor Series III.
Limited Term Bond Fund is a fund of Fidelity Advisor Series IV, an
open-end management investment company organized as a Massachusetts
business trust by a Declaration of Trust dated May 6, 1983. On January 29,
1992 the name of the Trust was changed from Income Portfolios to Fidelity
Income Trust, and on April 15, 1993, the Board of Trustees voted to change
the Trust's name to Fidelity Advisor Series IV. An amended and restated
Declaration of Trust, dated March 16, 1995, was filed on April 12,
1995.
Global Resources Fund and High Income Municipal Fund are fund s of
Fidelity Advisor Series V, an open-end management investment company
organized as a Massachusetts business trust by a Declaration of Trust dated
April 23, 1986, as amended and restated July 18, 1991, and as supplemented
April 15, 1993. On July 18, 1991, the Board of Trustees voted to change the
name of the Trust from Plymouth Investment Series to Fidelity Investment
Series, and on April 15, 1993, the Board voted to change the Trust's name
to Fidelity Advisor Series V. An amended and restated Declaration of Trust
dated March 16, 1995 was filed on April 12, 1995 .
Short-Intermediate Tax-Exempt Fund and Limited Term Tax-Exempt Fund are
fund s of Fidelity Advisor Series VI, an open-end management
investment company organized as a Massachusetts business trust by a
Declaration of Trust dated June 1, 1983, as amended and restated May 5,
1993. On January 29, 1992, the name of the Trust was changed from
Tax-Exempt Funds to Fidelity Oliver Street Trust and on April 15, 1993 the
Board of Trustees voted to change the name of the Trust to Fidelity Advisor
Series VI.
Overseas Fund is a fund of Fidelity Advisor Series VII, an open-end
management investment company organized as a Massachusetts business trust
by a Declaration of Trust dated March 21, 1980 as amended and restated July
18, 1991 and as supplemented April 15, 1993. On July 18, 1991, the Board of
Trustees voted to change the name of the Trust from Plymouth Securities
Trust to Fidelity Securities Trust, and on April 15, 1993 the Board of
Trustees voted to change the name of the Trust to Advisor Series VII.
Strategic Opportunities Fund, Strategic Income Fund, and Emerging Markets
Income Fund are fund s of Fidelity Advisor Series VIII, an open-end
management investment company organized as a Massachusetts business trust
by a Declaration of Trust dated September 23, 1983, as amended and restated
October 1, 1986 and as supplemented November 29, 1990. On April 15, 1993
the name of the Trust was changed from Fidelity Special Situations Fund to
Fidelity Advisor Series VIII.
Each Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the Trust or fund to use the identifying name "Fidelity" may be
withdrawn.
The assets of a Trust received for the issue or sale of shares of each fund
and all income, earnings, profits, and proceeds thereof, subject only to
the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the Trust. Expenses with respect to the Trust are to be
allocated in proportion to the asset value of the respective fund, except
where allocations of direct expense can otherwise be fairly made. The
officers of the Trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the Trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each Trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the Trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
Trust or the Trustees include a provision limiting the obligations created
thereby to the Trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholders held
personally liable for the obligations of the fund. The Declaration of Trust
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for neglect or wrongdoing,
but nothing in the Declaration of Trust protects Trustees against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties in the conduct of their office. Claims asserted against one class of
shares may subject the shareholders of any other class to certain
liabilities.
VOTING RIGHTS. A fund's capital consists of shares of beneficial interest.
The shares have no preemptive rights, and Class A and Institutional Class
shares have no conversion rights; the voting and dividend rights, the
conversion rights of Class B shares, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shareholders of
Global Resources, Growth Opportunities, Equity Income, Income & Growth,
High Yield, High Income Municipal, Government Investment, Limited Term
Bond, Limited Term Tax-Exempt, Short Fixed-Income, and Short-Intermediate
Tax-Exempt receive one vote for each dollar of net asset value owned.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a Trust, a fund, or class of a fund may, as set
forth in the Declaration of Trust, call meetings of the Trust, fund or
class, as applicable, for any purpose, related to the Trust, fund, or
class, as the case may be, including , in the case of meeting of the
Trust, the purpose of voting on removal of one or more Trustees. The Trust
or any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the outstanding shares of the funds of Advisor Series I, III,
VI, VII, and VIII, or, as determined by the current value of each
shareholder's investment in the funds of Advisor Series II, IV, and V. If
not so terminated, the Trust and funds will continue indefinitely. Global
Resources, Growth Opportunities, Income & Growth, Emerging Markets
Income, Strategic Opportunities, High Yield, Strategic Income,
Government Investment, Limited Term Bond, Short Fixed-Income, High
Income Municipal , and Limited Term Tax-Exempt may invest all of
their assets in another investment company.
As of April 30, 1995, the following owned of record or beneficially more
than 5% of the outstanding shares of the classes of the following Fidelity
Advisor funds:
EQUITY INCOME - INSTITUTIONAL CLASS: First National Bank of Ohio, Akron, OH
(18.99%); First National Bank, Gainesville, Gainesville, GA (9.25%);
Financial Advisor Services, San Francisco, CA (7.54%); First Interstate
Bank of Washington, Seattle, WA (5.34%).
EQUITY INCOME - CLASS A: Smith, Barney, Lehman, New York, NY (7.75%); Royal
Alliance Associates Inc., Birmingham, AL (5.35%).
EQUITY INCOME - CLASS B: Smith, Barney, Lehman, New York, NY (7.37%);
Donaldson, Lufkin & Jenrette, New York, NY (6.19%); NFSC, New York, NY
(5.19%); Merrill, Lynch, Pierce, Fenner & Smith, Jacksonville, FL (5.12%).
EQUITY PORTFOLIO GROWTH - INSTITUTIONAL CLASS: Integra Financial
Corporation, Pittsburgh, PA (6.33%).
EQUITY PORTFOLIO GROWTH - CLASS A: Cigna Securities, Hartford, CT (9.13%);
Smith, Barney, Lehman, New York, NY (7.18%); Merrill, Lynch, Pierce, Fenner
& Smith, Jacksonville, FL (6.60%).
LIMITED TERM BOND - INSTITUTIONAL CLASS: First National Bank of Ohio,
Akron, OH (13.07%); Amivest Corporation, New York, NY (7.46%); Hawkeye Bank
& Trust, Des Moines, IA (7.35%); First National Bank of Commerce, New
Orleans, LA (7.26%); Homeland Bank, N.A., Waterloo, IA (5.54%).
LIMITED TERM BOND - CLASS A: PaineWebber Inc., Weehawken, NJ (10.10%);
Smith, Barney, Lehman, New York, NY (6.62%); First Hawaiian Bank, Honolulu,
HI (5.60%).
LIMITED TERM BOND - CLASS B: Donaldson, Lufkin & Jenrette, New York, NY
(10.65%); Royal Alliance Associates Inc., Birmingham, AL (7.94%); NFSC, New
York, NY (7.45%); Smith, Barney, Lehman, New York, NY (7.32%).
LIMITED TERM TAX-EXEMPT - INSTITUTIONAL CLASS: Laird Norton Co., Seattle WA
(30.45%); Citizens State Bank, Corpus Christi TX (11.18%); First Interstate
Bank of Texas, Houston, TX (10.06%); First Union National Bank, Charlotte,
NC (7.23%); South Holland Bancorp, South Holland, IL (6.56%); Citizens
National Bank of Evansville, Evansville, IN (5.82%).
LIMITED TERM TAX-EXEMPT - CLASS A: Royal Alliance Associates Inc.,
Birmingham AL (10.20%); Merrill, Lynch, Pierce, Fenner & Smith,
Jacksonville, FL (8.60%); Smith, Barney, Lehman, New York, NY (7.55%);
Donaldson, Lufkin & Jenrette, New York, NY (6.43%).
LIMITED TERM TAX-EXEMPT - CLASS B: Donaldson, Lufkin & Jenrette, New York,
NY (15.79%); Royal Alliance Associates Inc., Birmingham AL (10.47%); A.G.
Edwards & Sons, St. Louis, MO (8.14%); NFSC, New York, NY (7.18%); Vestex
Securities, Hudson, OH (5.01%).
HIGH YIELD - CLASS A: Smith, Barney, Lehman, New York, NY (10.76%);
Donaldson, Lufkin & Jenrette, New York, NY (6.00%); NFSC, New York, NY
(5.17%).
HIGH YIELD - CLASS B: Walnut Street Securities, St. Louis, MO (16.38%);
NFSC, New York NY (8.02%); Donaldson, Lufkin & Jenrette, New York, NY
(5.68%); Smith, Barney, Lehman, New York, NY (5.04%).
GLOBAL RESOURCES - CLASS A: Smith, Barney, Lehman, New York, NY (9.19%);
NFSC, New York, NY (6.85%); Royal Alliance Associates Inc., Birmingham, AL
(5.39%).
GOVERNMENT INVESTMENT - CLASS A: Commonwealth Equity, Waltham, MA (6.53%);
NFSC, New York, NY (6.41%); First Hawaiian Bank, Honolulu, HI (5.80%).
GOVERNMENT INVESTMENT - CLASS B: NFSC, New York, NY (9.96%); Southwest
Securities Inc., Dallas, TX (9.13%); Royal Alliance Associates Inc.,
Birmingham, AL (7.37%); Dain Bosworth Inc., Minneapolis, MN (5.65%); Smith,
Barney, Lehman, New York NY (5.53%).
GROWTH OPPORTUNITIES - CLASS A: Cigna Securities Inc., Hartford, CT
(21.18%); Smith, Barney, Lehman, New York, NY (8.49%); A.G. Edwards & Sons,
St. Louis, MO (6.15%).
HIGH INCOME MUNICIPAL - CLASS A: Smith, Barney, Lehman, New York, NY
(16.39%); A.G. Edwards & Sons, St. Louis, MO (7.17%); Royal Alliance
Associates Inc., Birmingham, AL (5.23%); Cigna Securities Inc., Hartford,
CT (5.11%).
HIGH INCOME MUNICIPAL - CLASS B: Donaldson, Lufkin & Jenrette, New York, NY
(15.66%); NFSC, New York, NY (8.88%).
INCOME & GROWTH - CLASS A: Cigna Securities Inc., Hartford, CT (20.25%);
Smith, Barney, Lehman, New York, NY (6.13%).
SHORT FIXED-INCOME - CLASS A: Smith, Barney, Lehman, New York, NY (9.83%);
NFSC, New York, NY (7.15%).
STRATEGIC OPPORTUNITIES - CLASS A: Merrill, Lynch, Pierce, Fenner & Smith,
Jacksonville, FL (19.30%); Cigna Securities Inc., Hartford, CT (7.59%);
A.G. Edwards & Sons, St. Louis, MO (7.39%); Smith, Barney, Lehman, New
York, NY (5.82%); Prudential Securities, New York, NY (5.09%).
STRATEGIC OPPORTUNITIES - CLASS B: Smith, Barney, Lehman, New York, NY
(5.38%); Donaldson, Lufkin & Jenrette, New York, NY (5.16%); Royal Alliance
Associates Inc., Birmingham AL (5.05%).
OVERSEAS - CLASS A: Smith, Barney, Lehman, New York NY (10.65%); A.G.
Edwards & Sons, St. Louis, MO (5.81%); Royal Alliance Associates Inc.,
Birmingham, AL (5.54%); Merrill, Lynch, Pierce, Fenner & Smith,
Jacksonville, FL (5.09%).
EMERGING MARKETS INCOME - CLASS A: First Trust Company, Denver, CO
(13.84%); FMR Corp., Boston, MA (11.58%); NFSC, New York, NY (8.30%).
EMERGING MARKETS INCOME - CLASS B: NFSC, New York, NY (10.38%); Donaldson,
Lufkin & Jenrette, New York, NY (8.89%); PaineWebber Inc., Weehawken, NJ
(8.76%).
SHORT-INTERMEDIATE TAX-EXEMPT - CLASS A: NFSC, New York NY (16.10%);
Sunamerica Securities Inc., Phoenix, AZ (6.05%).
STRATEGIC INCOME - CLASS A: NFSC, New York, NY (8.14%); FMR Corp., Boston
MA (7.29%); Royal Alliance Associates Inc., Birmingham, AL (6.55%).
STRATEGIC INCOME - CLASS B: G.W. Wade, Wellesley, MA (63.37%); FMR Corp.,
Boston, MA (9.05%).
CUSTODIANS. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of Global Resources, Growth
Opportunities, and Strategic Opportunities. The Chase Manhattan Bank, N.A.,
1211 Avenue of the Americas, New York, New York, is custodian of the assets
of Overseas, Equity Portfolio Growth, Equity Income, Income & Growth, and
Emerging Markets Income. The Bank of New York, 110 Washington Street, New
York, New York, is custodian of the assets of High Yield, Strategic Income,
Government Investment, Limited Term Bond, and Short Fixed - Income.
U MB Bank , n.a. , 1010 Grand Avenue, Kansas City, Missouri, is
custodian of the assets of High Income Municipal, Limited Term Tax-Exempt,
and Short-Intermediate Tax-Exempt. The custodian is responsible for the
safekeeping of the fund's assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
investment policies of the fund or in deciding which securities are
purchased or sold by a fund. A fund may, however, invest in obligations of
the custodian and may purchase securities from or sell securities to the
custodian. Morgan Guaranty Trust Company of New York, The Bank of New
York, and Chemical Bank, each headquartered in New York, may also serve as
a special purpose custodian of certain assets in connection with pooled
repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of the custodian bank of Global Resources, Growth
Opportunities, and Strategic Opportunities leases its office space from an
affiliate of FMR at a lease payment which, when entered into, was
consistent with prevailing market rates. 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.
AUDITOR. Cooper & Lybrand, L.L.P. , serves as the independent
accountant for Equity Portfolio Growth, Global Resources, Growth
Opportunities, Strategic Opportunities, Equity Income, Income & Growth,
Emerging Markets Income, High Yield, Strategic Income, Government
Investment, Limited Term Bond, Short Fixed-Income, High Income Municipal,
Limited Term Tax-Exempt, and Short-Intermediate Tax-Exempt. Price
Waterhouse, LLP , serves as the independent accountant for Overseas. The
auditor examines financial statements for each fund and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
period ended October 31, November 30, or December 31, 1994, as appropriate,
are included in the Annual Reports, which are separate reports supplied
with this SAI. Each fund's financial statements and financial highlights
are incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of a fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
Also, the maturities of mortgage-backed securities and some asset-backed
securities, such as collateralized mortgage obligations, are determined on
a weighted average life basis, which is the average time for principal to
be repaid. For a mortgage security, this average time is calculated by
estimating the expected principal payments during the life of the mortgage.
The weighted average life of these securities is likely to be substantially
shorter than their stated final maturity.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Financial Statements and Financial Highlights, included in the
Annual Reports for Fidelity Advisor Equity Income Fund for the fiscal year
ended November 30, 1994 are incorporated by reference to the fund's
Statements of Additional Information and were filed on February 1, 1995 for
Fidelity Advisor Series III (No. 811-3466) pursuant to Rule 30D-1 under the
Investment Company Act of 1940 and are incorporated herein by reference.
(b) Exhibits:
(1) (a) Declaration of Trust dated May 17, 1982 is incorporated herein by
reference to Exhibit 1 to the Registration Statement No. 2-77571.
(b) Supplement to Declaration of Trust dated August 26, 1982 is
incorporated herein by reference to Exhibit 1 to Form N1-Q for the calendar
quarter ended February 28, 1983.
(c) Supplement to Declaration of Trust dated December 20, 1982 is
incorporated herein by reference to Exhibit 1 to Form N1-Q for the calendar
quarter ended February 28, 1983.
(d) Supplement to Declaration of Trust dated September 29, 1983 is
incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 2.
(e) Amendment to Declaration of Trust dated August 1, 1986 is
incorporated herein by reference to Exhibit 1(e) to Post-Effective
Amendment No. 7.
(f) Supplement to Declaration of Trust dated November 30, 1990 is
incorporated herein by reference to Exhibit 1(f) to Post-Effective
Amendment No. 16.
(2) Bylaws of the Trust are incorporated herein by reference to Exhibit 2
to the initial Registration Statement.
(3) Not Applicable.
(4) Form of Share Certificate is electronically filed herein as Exhibit
4.
(5) (a) Management Contract between the Registrant and Fidelity
Management & Research Company is incorporated herein by reference to
Exhibit 5 to Post-Effective Amendment No. 7.
(b) Sub-Advisory Agreement between Fidelity Management and Research
(U.K.) Inc. and Fidelity Management & Research Company dated December 1,
1990 is incorporated herein by reference to Exhibit 5(b) to Post-Effective
Amendment No. 16.
(c) Sub-Advisory Agreement between Fidelity Management and Research (Far
East) Inc. and Fidelity Management & Research Company dated December 1,
1990 is incorporated herein by reference to Exhibit 5(c) to Post-Effective
Amendment No. 16.
(6) (a) General Distribution Agreement dated April 1, 1987, between
Registrant and Fidelity Distributors Corporation is electronically filed
herein as Ex- hibit 6.
(b) Form of Bank Agency Agreement (most recently revised May
1994) was electronically filed and is incororated herein by reference to
Exhibit 6(b) to Post-Effective Amendment No. 34.
(c) Form of Selling Dealer Agreement (most recently revised May
1994) was eletronically filed and is incorporated herein by reference to
Exhibit 6(c) to Post-Effective Amendment No. 34.
(d) Form of Selling Dealer Agreement for Bank Related Transactions
(most recently revised May 1994) was electronically filed and is
incorporatedherein by reference to Exhibit 6(d) to Post-Effective Amendment
No. 34.
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post Effective Amendment No. 19.
(8) Custodian Contract between Registrant and Chase Manhattan Bank, N.A.,
dated September 1, 1994, was electronically filed and is incorporated
herein by reference to Exhibit 8 to Post-Effective Amendment No. 34.
(9) None
(10) None.
(11) Auditor consent is elctronically filed herein as Exhibit 11.
(12) None.
(13) None.
(14) (a) Retirement Plan for Fidelity Individual Retirement Accounts,
as currently in effect, was electronically filed and is incorporated herein
by reference as Exhibit 14(a) to Union Street Trust's Post-Effective
Amendment No. 87.
(b) Retirement Plan for Portfolio Advisory Services Individual
Retirement Account, as currently in effect, was electronically filed and is
incorporated herein by reference as Exhibit 14(i) to Union Street Trust's
Post-Effective Amendment No. 87.
(c) Retirement Plan for NFSC Individual Retirement Account, as
currently in effect, was electronically filed and is incorporated herein by
reference as Exhibit 14(h) to Union Street Trust's Post-Effective Amendment
No. 87.
(d) NFSC Defined Contribution Plan, as currently in effect, was
electronically filed and is incorporated herein by reference as Exhibit
14(k) to Union Street's Trust Post-Effective Amendment No. 87.
(e) Fidelity Institutional Individual Retirement Account Custodian
Agreement and Disclosure Statement, as currently in effect, was
electronically filed and is incorporated herein by reference as Exhibit
14(d) to Union Street Trust's Post-Effective Amendment No. 87.
(f) Fidelity Investments Section 403(b)(7) Individual Custodial Account
Agreement and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(f) to Fidelity Commonwealth Trust's (File
No. 2-52322) Post Effective Amendment No. 57.
(g) Fidelity 403(b) Custodial Agreement, as currently in
effect, was electronically filed and is incorporated herein by reference as
Exhibit 14(e) to Union Street Trust's Post-Effective Amendment No. 87.
(h) The CORPORATEplan for Retirement Profit Sharing/401k Plan, as
currently in effect, was electronically filed and is incorporated herein by
reference as Exhibit 14(l) to Union Street Trust's Post-Effective Amendment
No. 87.
(i) The CORPORATEplan for Retirement Money Purchase Pension Plan,
as currently in effect, was electronically filed and is incorporated herein
by reference as Exhibit 14(m) to Union Street Trust's Post-Effective
Amendment No. 87.
(j) Form for Fidelity Advisor Funds Individual Retirement Account
Custodial Agreement Disclosure Statement in effect as of January 1, 1994 is
incorporated herein by reference as Exhibit 14(a) to Post-Effective
Amendment No. 28.
(k) Form for Fidelity Advisor Funds Institutional Individual Retirement
Account Custodial Agreement Disclosure Statement in effect as of January 1,
1994 is incorporated herein by reference as Exhibit 14(b) to Post-Effective
Amendment No. 28.
(l) Plymouth Investments Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference to
Exhibit 14(o) to Fidelity Commonwealth Trust's (File No. 2-52322) Post
Effective Amendment No. 57.
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Equity Income is incorporated herein by reference to
Exhibit 15 to post-effective Amendment No. 6.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Equity Income Class B is electronically filed herein as Exhibit
15(b).
(16) (a) Schedule for computations of performance calculations for
Fidelity Advisor Equity-Income Fund is filed electronically herein as
Exhibit 16(a).
(b) Schedule for computations of the moving average calculations for
Fidelity Advisor Equity-Income Fund is electronically filed herein as
Exhibit 16(b).
(17) Financial Data Schedule is electronically filed herein as Exhibit
17.
(18) Rule 18f-3 Plan is electronically filed herein as Exhibit 18.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of the other
Fidelity funds, each of which has Fidelity Management & Research Company as
its investment adviser. In addition, the officers of these funds are
substantially identical. Nonetheless, Registrant takes the position that
it is not under common control with these other funds since the power
residing in the respective Boards and officers arises as the result of an
official position with the respective funds.
Item 26. Number of Holders of Securities
April 30, 1995
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Advisor Equity Income: Class A 21,227
Fidelity Advisor Equity Income: Class B 7,588
Fidelity Advisor Equity Income: Institutional Class 304
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee, or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.; President
and Trustee of funds advised by FMR.
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman and Director of FMR.
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
William Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard Haberman Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephen P. Jonas Treasurer and Vice President of FMR (1993) and Treasurer
of the funds advised by FMR (1995); Treasurer of FMR
Texas Inc. (1993), Fidelity Management & Research (U.K.)
Inc. (1993), and Fidelity Management & Research (Far
East) Inc. (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund advised by
FMR.
Thomas T. Soviero Vice President of FMR (1993).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management &
Research Company and Fidelity Management Trust Company. The directors and
officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management & Research
(Far East) Inc.; President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.
Richard C. Habermann Senior Vice President of FMR U.K.; Senior Vice President of
Fidelity Management & Research (Far East) Inc.; Director of
Worldwide Research of FMR.
Rick Spillane Senior Vice President and Director of Operations and
Compliance of FMR U.K. (1993).
Stephen P. Jonas Treasurer of FMR U.K. (1993), Fidelity Management &
Research (Far East) Inc. (1993), and FMR Texas Inc. (1993);
Treasurer and Vice President of FMR (1993); and Treasurer of
the funds advised by FMR (1995).
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management & Research
(Far East) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The directors
and officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc. and Fidelity Management &
Research (U.K.) Inc.; Senior Vice President and Trustee
of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East; Senior Vice
President of Fidelity Management & Research (U.K.)
Inc.; Director of Worldwide Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Stephen P. Jonas Treasurer of FMR Far East (1993), Fidelity Management
& Research (U.K.) Inc. (1993), and FMR Texas Inc.
(1993); Treasurer and Vice President of FMR (1993);
and Treasurer of the funds advised by FMR (1995).
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management &
Research (U.K.) Inc.; Secretary of FMR Texas Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the fund's custodian Chase
Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Fidelity Advisor Equity Income, undertakes to
deliver to each person who has received the prospectus or annual or
semiannual financial report for a fund in an electronic format, upon his or
her request and without charge, a paper copy of the prospectus or annual or
semiannual report for the fund.
The Registrant, on behalf of Fidelity Advisor Equity Income undertakes,
provided the information required by Item 5A is contained in the annual
report, to furnish each person to whom a prospectus has been delivered,
upon their request and without charge, a copy of the Registrant's latest
annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 35 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and MA, on the 22nd day of June 1995.
Fidelity Advisor Series III
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee June 22, 1995
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Stephen P. Jonas Treasurer June 22, 1995
Stephen P. Jonas
/s/J. Gary Burkhead Trustee June 22, 1995
J. Gary Burkhead
/s/Ralph F. Cox * Trustee June 22, 1995
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee June 22, 1995
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee June 22, 1995
Richard J. Flynn
/s/E. Bradley Jones * Trustee June 22, 1995
E. Bradley Jones
/s/Donald J. Kirk * Trustee June 22, 1995
Donald J. Kirk
/s/Peter S. Lynch * Trustee June 22, 1995
Peter S. Lynch
/s/Edward H. Malone * Trustee June 22, 1995
Edward H. Malone
/s/Marvin L. Mann_____* Trustee June 22, 1995
Marvin L. Mann
/s/Gerald C. McDonough* Trustee June 22, 1995
Gerald C. McDonough
/s/Thomas R. Williams * Trustee June 22, 1995
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Income Fund
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Djinis, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Institutional Trust
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series II Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Exchange Fund Fund
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned individual
serves as President and Board Member (collectively, the "Funds"), hereby
severally constitute and appoint J. Gary Burkhead, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
sign for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorney-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission. I hereby ratify
and confirm all that said attorneys-in-fact or their substitutes may do or
cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d December 15, 1994
Edward C. Johnson 3d
NUMBER SHARES
[Trust name]
[fund name]
A MASSACHUSETTS BUSINESS TRUST
ACCOUNT NO. ALPHA CODE
CUSIP #
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
THIS IS TO CERTIFY that
is the owner of
SHARES OF BENEFICIAL INTEREST IN
[TRUST NAME]
[FUND NAME]
hereafter called the "Trust," fully paid and nonassessable, this
Certificate and the shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-Laws of the
Trust and all amendments thereof, copies of which are on file at the office
of the Trust, to all of which the holder, by acceptance hereof assents.
The shares represented hereby are transferable on the books of the Trust
by the owner thereof in person or by duly authorized attorney upon
surrender of this Certificate to the Trustees properly endorsed for
transfer.
This Certificate is executed on behalf of the Trustees and not
individually and the obligations hereof are not binding upon any of the
Trustees or shareholders individually but are binding only upon the assets
and the property of the Trust. This Certificate is not valid unless
countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Trustees of the [trust name], [fund name] have
caused the following facsimile signatures to be affixed to this Certificate
to be signed in its name by its proper officers.
Dated:
COUNTERSIGNED:
STATE STREET BANK AND TRUST COMPANY
(BOSTON)
BY TRANSFER
AGENT,
AUTHORIZED SIGNATURE /s/Gary French /s/J. Gary Burkhead
Treasurer Senior Vice President
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as
though they were written out in full according to applicable laws or
regulations:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TEN COM -as tenants in common UNIF GIFT/TRANSFMIN ACT- __________Custodian_________
(Cust) (Minor)
TEN ENT -as tenants by the entireties under Uniform Gifts/Transfer to Minors Act
JT TEN -as joint tenants with right
of survivorship and not as ___________________________________
tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _________________________ hereby sell, assign and
transfer unto
PLEASE INSERT TRANSFER NUMBER
OF ASSIGNEE
_________________________________________
__________________________________________________________________
Please print or typewrite name and address including
postal zip code of assignee
__________________________________________________________________
__________________________________________________________________
______________________________________________________________ Shares
of the beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute
and appoint
_____________________________________________________________________
__________________________________________________________________
Appoint to transfer the said shares on the books of the within-named Trust
with full power of sub-
stitution in the premises.
Dated, ______________________________
_______________________________
NOTICE: The signature to this assignment must correspond with the name as
written
upon the face of the Certificate, in every particular, without alteration
or enlargement, or any
change whatever.
__________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
EXHIBIT 6
GENERAL DISTRIBUTION AGREEMENT
between
EQUITY PORTFOLIO: INCOME
and
FIDELITY DISTRIBUTORS CORPORATION
Required authorizations and approvals having been obtained, Equity
Portfolio: Income, a Massachusetts business trust which may issue one or
more series of beneficial interest ("Issuer"), and Fidelity Distributors
Corporation, a Massachusetts corporation having its principal place of
business in Boston, Massachusetts ("Distributors"), hereby consent pursuant
to the existing General Distribution Agreement dated June 1, 1986, to an
amendment in its entirety of said Agreement as of April 1, 1987, as set
forth below.
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to the Distributor the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: the Distributor (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to the Distributor
shall be nonexclusive in that the Issuer reserves the right to sell its
shares to investors on applications received and accepted by the Issuer.
Further, the Issuer reserves the right to issue shares in connection with
the merger or consolidation, or acquisition by the Issuer through purchase
or otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by the Distributor or the issuer will be sold at the
public offering price. The public offering price for all accepted
subscriptions will be the net asset value per share, as determined in the
manner described in the Issuer's current Prospectus and/or Statement of
Additional Information, plus a sales charge (if any) described in the
Issuer's current Prospectus and/or Statement of Additional Information.
The Issuer shall in all cases receive the net asset value per share on all
sales. If a sales charge is in effect, the Distributor shall have the
right subject to such rules or regulations of the Securities and Exchange
Commission as may then be in effect pursuant to Section 22 of the
Investment Company Act of 1940 to pay a portion of the sales charge to
dealers who have sold shares of the Issuer. If a fee in connection with
shareholder redemptions is in effect, the Issuer shall collect the fee on
behalf of Distributors and, unless otherwise agreed upon by the Issuer and
Distributors, Distributors shall be entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by the Distributor except such
unconditional orders as may have been placed with the Distributor before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and the Distributor's authority to process orders
for shares on behalf of the Issuer if, in the judgment of the Issuer, it is
in the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to the
Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of the
Issuer. This shall not prevent the Distributor from entering into like
arrangements (including arrangements involving the payment of underwriting
commissions) with other issuers. This does not obligate the Distributor to
register as a broker or dealer under the Blue Sky laws of any jurisdiction
in which it is not now registered or to maintain its registration in any
jurisdiction in which it is now registered. If a sales charge is in
effect, the Distributor shall have the right to enter into sales agreements
with dealers of its choice for the sale of shares of the Issuer to the
public at the public offering price only and fix in such agreements the
portion of the sales charge which may be retained by dealers, provided that
the Issuer shall approve the form of the dealer agreement and the dealer
discounts set forth therein and shall evidence such approval by filing said
form of dealer agreement and amendments thereto as an exhibit to its
currently effective Registration Statement under the 1933 Act.
7. Authorized Representations - The Distributor is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for the Distributor's use.
This shall not be construed to prevent the Distributor from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through the Distributor, and the Distributor may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer. However, all sums of
money received by the Distributor as a result of such purchases and sales
or as a result of such participation must, after reimbursement of actual
expenses of the Distributor in connection with such activity, be paid over
by the Distributor for the benefit of the Issuer.
9. Registration of Shares - The Issuer agrees that it shall take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares the Distributor may reasonably be expected to sell. The
Issuer shall make available to the Distributor such number of copies of its
currently effective Prospectus and Statement of Additional Information as
the Distributor may reasonably request. The Issuer shall furnish to the
Distributor copies of all information, financial statements and other
papers which the Distributor may reasonably request for use in connection
with the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issuer of its shares, (b) in connection
with the registration and qualification of shares for sale in the various
states in which the Board of Trustees of the Issuer shall determine it
advisable to qualify such shares for sales (including registering the
Issuer as a broker or dealer or any officer of the Issuer as agent or
salesman in any state), (c) of preparing, setting in type, printing and
mailing any report or other communication to shareholders of the Issuer in
their capacity as such, and (d) of preparing, setting in type, printing and
mailing Prospectuses, Statements of Additional Information and any
supplements thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the Issuer, it
is recognized by the Issuer that FMR may reimburse the Distributor for any
direct expenses incurred in the distribution of shares of the Issuer from
any source available to it, including advisory and service or management
fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of the Distributor. In no case (i)
is the indemnity of the Issuer in favor of the Distributor or any person
indemnified to be deemed to protect the Distributor or any person against
any liability to the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of wilful
misfeasance, bad faith or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties under
this Agreement, or (ii) is the Issuer to be liable under its indemnity
agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
person, as the case may be, shall have notified the Issuer in writing of
the claim with a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or any such person (or after the Distributor or
such person shall have received notice of service on any designated agent).
However, failure to notify the Issuer of any claim shall not relieve the
Issuer from any liability which it may have to the Distributor or any
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. The Issuer shall be
entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any claims,
but if the Issuer elects to assume the defense, the defense shall be
conducted by counsel chosen by it and satisfactory to the Distributor or
person or persons, defendant or defendants in the suit. In the event the
Issuer elects to assume the defense of any suit and retain counsel, the
Distributor, officers or directors or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of
any additional counsel retained by them. If the Issuer does not elect to
assume the defense of any suit, it will reimburse the Distributors,
officers or directors or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Issuer agrees to notify the Distributor promptly of
the commencement of any litigation or proceedings against it or any of its
officers or trustees in connection with the issuance or sale of any of the
shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of the Distributor or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of the
Distributor. In no case (i) is the indemnity of the Distributor in favor
of the Issuer or any person indemnified to be deemed to protect the Issuer
or any person against any liability to which the Issuer or such person
would otherwise be subject by reason of wilful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Distributor to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Issuer or any person indemnified unless the Issuer or person, as the case
may be, shall have notified the Distributor in writing of the claim within
a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon
the Issuer or any such person (or after the Issuer or such person shall
have received notice of service on any designated agent). However, failure
to notify the Distributor of any claim shall not relieve the Distributor
from any liability which it may have to the Issuer or any person against
whom the action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of any notice to the
Distributor, it shall be entitled to participate, at its own expense, in
the defense or, if it so elects, to assume the defense of any suit brought
to enforce the claim, but if the Distributor elects to assume the defense,
the defense shall be conducted by counsel chosen by it and satisfactory to
the Issuer, to its officers and Board and to any controlling person or
persons, defendants or defendants in the suit. In the event that the
Distributor elects to assume the defense of any suit and retain counsel,
the Issuer or controlling persons, defendants or defendants in the suit,
shall bear the fees and expense of any additional counsel retained by them.
If the Distributor does not elect to assume the defense of any suit, it
will reimburse the Issuer, officers and Board or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Distributor agrees to notify
the Issuer promptly of the commencement of any litigation or proceedings
against it in connection with the issue and sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1988 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to the Distributor, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - The Distributor is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust of the Issuer and agrees that the obligations assumed by the Issuer
under this contract shall be limited in all cases to the Issuer and its
assets. The Distributor shall not seek satisfaction of any such obligation
from the shareholders or any shareholder of the Issuer. Nor shall the
Distributor seek satisfaction of any such obligation from the Trustees or
any individual Trustee of the Issuer. The Distributor understands that the
rights and obligations of each series of shares of the Issuer under the
Issuer's Declaration of Trust are separate and distinct from those of any
and all other series.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and the Distributor has executed this instrument in its name and behalf,
and its corporate seal affixed, by one of its officers duly authorized, as
of the day and year first above written.
EQUITY PORTFOLIO: INCOME
Attest: /s/Arthur S. Loring By /s/J. Gary Burkhead
Secretary
FIDELITY DISTRIBUTORS CORPORATION
Attest: /s/Arthur S. Loring By /s/John F. O'Brien
Clerk
AMENDMENT TO GENERAL DISTRIBUTION AGREEMENT
Effective January 1, 1988, Paragraph 8 of the General Distribution
Agreement between each of the funds or portfolios indicated on the attached
Schedule A shall be amended to read in full as follows:
8. Portfolio Securities - Portfolio securities of the issuer may be bought
or sold by or through the Distributor, and the Distributor may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
Signed on behalf of each of the funds or portfolios identified on Schedule
A.
On Behalf of Each of the Funds or Portfolios:
Attest:/s/ Arthur S. Loring_____________ By:/s/ J. Gary
Burkhead___________________
Secretary
FIDELITY
DISTRIBUTORS CORPORATION:
Attest:/s/ Arthur S. Loring_____________ By:/s/ John F.
O'Brien___________________
Secretary
AMENDMENT TO GENERAL DISTRIBUTION AGREEMENT
SCHEDULE A
California Tax-Free Fund:
High Yield Portfolio
Money Market Portfolio
Insured Portfolio
Fidelity Capital Trust:
Fidelity Capital Appreciation Fund
Fidelity Value Fund
Fidelity Cash Reserves
Fidelity Charles Street Trust:
Fidelity U.S. Government Reserves
Fidelity Stock Index Fund
Fidelity Contrafund
Fidelity Corporate Trust:
ARP (Adjustable-Rate Preferred Portfolio)
APP (Auction Preferred Portfolio)
Fidelity Court Street Trust:
Fidelity High Yield Municipals
Fidelity Connecticut Tax-Free Portfolio
Fidelity New Jersey Tax-Free High Yield Portfolio
Fidelity New Jersey Tax-Free Money Market Portfolio
Fidelity Colorado Tax-Free Portfolio
Fidelity North Carolina Tax-Free Portfolio
Fidelity Virginia Tax-Free Portfolio
Fidelity Georgia Tax-Free Portfolio
Fidelity Maryland Tax-Free Portfolio
Fidelity Missouri Tax-Free Portfolio
Fidelity Daily income Trust
Daily Money Fund:
Money Market Portfolio
U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
Fidelity Devonshire Trust:
Fidelity Equity-Income Fund
Fidelity Real Estate Investment Portfolio
Fidelity Utilities Income Fund
Equity Portfolio: Growth
Equity Portfolio: Income
Fidelity Fund
Fidelity Financial Trust:
Fidelity Convertible Securities
Fidelity Freedom Fund
Financial Reserves Fund
Fidelity Fixed-Income Trust:
Fidelity Flexible Bond Portfolio
Fidelity Short-Term Bond Portfolio
Fidelity Government Securities fund (a limited partnership)
Fidelity Growth Company Fund
Fidelity High Income Fund
Fidelity Income Fund:
Fidelity Ginnie Mae Portfolio
Fidelity Mortgage Securities Portfolio
Income Portfolios:
GNMA Series
Limited Term Series
Short Fixed-Income Series
Short Government Series
Short-Intermediate Fixed-Income Series
Variable Rate Series
Yield Plus Series
Liquid Assets Series
State and Local Asset Management Series:
Government Money Market Portfolio
Government Bond Portfolio
The California Portfolio
Fidelity Institutional Cash Portfolios:
Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
U.S. Treasury Portfolio II
Domestic Money Market Portfolio
Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Institutional Trust
Fidelity U.S. Equity Index Portfolio
Fidelity U.S. Bond Index Portfolio
Fidelity Intermediate Bond Fund
Fidelity Investment Trust:
Fidelity Europe Fund
Fidelity Global Bond Fund
Fidelity International Growth & Income Fund
Fidelity Overseas Fund
Fidelity Pacific Basin Fund
Fidelity Canada Fund
Fidelity United Kingdom Fund
Fidelity Limited Term Municipals
Fidelity Magellan Fund
Fidelity Massachusetts Tax-Free:
Money Market Portfolio
High Yield Portfolio
Fidelity Money Market Trust:
Domestic Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
Fidelity Municipal Trust:
Fidelity Aggressive Tax-Free Portfolio
Fidelity Insured Tax-Free Portfolio
Fidelity Municipal Bond Portfolio
Fidelity Pennsylvania Tax-Free High Yield Portfolio
Fidelity Pennsylvania Tax-Free Money Market Portfolio
Fidelity Ohio Tax-Free Portfolio
Fidelity Michigan Tax-Free Portfolio
Fidelity Minnesota Tax-Free Portfolio
Fidelity Short-Term Tax-Free Portfolio
Fidelity Texas Tax-Free Portfolio
The North Carolina Cash Management Trust:
Cash Portfolio
Term Portfolio
Fidelity New York Tax-Free Fund:
High Yield Portfolio
Insured Portfolio
Money Market Portfolio
Short-Term Portfolio
Fidelity New Jersey Tax-Free Portfolio, L.P.
Plymouth Fund:
Plymouth Aggressive Income Portfolio
Plymouth Government Securities Portfolio
Plymouth Growth Opportunities Portfolio
Plymouth Income & Growth Portfolio
Plymouth Short-Term Bond Portfolio
Plymouth Investment Series:
Plymouth High Income Municipal Portfolio
Plymouth Global Natural Resources Portfolio
Plymouth Securities Trust:
Plymouth Market Access Plus:
Bull Value Portfolio
Plymouth Market Access Plus:
Bear Value Portfolio
Fidelity Puritan Trust:
Fidelity Balanced Fund
Fidelity Puritan Fund
Fidelity Qualified Dividend Fund
Fidelity Securities Fund:
Fidelity Growth & Income Portfolio
Fidelity OTC Portfolio
Fidelity Blue Chip Fund
Fidelity Select Portfolios:
Air Transportation Portfolio
American Gold Portfolio
Automation and Machinery Portfolio
Automotive Portfolio
Biotechnology Portfolio
Broadcast and Media Portfolio
Brokerage and Investment Management Portfolio
Capital Goods Portfolio
Chemicals Portfolio
Computers Portfolio
Defense and Aerospace Portfolio
Electric Utilities Portfolio
Electronics Portfolio
Energy Portfolio
Energy Service Portfolio
Financial Services Portfolio
Food and Agriculture Portfolio
Health Care Portoflio
Health Care Delivery Portfolio (name changed to Medical Delivery
Housing Portfolio Portfolio on 7/10/87)
Industrial Materials Portfolio
Leisure Portfolio
life Insurance Portfolio
Money Market Portfolio
Paper and Forest Products Portfolio
Precious Metals and Minerals Portfolio
Property and Casualty Insurance Portfolio
Regional Banks Portfolio
Restaurant Industry Portfolio
Fidelity Select Portfolios (cont.)
Retailing Portfolio
Savings and Loan Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Telecommunications Portfolio
Transportation Portfolio
Utilities Portfolio
Fidelity Special Situations Fund
Tax-Exempt Portfolios:
Limited Term Series
Short-Term Intermediate Series
Fidelity Tax-Exempt Money Market Trust
Fidelity Trend Fund
Fidelity U.S. Treasury Money Market Fund, L.P.
Variable Insurance Products Fund:
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
Fidelity U.S. Investments -
Government Securities Fund, L.P.
Bond Fund, L.P.
Zero Coupon Bond Fund;
The 1993 Portfolio
The 1998 Portfolio
The 2003 Portfolio
SECFIL2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectuses
and Statements of Additional Information in Post-Effective Amendment No. 35
to the Registration Statement on Form N-1A of Fidelity Advisor Series III:
Fidelity Advisor Equity-Income Fund of our report dated January 9, 1995
relating to the financial statements and financial highlights included in
the November 30, 1994 Annual Report to Shareholders of Fidelity Advisor
Equity-Income Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the Statements
of Additional Information.
/s/ COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 20, 1995
Exhibit 15(b)
DISTRIBUTION AND SERVICE PLAN
Fidelity Advisor Equity Portfolio Income
Class B
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 the Class B shares of Fidelity
Advisor Equity Portfolio Income ("Class B"), a class of shares of Fidelity
Advisor Equity Portfolio Income (the "Fund"), a series of Fidelity Advisor
Series III (the "Trust").
2. The Trust has entered into a General Distribution Agreement on behalf
of the 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 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 Fund and reports to recipients other than existing shareholders of the
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
("Investment Professionals"); and (6) providing training, marketing and
support to Investment Professionals with respect to the sale of shares.
3. In accordance with such terms as the Trustees may, from time to time
establish, and in conjunction with its services under the General
Distribution Agreement with respect to shares of Class B ("Class B
Shares"), the Distributor is hereby specifically authorized to make
payments to Investment Professionals in connection with the sale of the
Class B Shares. Such payments may be paid as a percentage of the dollar
amount of purchases of Class B Shares attributable to a particular
Investment Professional, or may take such other form as may be approved by
the Trustees.
4. In consideration for the services provided and the expenses incurred
by the Distributor pursuant to the General Distribution Agreement and
paragraphs 2 and 3 hereof, all with respect to the Class B Shares:
(a) Class B shall pay to the Distributor a monthly distribution fee at
the annual rate of 0.75% (or such lesser amount as the Trustees may, from
time to time, determine) of the average daily net assets of Class B
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 Fund's then current Prospectus for the
determination of the net asset value of Class B Shares, but shall exclude
assets attributable to (i) Class B Shares purchased more than 144 months
prior to such date or (ii) any other class of shares of the Fund. The
Distributor may, but shall not be required to, use all or any portion of
the distribution fee received pursuant to the Plan to compensate Investment
Professionals who have engaged in the sale of Class B 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 paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time establish,
receive all or a portion of any sales charges, including contingent
deferred sales charges, which may be imposed upon the sale or redemption of
Class B Shares.
5. Separate from any payments made as described in paragraph 4 hereof,
Class B shall also pay to the Distributor a service fee at the annual rate
of 0.25% (or such lesser amount as the Trustees may, from time to time,
determine) of the average daily net assets of Class B 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 Fund's then current Prospectus for the determination of the net
asset value of Class B Shares, but shall exclude assets attributable to any
other class of shares of the Fund. In accordance with such terms as the
Trustees may from time to time establish, the Distributor may use all or a
portion of such service fees to compensate Investment Professionals for
personal service and/or the maintenance of shareholder accounts, or for
other services for which "service fees" lawfully may be paid in accordance
with applicable rules and regulations.
6. The Fund presently pays, and will continue to pay, a management fee to
Fidelity Management and Research Company (the "Adviser") pursuant to a
management agreement between the 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 the Distributor for expenses incurred in connection
with the distribution of Class B Shares, including the activities referred
to in paragraphs 2 and 3 hereof. To the extent that the payment of
management fees by the Fund to the Adviser should be deemed to be indirect
financing of any activity primarily intended to result in the sale of Class
B Shares within the meaning of Rule 12b-1, then such payment shall be
deemed to be authorized by this Plan.
7. 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" (as defined in the Act) of Class B, this
Plan having been approved by a vote of a majority of the Trustees of the
Trust, including a majority of Trustees who are not "interested persons" of
the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the 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.
8. This Plan shall, unless terminated as hereinafter provided, remain in
effect until [date], 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 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 fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a majority of
the outstanding voting securities of Class B in the case of this Plan, or
upon approval by a vote of the 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 paragraph 7.
9. 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 Class B.
10. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
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 Class B Shares (making
estimates of such costs where necessary or desirable) and the purposes for
which such expenditures were made.
11. 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 Class B Shares.
12. Consistent with the limitation of shareholder liability as set forth
in the Trust's Declaration of Trust, any obligation assumed by Class B
pursuant to this Plan and any agreement related to this Plan shall be
limited in all cases to Class B and its assets and shall not constitute an
obligation of any shareholder of the Trust or of any other class of the
Fund, series of the Trust or class of such series.
13. If any provision of this 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 16__
SCHEDULE FOR COMPUTATION OF PERFORMANCE CALCULATIONS
CUMULATIVE TOTAL RETURNS and their income and capital components are
described in the fund's Statement of Additional Information, and are based
on the net asset values, dividends, capital gain distributions, and
reinvestment prices of the historical period covered.
AVERAGE ANNUAL RETURNS are calculated according to the following formula:
Average Annual Return = [(1 + Cumulative Return)1/n] - 1
[where n = the number of years in the base period]
Advisor Equity Portfolio Income
ALL EQUITY FUNDS EXCEPT SELECT - REMEMBER TO FILL IN THE BRACKETED
INFORMATION BEFORE FILING WITH SEC.
EXHIBIT 16__
SCHEDULE FOR THE COMPUTATION OF MOVING AVERAGES
[Name of Fund]
The 13-week and 39-week moving averages are long-term or weekly moving
averages. As such, they are based upon the closing adjusted NAV (presented
here) on the last business day of each week for the past 13 and 39 weeks
through the last business day of the week closest to the fund's fiscal year
end.
Adjusted Net Asset Value:
Following Day Dividend + Following Day Capital Gains
Current Day Factor = [---------------------------------------------- + 1]
(Following Day Factor)
Following Day NAV
Where:
Following Day Factor = 1.0 until the day preceding the first distribution.
Current Day NAV
Adjusted NAV = ---------------
Current Day Factor
13-week Moving Average is calculated as follows:
Sum of the end-of-week Adjusted Navs for the time period
13
39-week Moving Average is calculated as follows:
Sum of the end-of-week Adjusted NAVs for the time period
39
39 Week Moving Averages
[Actual schedule of data (for the maximum - 39 weeks), which is provided by
Fund Performance, should be inserted here.]
SELECT ONLY - REMEMBER TO FILL IN THE BRACKETED INFORMATION BEFORE FILING
WITH SEC.
EXHIBIT 16__
SCHEDULE FOR THE COMPUTATION OF MOVING AVERAGES
[Name of Fund]
The 13-week and 39-week moving averages are short-term or daily moving
averages. As such, they are based upon the daily closing adjusted NAV
(presented here) for each business day in the 13- or 39-week period through
the last business day of the week closest to the fund's fiscal year end.
Adjusted Net Asset Value:
Following Day Dividend + Following Day Capital Gains
Current Day Factor = [---------------------------------------------- + 1]
(Following Day Factor)
Following Day Reinvestment NAV*
* Select Funds began reinvesting at the 10:00 a.m. NAV on July 24, 1986.
Prior to that, distributions were reinvested at the closing NAV.
Where:
Following Day Factor = 1.0 until the day preceding the first distribution.
Current Day 4:00 p.m. NAV
Adjusted NAV = ------------------------
Current Day Factor
13-week Moving Average is calculated as follows:
Sum of daily Adjusted Navs for the time period
Number of business days in 13-week period
39-week Moving Average is calculated as follows:
Sum of daily Adjusted NAVs for the time period
Number of business days in the 39-week period
39 Week Moving Averages
[Actual schedule of data (for the maximum - 39 weeks), which is provided by
Fund Performance, should be inserted here.]
ONLY USE FOR BOND FUNDS THAT ARE NOT PART OF A TRUST WITH AN EQUITY FUND
EXHIBIT 16_
SCHEDULE FOR COMPUTATION OF ADJUSTED NAVS
Adjusted NAVs are derived by dividing the fund's actual NAV by a "factor"
that adjusts the NAV for any reinvestment of dividends and capital gains,
if any, that occurred during the period. The factor typically starts at "1"
beginning at the end of the period and, going backward, increases each time
a distribution is paid. (The end of the period adjusted NAV should equal
the fund's actual NAV, barring any month-end distributions.)
ADJUSTED NET ASSET VALUE:
Following Day Dividend + Following Day Capital Gains
Current Day Factor = [---------------------------------------------- + 1]
(Following Day Factor)
Following Day NAV
Where:
Following Day Factor = 1.0 until the day preceding the first distribution.
Current Day NAV
Adjusted NAV = ---------------
Current Day Factor
FA Equity Income -Instl
DATE FACTOR ADJ. NAV
04-Mar-94 1.020271 15.19
07-Mar-94 1.020271 15.28
08-Mar-94 1.020271 15.23
09-Mar-94 1.020271 15.24
10-Mar-94 1.020271 15.18
11-Mar-94 1.020271 15.24
14-Mar-94 1.020271 15.30
15-Mar-94 1.020271 15.32
16-Mar-94 1.020271 15.41
17-Mar-94 1.020271 15.49
18-Mar-94 1.013155 15.46
21-Mar-94 1.013155 15.38
22-Mar-94 1.013155 15.39
23-Mar-94 1.013155 15.43
24-Mar-94 1.013155 15.29
25-Mar-94 1.013155 15.21
28-Mar-94 1.013155 15.11
29-Mar-94 1.013155 14.89
30-Mar-94 1.013155 14.68
31-Mar-94 1.013155 14.66
01-Apr-94 1.013155 NA
04-Apr-94 1.013155 14.47
05-Apr-94 1.013155 14.73
06-Apr-94 1.013155 14.79
07-Apr-94 1.013155 14.89
08-Apr-94 1.013155 14.83
11-Apr-94 1.013155 14.90
12-Apr-94 1.013155 14.91
13-Apr-94 1.013155 14.85
14-Apr-94 1.013155 14.88
15-Apr-94 1.013155 14.93
18-Apr-94 1.013155 14.87
19-Apr-94 1.013155 14.89
20-Apr-94 1.013155 14.85
21-Apr-94 1.013155 14.97
22-Apr-94 1.013155 15.01
25-Apr-94 1.013155 15.13
26-Apr-94 1.013155 15.18
27-Apr-94 1.013155 NA
28-Apr-94 1.013155 15.12
29-Apr-94 1.013155 15.17
02-May-94 1.013155 15.26
03-May-94 1.013155 15.27
04-May-94 1.013155 15.22
05-May-94 1.013155 15.23
06-May-94 1.013155 15.16
09-May-94 1.013155 15.01
10-May-94 1.013155 15.07
11-May-94 1.013155 14.97
12-May-94 1.013155 15.05
13-May-94 1.013155 15.09
16-May-94 1.013155 15.10
17-May-94 1.013155 15.20
18-May-94 1.013155 15.34
19-May-94 1.013155 15.35
20-May-94 1.013155 15.34
23-May-94 1.013155 15.31
24-May-94 1.013155 15.33
25-May-94 1.013155 15.30
26-May-94 1.013155 15.33
27-May-94 1.013155 15.33
30-May-94 1.013155 NA
31-May-94 1.013155 15.29
01-Jun-94 1.013155 15.32
02-Jun-94 1.013155 15.34
03-Jun-94 1.013155 15.40
06-Jun-94 1.013155 15.43
07-Jun-94 1.013155 15.37
08-Jun-94 1.013155 15.34
09-Jun-94 1.013155 15.41
10-Jun-94 1.013155 15.48
13-Jun-94 1.013155 15.54
14-Jun-94 1.013155 15.61
15-Jun-94 1.013155 15.58
16-Jun-94 1.013155 15.59
17-Jun-94 1.006061 15.51
20-Jun-94 1.006061 15.38
21-Jun-94 1.006061 15.27
22-Jun-94 1.006061 15.35
23-Jun-94 1.006061 15.30
24-Jun-94 1.006061 15.12
27-Jun-94 1.006061 15.21
28-Jun-94 1.006061 15.20
29-Jun-94 1.006061 15.27
30-Jun-94 1.006061 15.20
01-Jul-94 1.006061 15.21
04-Jul-94 1.006061 NA
05-Jul-94 1.006061 15.25
06-Jul-94 1.006061 15.25
07-Jul-94 1.006061 15.29
08-Jul-94 1.006061 15.34
11-Jul-94 1.006061 15.36
12-Jul-94 1.006061 15.36
13-Jul-94 1.006061 15.39
14-Jul-94 1.006061 15.57
15-Jul-94 1.006061 15.58
18-Jul-94 1.006061 15.62
19-Jul-94 1.006061 15.62
20-Jul-94 1.006061 15.54
21-Jul-94 1.006061 15.57
22-Jul-94 1.006061 15.59
25-Jul-94 1.006061 15.65
26-Jul-94 1.006061 15.62
27-Jul-94 1.006061 15.62
28-Jul-94 1.006061 15.63
29-Jul-94 1.006061 15.72
01-Aug-94 1.006061 15.82
02-Aug-94 1.006061 16.09
03-Aug-94 1.006061 16.10
04-Aug-94 1.006061 16.04
05-Aug-94 1.006061 16.00
08-Aug-94 1.006061 16.01
09-Aug-94 1.006061 16.05
10-Aug-94 1.006061 16.08
11-Aug-94 1.006061 16.03
12-Aug-94 1.006061 16.08
15-Aug-94 1.006061 16.08
16-Aug-94 1.006061 16.16
17-Aug-94 1.006061 16.17
18-Aug-94 1.006061 16.11
19-Aug-94 1.006061 16.13
22-Aug-94 1.006061 16.08
23-Aug-94 1.006061 16.14
24-Aug-94 1.006061 16.27
25-Aug-94 1.006061 16.26
26-Aug-94 1.006061 16.39
29-Aug-94 1.006061 16.47
30-Aug-94 1.006061 16.53
31-Aug-94 1.006061 16.56
01-Sep-94 1.006061 16.50
02-Sep-94 1.006061 16.49
05-Sep-94 1.006061 NA
06-Sep-94 1.006061 16.50
07-Sep-94 1.006061 16.48
08-Sep-94 1.006061 16.55
09-Sep-94 1.006061 16.45
12-Sep-94 1.006061 16.41
13-Sep-94 1.006061 16.42
14-Sep-94 1.006061 16.46
15-Sep-94 1.006061 16.58
16-Sep-94 1.000000 16.50
19-Sep-94 1.000000 16.49
20-Sep-94 1.000000 16.25
21-Sep-94 1.000000 16.20
22-Sep-94 1.000000 16.16
23-Sep-94 1.000000 16.17
26-Sep-94 1.000000 16.20
27-Sep-94 1.000000 16.24
28-Sep-94 1.000000 16.32
29-Sep-94 1.000000 16.24
30-Sep-94 1.000000 16.29
03-Oct-94 1.000000 16.27
04-Oct-94 1.000000 16.11
05-Oct-94 1.000000 15.99
06-Oct-94 1.000000 15.96
07-Oct-94 1.000000 16.09
10-Oct-94 1.000000 16.20
11-Oct-94 1.000000 16.32
12-Oct-94 1.000000 16.33
13-Oct-94 1.000000 16.42
14-Oct-94 1.000000 16.45
17-Oct-94 1.000000 16.48
18-Oct-94 1.000000 16.44
19-Oct-94 1.000000 16.48
20-Oct-94 1.000000 16.42
21-Oct-94 1.000000 16.37
24-Oct-94 1.000000 16.29
25-Oct-94 1.000000 16.27
26-Oct-94 1.000000 16.34
27-Oct-94 1.000000 16.41
28-Oct-94 1.000000 16.64
31-Oct-94 1.000000 16.61
01-Nov-94 1.000000 16.48
02-Nov-94 1.000000 16.44
03-Nov-94 1.000000 16.45
04-Nov-94 1.000000 16.34
07-Nov-94 1.000000 16.34
08-Nov-94 1.000000 16.41
09-Nov-94 1.000000 16.42
10-Nov-94 1.000000 16.37
11-Nov-94 1.000000 16.33
14-Nov-94 1.000000 16.43
15-Nov-94 1.000000 16.44
16-Nov-94 1.000000 16.42
17-Nov-94 1.000000 16.36
18-Nov-94 1.000000 16.26
21-Nov-94 1.000000 16.16
22-Nov-94 1.000000 15.91
23-Nov-94 1.000000 15.88
24-Nov-94 1.000000 NA
25-Nov-94 1.000000 15.94
FA Equity-Income - Institutional
(080)
Total
Pay Reinvest
Capital Month Closing Initial
date X-date NAV DIV
Gains End NAV Shares
Nov-84 10.24 976.563
31-Dec 10.49
0.05 Dec-84 10.49
976.563
31-Jan 11.2
0.06 Jan-85 11.2
976.563
28-Feb 11.15
0.07 Feb-85 11.15
976.563
29-Mar 11.07
0.06 Mar-85 11.07
976.563
30-Apr 11.02
0.06 Apr-85 11.02
976.563
31-May 11.51
0.07 May-85 11.51
976.563
28-Jun 11.64
0.06 Jun-85 11.64
976.563
31-Jul 11.6
0.06 Jul-85 11.6
976.563
30-Aug 11.53
0.09 Aug-85 11.53
976.563
30-Sep 11.22
0.05 Sep-85 11.22
976.563
31-Oct 11.57
0.05 Oct-85 11.57
976.563
29-Nov 11.95
0.09 Nov-85 11.95
976.563
31-Dec 12.31
0.06 Dec-85 12.31
976.563
31-Jan 12.13
0.07 0.34 Jan-86 12.13
976.563
28-Feb 12.85
0.07 Feb-86 12.85
976.563
31-Mar 13.55
0.07 Mar-86 13.55
976.563
30-Apr 13.41
0.06 Apr-86 13.41
976.563
30-May 13.39
0.06 May-86 13.39
976.563
30-Jun 13.5
0.07 Jun-86 13.5
976.563
31-Jul 12.93
0.05 Jul-86 12.93
976.563
29-Aug 13.64
0.07 Aug-86 13.64
976.563
30-Sep 12.94
0.06 Sep-86 12.94
976.563
31-Oct 13.46
0.05 Oct-86 13.46
976.563
28-Nov 13.54
0.08 Nov-86 13.54
976.563
01-Dec 12.76
0.75
31-Dec 12.52
0.07 Dec-86 12.52
976.563
30-Jan 13.31
0.05 0.39 Jan-87 13.31
976.563
27-Feb 13.65
0.06 Feb-87 13.65
976.563
31-Mar 13.83
0.07 Mar-87 13.83
976.563
30-Apr 13.6
0.05 Apr-87 13.6
976.563
29-May 13.49
0.04 May-87 13.49
976.563
30-Jun 13.81
0.07 Jun-87 13.81
976.563
31-Jul 14.15
0.06 Jul-87 14.15
976.563
31-Aug 14.48
0.06 Aug-87 14.48
976.563
30-Sep 14.07
0.07 Sep-87 14.07
976.563
30-Oct 11.47
0.05 Oct-87 11.47
976.563
30-Nov 10.93
0.05 Nov-87 10.93
976.563
23-Dec 9.79
0.07 1.65 Dec-87 9.65
976.563
29-Jan 10.25
0.06 Jan-88 10.25
976.563
ERR 10.7
0.05 Feb-88 10.7
976.563
31-Mar 10.5
0.06 Mar-88 10.5
976.563
29-Apr 10.59
0.06 Apr-88 10.59
976.563
15-Jun 31-May 10.66
0.06 May-88 10.66
976.563
15-Jul 30-Jun 11.2
0.07 Jun-88 11.2
976.563
15-Aug 29-Jul 11.12
0.06 Jul-88 11.12
976.563
15-Sep 31-Aug 10.83
0.07 Aug-88 10.83
976.563
17-Oct 30-Sep 11.09
0.06 Sep-88 11.09
976.563
15-Nov 31-Oct 11.24
0.05 Oct-88 11.24
976.563
15-Dec 30-Nov 11.1
0.07 Nov-88 11.1
976.563
30-Dec 20-Dec 11.02
0.1 Dec-88 11.08
976.563
15-Feb 31-Jan 11.73
0.06 Jan-89 11.73
976.563
15-Mar 28-Feb 11.57
0.06 Feb-89 11.57
976.563
14-Apr 31-Mar 11.74
0.06 Mar-89 11.74
976.563
15-May 28-Apr 12.12
0.05 Apr-89 12.12
976.563
15-Jun 31-May 12.36
0.05 May-89 12.36
976.563
14-Jul 30-Jun 12.35
0.06 Jun-89 12.35
976.563
15-Aug 31-Jul 13.07
0.06 Jul-89 13.07
976.563
15-Sep 31-Aug 13.18
0.06 Aug-89 13.18
976.563
13-Oct 29-Sep 12.95
0.06 Sep-89 12.95
976.563
15-Nov 31-Oct 12.18
0.06 Oct-89 12.18
976.563
15-Dec 30-Nov 12.27
0.07 Nov-89 12.27
976.563
29-Dec 20-Dec 11.8
0.13 0.18 Dec-89 12.13
976.563
25-Jan 11-Jan 11.95
0.12
15-Feb 31-Jan 11.2
0.05 Jan-90 11.2
976.563
15-Mar 28-Feb 11.17
0.05 Feb-90 11.17
976.563
12-Apr 30-Mar 11.11
0.06 Mar-90 11.11
976.563
15-May 30-Apr 10.63
0.05 Apr-90 10.63
976.563
15-Jun 31-May 11.28
0.05 May-90 11.28
976.563
16-Jul 29-Jun 11.17
0.06 Jun-90 11.17
976.563
15-Aug 31-Jul 10.93
0.06 Jul-90 10.93
976.563
17-Sep 31-Aug 10.05
0.05 Aug-90 10.05
976.563
15-Oct 28-Sep 9.24
0.05 Sep-90 9.24
976.563
01-Nov 31-Oct 8.98
0.05 Oct-90 8.98
976.563
01-Dec 30-Nov 9.52
0.06 Nov-90 9.52
976.563
21-Dec 21-Dec 9.67
0.1 Dec-90 9.63
976.563
04-Feb 31-Jan 10.07
0.05 Jan-91 10.07
976.563
01-Mar 28-Feb 10.73
0.06 Feb-91 10.73
976.563
01-Apr 22-Mar 10.62
0.06 Mar-91 10.84
976.563
01-May 26-Apr 10.87
0.04 Apr-91 10.8
976.563
03-Jun 24-May 10.95
0.04 May-91 11.35
976.563
01-Jul 21-Jun 11.05
0.04 Jun-91 10.79
976.563
01-Aug 26-Jul 11.2
0.04 Jul-91 11.34
976.563
03-Sep 23-Aug 11.49
0.04 Aug-91 11.54
976.563
01-Oct 27-Sep 11.38
0.04 Sep-91 11.44
976.563
01-Nov 25-Oct 11.37
0.03 Oct-91 11.6
976.563
02-Dec 22-Nov 11.17
0.05 Nov-91 11.08
976.563
23-Dec 20-Dec 11.09
0.05 Dec-91 11.9
976.563
03-Feb 24-Jan 12.04
0.04 Jan-92 11.98
976.563
02-Mar 21-Feb 12.27
0.04 Feb-92 12.31
976.563
01-Apr 27-Mar 12.07
0.04 Mar-92 12.07
976.563
01-May 24-Apr 12.39
0.03 Apr-92 12.47
976.563
01-Jun 22-May 12.51
0.05 May-92 12.53
976.563
01-Jul 26-Jun 12.2
0.04 Jun-92 12.35
976.563
03-Aug 24-Jul 12.32
0.03 Jul-92 12.64
976.563
01-Sep 28-Aug 12.31
0.05 Aug-92 12.29
976.563
01-Oct 25-Sep 12.22
0.03 Sep-92 12.36
976.563
02-Nov 23-Oct 12.34
0.03 Oct-92 12.48
976.563
01-Dec 27-Nov 12.82
0.05 Nov-92 12.88
976.563
21-Dec 18-Dec 13.05
0.04 Dec-92 13.17
976.563
01-Feb 22-Jan 13.48
0.02 Jan-93 13.55
976.563
01-Mar 19-Feb 13.61
0.04 Feb-93 13.86
976.563
01-Apr 26-Mar 14.23
0.03 Mar-93 14.29
976.563
03-May 23-Apr 14.2
0.03 Apr-93 14.21
976.563
01-Jun 21-May 14.22
0.04 May-93 14.4
976.563
01-Jul 25-Jun 14.31
0.05 Jun-93 14.5
976.563
02-Aug 23-Jul 14.52
0.06 Jul-93 14.64
976.563
01-Sep 27-Aug 15.03
0.05 Aug-93 15.12
976.563
Sep-93 15.03 976.563
Oct-93 15.21 976.563
Nov-93 14.93 976.563
Dec-93 15.3 976.563
Jan-94 16.02 976.563
Feb-94 15.62 976.563
21-Mar 18-Mar 15.66
0.11 Mar-94 14.85
976.563
Apr-94 15.37 976.563
May-94 15.49 976.563
20-Jun 17-Jun 15.6
0.11 Jun-94 15.29
976.563
Jul-94 15.82 976.563
Aug-94 16.66 976.563
19-Sep 16-Sep 16.5
0.1 Sep-94 16.29
976.563
Oct-94 16.61 976.563
Nov-94 16.07 976.563
Value of Value of Value of
DividendsCap Gains Cost of
Initial Reinvest Reinvest
Total Received Received Reinvest
Shares Div Cap Gains
Value In Cash In Cash Distrib
10000 0 0
10000 0 0 0
10244 49 0
10293 49 0 49
10938 111 0
11049 107 0 108
10889 180 0
11068 176 0 177
10811 238 0
11048 234 0 236
10762 297 0
11058 293 0 296
11240 380 0
11620 361 0 366
11367 445 0
11812 420 0 427
11328 504 0
11832 479 0 488
11260 593 0
11853 566 0 580
10957 629 0
11586 615 0 631
11299 700 0
11999 664 0 683
11670 816 0
12486 752 0 776
12021 903 0
12925 811 0 839
11846 964 357
13166 879 332 1269
12549 1097 378
14024 947 332 1345
13232 1233 399
14864 1016 332 1422
13096 1286 395
14776 1074 332 1487
13076 1350 394
14820 1133 332 1554
13184 1439 397
15020 1201 332 1631
12627 1434 381
14441 1250 332 1687
13320 1591 401
15312 1318 332 1765
12637 1576 381
14594 1377 332 1832
13145 1696 396
15237 1426 332 1889
13223 1797 398
15418 1504 332 1979
12227 1746 1206
15179 1572 1064 2918
12998 1917 1755
16670 1621 1445 3451
13330 2041 1800
17171 1680 1445 3526
13506 2156 1824
17485 1748 1445 3614
13281 2183 1794
17258 1797 1445 3677
13174 2216 1779
17169 1836 1445 3728
13486 2358 1821
17665 1904 1445 3817
13818 2492 1866
18177 1963 1445 3894
14141 2628 1910
18678 2021 1445 3971
13740 2644 1856
18239 2090 1445 4061
11201 2220 1513
14934 2139 1445 4126
10674 2180 1441
14296 2188 1445 4191
9424 2015 3400
14839 2256 3057 6441
10010 2233 3611
15854 2314 3057 6533
10449 2408 3770
16627 2363 3057 6611
10254 2457 3699
16410 2422 3057 6704
10342 2571 3731
16644 2480 3057 6798
10410 2683 3756
16849 2539 3057 6892
10938 2929 3946
17813 2607 3057 7002
10859 3004 3918
17781 2666 3057 7098
10576 3037 3816
17429 2734 3057 7210
10830 3207 3907
17944 2793 3057 7306
10977 3331 3960
18268 2842 3057 7387
10840 3403 3911
18154 2910 3057 7501
10820 3562 3904
18286 3008 3057 7665
11455 3870 4133
19457 3066 3057 7764
11299 3916 4076
19292 3125 3057 7863
11465 4074 4136
19675 3184 3057 7963
11836 4290 4270
20396 3232 3057 8047
12070 4459 4355
20884 3281 3057 8131
12061 4556 4351
20968 3340 3057 8233
12764 4924 4605
22292 3398 3057 8334
12871 5068 4644
22582 3457 3057 8437
12646 5082 4563
22291 3516 3057 8540
11895 4883 4291
21069 3574 3057 8643
11982 5040 4323
21346 3643 3057 8764
11846 5215 4596
21657 3770 3232 9303
10938 4906 4444
20287 3818 3350 9608
10908 4983 4432
20323 3867 3350 9698
10850 5065 4408
20323 3926 3350 9807
10381 4938 4218
19537 3975 3350 9899
11016 5332 4476
20823 4023 3350 9991
10908 5391 4432
20731 4082 3350 10101
10674 5386 4337
20397 4141 3350 10213
9814 5046 3988
18848 4189 3350 10306
9023 4733 3666
17423 4238 3350 10400
8770 4694 3563
17027 4287 3350 10494
9297 5090 3777
18164 4346 3350 10608
9404 5339 3821
18564 4443 3350 10799
9834 5679 3996
19509 4492 3350 10895
10479 6168 4258
20904 4551 3350 11011
10586 6350 4301
21237 4609 3350 11128
10547 6405 4285
21237 4648 3350 11207
11084 6812 4504
22400 4688 3350 11285
10537 6553 4281
21372 4727 3350 11364
11074 6968 4500
22541 4766 3350 11443
11270 7170 4579
23019 4805 3350 11523
11172 7188 4539
22900 4844 3350 11603
11328 7350 4603
23281 4873 3350 11663
10820 7120 4396
22337 4922 3350 11763
11621 7755 4722
24098 4971 3350 11864
11699 7888 4754
24341 5010 3350 11945
12021 8187 4884
25093 5049 3350 12026
11787 8109 4789
24685 5088 3350 12108
12178 8439 4948
25565 5117 3350 12169
12236 8583 4972
25791 5166 3350 12272
12061 8543 4900
25504 5205 3350 12354
12344 8807 5015
26166 5234 3350 12416
12002 8666 4877
25545 5283 3350 12519
12070 8779 4904
25753 5313 3350 12582
12188 8927 4952
26067 5342 3350 12644
12578 9318 5111
27007 5391 3350 12749
12861 9613 5226
27700 5430 3350 12833
13232 9932 5376
28541 5449 3350 12875
13535 10245 5499
29280 5488 3350 12959
13955 10627 5670
30252 5518 3350 13022
13877 10631 5638
30146 5547 3350 13086
14063 10859 5714
30635 5586 3350 13171
14160 11042 5753
30956 5635 3350 13277
14297 11278 5809
31384 5693 3350 13405
14766 11756 5999
32521 5742 3350 13512
14678 11686 5964
32327 5742 3350 13512
14854 11826 6035
32714 5742 3350 13512
14580 11608 5924
32112 5742 3350 13512
14941 11896 6071
32908 5742 3350 13512
15645 12455 6357
34456 5742 3350 13512
15254 12144 6198
33596 5742 3350 13512
14502 11770 5892
32164 5850 3350 13749
15010 12182 6099
33291 5850 3350 13749
15127 12277 6146
33550 5850 3350 13749
14932 12352 6067
33351 5957 3350 13987
15449 12780 6277
34507 5957 3350 13987
16270 13459 6610
36339 5957 3350 13987
15908 13375 6464
35747 6055 3350 14205
16221 13638 6591
36450 6055 3350 14205
15693 13195 6376
35265 6055 3350 14205
MULTIPLE CLASS OF SHARES PLAN
FOR
FIDELITY ADVISOR FUNDS
DATED JULY 1, 1995
This Multiple Class Plan (the "Plan"), when effective in accordance with
its provisions, shall be the written plan contemplated by Rule 18f-3 under
the Investment Company Act of 1940 (the "1940 Act") for the portfolios
(each a "Portfolio") of the respective Fidelity Advisor Funds (each, a
"Fund").
1. Classes Offered. Each Portfolio may offer up to three classes of its
shares: Class A, Class B and Institutional Class (each, a "Class"). In
addition, Fidelity Advisor Strategic Opportunities Fund ("Strategic
Opportunities Fund") may offer a fourth class: Initial Class.
2. Distribution and Shareholder Service Fees. Distribution fees and/or
shareholder service fees shall be calculated and paid in accordance with
the terms of the then-effective plan pursuant to Rule 12b-l under the 1940
Act for the applicable class. Distribution and shareholder service fees
currently authorized are as set forth in Exhibit I to this Plan.
3. Conversion Privilege. After a maximum holding period of six years from
the initial date of purchase, Class B shares convert automatically to Class
A shares of the same Portfolio. Simultaneously, a portion of the Class B
Shares purchased through the reinvestment of Class B dividends or capital
gains distributions ("Dividend Shares") will also convert to Class A
Shares. The portion of Dividend Shares that will convert at that time is
determined by the ratio of converting Class B non-Dividend Shares held by a
shareholder to that shareholder's total Class B non-Dividend Shares. All
conversions pursuant to this paragraph 3 shall be made on the basis of the
relative net asset values of the two classes, without the imposition of any
sales load, fee, or other charge.
4. Exchange Privileges.
Class A: Shares of Class A may be exchanged for shares of (i) any other
Fidelity Advisor Fund: Class A; and (ii) any portfolio of Daily Money Fund
or Daily Tax-Exempt Money Fund, other than Daily Money Fund: U.S. Treasury
Portfolio: Class B, or Daily Money Fund: U.S. Treasury Income Portfolio.
Class B: Shares of Class B may be exchanged for shares of (i) any other
Fidelity Advisor Fund: Class B; and (ii) Daily Money Fund: U.S. Treasury
Portfolio: Class B.
Institutional Class: Shares of Institutional Class may be exchanged for
shares of (i) any other Fidelity Advisor Fund: Institutional Class; and
(ii) shares of any Fidelity Retail Fund offering an exchange privilege to
other Fidelity Retail Funds.
Strategic Opportunities Fund: Initial Class: Shares of Strategic
Opportunities Fund: Initial Class may be exchanged for shares of any
Fidelity Retail Fund offering an exchange privilege to other Fidelity
Retail Funds.
5. Expense Allocations. Expenses shall be allocated under this Plan as
follows:
A. Class expenses: The following expenses shall be allocated exclusively
to the applicable specific class of shares: (i) distribution and
shareholder service fees; (ii) transfer agent fees; and (iii) Blue Sky
state registration fees.
B. Portfolio expenses: Expenses not allocated to specific classes as
specified above shall be charged to the Portfolio and allocated daily to
each class on the basis of the net asset value of that class in relation to
the net asset value of the Portfolio.
6. Voting Rights. Each class of shares governed by this Plan (i) shall
have exclusive voting rights on any matter submitted to shareholders that
relates solely to its arrangement; and (ii) shall have separate voting
rights on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class.
7. Effective Date of Plan. 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 Trustees of the Fund, and a majority of the Trustees of the
Fund who are not "interested persons" of the Fund, which vote shall have
found that this Plan as proposed to be adopted, including the expense
allocation, is in the best interests of each class individually and of the
Portfolio as a whole; or upon such other date as the Trustees shall
determine. Any material amendment to 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 Trustees of the Fund, and a majority of the
Trustees of the Fund who are not "interested persons" of the Fund, which
vote shall have found that this Plan as proposed to be amended, including
the expense allocation, is in the best interests of each class individually
and of the Portfolio as a whole; or upon such other date as the Trustees
shall determine.
8. Severability. If any provision of this 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.
9. Limitation of Liability. Consistent with the limitation of shareholder
liability as set forth in each Fund's Declaration of Trust or other
organizational document, any obligations assumed by any Portfolio or class
thereof, and any agreements related to this Plan shall be limited in all
cases to the relevant Portfolio and its assets, or class and its assets, as
the case may be, and shall not constitute obligations of any other
Portfolio or class of shares. All persons having any claim against the
Portfolio, or any class thereof, arising in connection with this Plan, are
expressly put on notice of such limitation of shareholder liability, and
agree that any such claim shall be limited in all cases to the relevant
Portfolio and its assets, or class and its assets, as the case may be, and
such person shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Fund, Class or Portfolio; nor shall
such person seek satisfaction of any such obligation from the Trustees or
any individual Trustee of the Fund.
EXHIBIT I TO MULTIPLE CLASS OF SHARES PLAN FOR FIDELITY ADVISOR FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Overseas: front-end 0.65 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Equity Portfolio Growth: front-end 0.65 none
Class A none none none
Institutional Class
Global Resources Fund: front-end 0.65 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Growth Opportunities Fund: front-end 0.65 none
Class A none none none
Institutional Class
Strategic Opportunities Fund: front-end none none
Initial Class front-end 0.65 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Equity Income Fund: front-end 0.65 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Income & Growth Fund: front-end 0.65 none
Class A none none none
Institutional Class
Emerging Markets Income Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
High Yield Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Strategic Income Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Government Investment Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Limited Term Bond Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Short Fixed-Income Fund: front-end 0.15 none
Class A none none none
Institutional Class
High Income Municipal Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Limited Term Tax-Exempt Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
Short-Intermediate Tax-Exempt Fund: front-end 0.15 none
Class A none none none
Institutional Class
California Tax-Free Income Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
New York Tax-Free Income Fund: front-end 0.25 none
Class A contingent deferred 0.75 0.25
Class B none none none
Institutional Class
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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