SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[X] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(e) or Sec. 240.14a-12
</TABLE>
(Name of Registrant as Specified In Its Charter) Fidelity
Advisor Series VI
(Name of Person(s) Filing Proxy Statement) Arthur S.
Loring, Secretary
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<CAPTION>
<S> <C>
[X] $125 per Exchange Act Rules 0-11(c)(ii), 14a-6(j) (1), or 14a-6(j) (2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(j) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(j) (4) and 0-11.
</TABLE>
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
<TABLE>
<CAPTION>
<S> <C>
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a) (2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
</TABLE>
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND:
CLASS A
CLASS B
INSTITUTIONAL CLASS
FUNDS OF
FIDELITY ADVISOR SERIES VI
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-___-____
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Advisor Limited Term Tax-Exempt Fund, (the fund), will
be held at the office of Fidelity Advisor Series VI (the trust), 82
Devonshire Street, Boston, Massachusetts 02109 on November 16, 1994, at
11:00 a.m. The purpose of the Meeting is to consider and act upon the
following proposals, and to transact such other business as may properly
come before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of Coopers & Lybrand, L.L.P. as independent
accountants of the trust.
3. To amend the Declaration of Trust to provide dollar-based voting rights
for shareholders of the trust.
4. To amend the Declaration of Trust regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to provide each fund with the ability
to invest all of its assets in another open-end investment company with
substantially the same investment objective and policies.
6. To adopt a new fundamental investment policy for each fund to invest
all of its assets in another open-end investment company with substantially
the same investment objective and policies.
7. To amend the Bylaws of the Trust to require Trustee approval of further
amendments to the bylaws.
8. To approve an amended management contract for each fund.
9. To amend the Class A Distribution and Service Plan for each fund to
remove from the 12b-1 fee calculation the exclusion of shares purchased 144
months prior.
10. To amend the Class B Distribution and Service Plan for Limited Term
Tax-Exempt Fund to remove from the 12b-1 fee calculation the exclusion of
shares purchased 144 months prior.
11. To amend Limited Term Tax-Exempt Fund's investment objective and
policies to provide greater investment latitude to seek high current
income.
12. To replace certain of Limited Term Tax-Exempt Fund's fundamental
investment policies with non-fundamental policies.
13. To restate Limited Term Tax-Exempt Fund's fundamental defensive policy
with one that is non-fundamental.
14. To adopt a fundamental investment limitation concerning senior
securities for Limited Term Tax-Exempt Fund.
15. To adopt a fundamental investment limitation concerning commodities for
Limited Term Tax-Exempt Fund.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
16. To amend Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning diversification.
17. To eliminate Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning short sales of securities.
18. To eliminate Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning margin purchases.
19. To amend Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning borrowing.
20. To amend Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning the underwriting of securities.
21. To amend Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning the concentration of its investments in a single
industry.
22. To amend Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning real estate.
23. To amend Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning lending.
24. To eliminate Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning investments in other investment companies.
25. To eliminate Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning investments in securities of newly-formed issuers.
26. To eliminate Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning investing in oil, gas, and mineral exploration
programs.
27. To eliminate Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning investing in companies for the purpose of exercising
control or management.
28. To eliminate Limited Term Tax-Exempt Fund's fundamental investment
limitation concerning purchasing securities of an issuer in which the
Trustees or directors and officers of the fund or FMR hold more than 5% of
the outstanding securities of such issuer.
The Board of Trustees has fixed the close of business on September 19,
1994 as the record date for the determination of the shareholders of each
fund entitled to notice of, and to vote at, such Meeting and any
adjournments thereof.
By the order of the Board of Trustees,
ARTHUR S. LORING, Secretary
September 20, 1994
YOUR VOTE IS IMPORTANT
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE TO THE FUNDS, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR
SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help you avoid the time and expense involved in validating your
vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears
in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All other accounts should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself or
by the individual executing the proxy card. For example:
REGISTRATION VALID
SIGNATURE
A. 1) ABC Corp. John Smith,
Treasurer
2) ABC Corp. John Smith,
Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins,
Trustee
2) ABC Trust Ann B. Collins,
Trustee
3) Ann B. Collins, Trustee Ann B. Collins,
Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND:
CLASS A
CLASS B
INSTITUTIONAL CLASS
TO BE HELD NOVEMBER 16, 1994
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity
Advisor Series VI (the trust) to be used at the Special Meeting of
Shareholders of Fidelity Advisor Limited Term Tax-Exempt Fund (the fund)
and at any adjournments thereof (the Meeting), to be held November 16,
1994, at 11:00 a.m. at 82 Devonshire Street, Boston, Massachusetts 02109,
the principal executive office of the trust. The purpose of the Meeting is
set forth in the accompanying Notice. The solicitation is made primarily by
the mailing of this Proxy Statement and the accompanying proxy card on or
about September 20, 1994. Supplementary solicitations may be made by mail,
telephone, telegraph, or by personal interview by representatives of the
trust. In addition, Boston Financial Data Services may be paid to solicit
shareholders on behalf of the funds at an anticipated cost of approximately
$130. The expenses in connection with preparing this Proxy Statement and
its enclosures and of all solicitations will be paid by the funds.
Brokerage firms and others will be reimbursed for their reasonable expenses
in forwarding solicitation material to the beneficial owners of shares.
If the enclosed proxy card is executed and returned, it may nevertheless
be revoked at any time prior to its use by written notification received by
the trust, by the execution of a later-dated proxy card, or by attending
the Meeting and voting in person. All proxy cards solicited by the Board of
Trustees that are properly executed and received by the Secretary prior to
the Meeting, and which are not revoked, will be voted at the Meeting.
Shares represented by such proxies will be voted in accordance with the
instructions thereon. If no specification is made on a proxy card, it will
be voted FOR the matters specified on the proxy card. All proxies not
voted, including broker non-votes, will not be counted toward establishing
a quorum. Shareholders should note that while votes to ABSTAIN will count
toward establishing a quorum, passage of any proposal being considered at
the Meeting will occur only if a sufficient number of votes are cast FOR
the proposal. Accordingly, votes to ABSTAIN and votes AGAINST will have the
same effect in determining whether the proposal is approved.
If a quorum is present at the Meeting, but sufficient votes to approve one
or more of the proposed items are not received, or if other matters arise
requiring shareholder attention, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a
majority of those shares present at the Meeting or represented by proxy.
When voting on a proposed adjournment, the persons named as proxies will
vote FOR the proposed adjournment all shares that they are entitled to vote
with respect to each item, unless directed to vote AGAINST the item, in
which case such shares will be voted against the proposed adjournment with
respect to that item. A shareholder vote may be taken on one or more of the
items in this Proxy Statement prior to such adjournment if sufficient votes
have been received and it is otherwise appropriate. A copy of Limited Term
Tax-Exempt Fund's annual report for the fiscal year ended November 30, 1993
has been mailed or delivered to shareholders of the fund entitled to vote
at the meeting.
Shares of each fund in the trust issued and outstanding as of August 31,
1994 are indicated in the following table:
Fidelity Advisor Limited Term Tax-Exempt Fund:
Class A
Class B
Institutional Class
Fidelity Advisor Short-Intermediate Tax-Exempt Fund:
Class A
As of August 31, 1994, the following shareholders owned of record or
beneficially more than 5% of the outstanding shares of the respective fund:
Limited Term Tax-Exempt Fund: Class A ______; Limited Term Tax-Exempt Fund:
Class B ______; Limited Term Tax-Exempt Fund: Institutional Class ______;
and Short-Intermediate Tax-Exempt Fund: Class A ______. To the knowledge of
the trust, no other shareholder owned of record or beneficially more than
5% of the outstanding shares of any class of the funds on that date.
Shareholders of record at the close of business on September 19, 1994 will
be entitled to vote at the Meeting. Each such shareholder will be entitled
to one vote for each share held on that date.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS SUFFICIENT
TO APPROVE PROPOSALS 1 AND 2. APPROVAL OF PROPOSAL 3 REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF OUTSTANDING VOTING SECURITIES OF THE FUND
OF THE TRUST AND, IN THE CASE OF PROPOSALS 4 AND 5, A MAJORITY OF
OUTSTANDING SHARES OF THE ENTIRE TRUST. APPROVAL OF PROPOSALS 9 AND 10
REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES OF EACH CLASS OF THE APPROPRIATE FUND. APPROVAL OF PROPOSALS 6
THROUGH 8 AND 11 THROUGH 28 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF
THE OUTSTANDING VOTING SECURITIES'' OF THE FUND. UNDER THE INVESTMENT
COMPANY ACT OF 1940 (THE 1940 ACT), A "MAJORITY VOTE OF THE OUTSTANDING
VOTING SECURITIES'' MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR
MORE OF THE SHARES PRESENT AT THE MEETING OR REPRESENTED BY PROXY IF THE
HOLDERS OF MORE THAN 50% OF THE OUTSTANDING SHARES ARE PRESENT OR
REPRESENTED BY PROXY OR (B) MORE THAN 50% OF THE OUTSTANDING SHARES.
1. TO ELECT A BOARD OF TRUSTEES.
Pursuant to the provisions of the Declaration of Trust of Fidelity Advisor
Series VI, the Trustees have determined that the number of Trustees shall
be fixed at twelve. It is intended that the enclosed proxy card will be
voted for the election as Trustees of the twelve nominees listed below,
unless such authority has been withheld in the proxy card.
All nominees named below are currently Trustees of Fidelity Advisor Series
VI and have served in that capacity continuously since originally elected
or appointed. Mr. Cox, Mrs. Davis, and Mr. Mann were selected by the
trust's Nominating and Administration Committee (see page __) and were
appointed to the Board in November 1991, December 1992, and October 1993,
respectively. None of the nominees is related to one another. Those
nominees indicated by an asterisk (*) are "interested persons" of the trust
by virtue of, among other things, their affiliation with either the trust,
the funds' investment adviser, Fidelity Management & Research Company (FMR,
or the Adviser), or the fund's distribution agent, Fidelity Distributors
Corporation (FDC). Each of the nominees is currently a Trustee or General
Partner, as the case may be, of other funds advised by FMR.
In the election of Trustees, those twelve nominees receiving the highest
number of votes cast at the Meeting, providing a quorum is present, shall
be elected.
<TABLE>
<CAPTION>
Nominee Principal Occupation(s)** Year of
(Age) Election or
Appointme
nt
<S> <C> <C>
*J. Gary Burkhead Senior Vice President, is 1990
82 Devonshire Street President of FMR; and President
Boston, MA and a Director of FMR Texas
(53) Inc. (1989), Fidelity
Management & Research (U.K.)
Inc., and Fidelity Management &
Research (Far East) Inc.
Ralph F. Cox Consultant to Western Mining 1991
200 Rivercrest Drive Corporation (1994). Prior to
Fort Worth, TX February 1994, he was
(62) 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 Bonneville Pacific
Corporation (independent power,
1989), 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 Prior to her retirement in 1992
P.O. Box 264 September 1991, Mrs. Davis
Bridgehampton, NY was the Senior Vice President of
(62) Corporate Affairs of Avon
Products, Inc. She is currently a
Director of BellSouth
Corporation
(telecommunications), Eaton
Corporation (manufacturing,
1991), and the TJX Companies,
Inc. (retail stores, 1990), and
previously served as a Director
of Hallmark Cards, Inc.
(1985-1991) and Nabisco
Brands, Inc. In addition, she
serves as a Director of the New
York City Chapter of the National
Multiple Sclerosis Society, and is
a member of the Advisory
Council of the International
Executive Service Corps. and
the President's Advisory Council
of The University of Vermont
School of Business
Administration.
Richard J. Flynn Financial consultant. Prior to 1983
77 Fiske Hill September 1986, Mr. Flynn was
Sturbridge, MA Vice Chairman and a Director of
(70) the Norton Company
(manufacturer of industrial
devices). He is currently a
Director of Mechanics Bank and
a Trustee of College of the Holy
Cross and Old Sturbridge
Village, Inc.
*Edward C. Johnson President, is Chairman, Chief 1983
3d Executive Officer and a Director
82 Devonshire Street of FMR Corp.; a Director and
Boston, MA Chairman of the Board and of
(64) the Executive Committee of
FMR; Chairman and a Director
of FMR Texas Inc. (1989),
Fidelity Management &
Research (U.K.) Inc., and
Fidelity Management &
Research (Far East) Inc.
E. Bradley Jones Prior to his retirement in 1984, 1990
3881-2 Lander Road Mr. Jones was Chairman and
Chagrin Falls, OH Chief Executive Officer of LTV
(67) Steel Company. Prior to May
1990, he was a Director of
National City Corporation (a
bank holding company) and
National City Bank of Cleveland.
He is a Director of TRW Inc.
(original equipment and
replacement products),
Cleveland-Cliffs Inc. (mining),
NACCO Industries, Inc. (mining
and marketing), Consolidated
Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale
Materials Handling, Inc. (1989)
and RPM Inc. (manufacturer of
chemical products, 1990). In
addition, he serves as a Trustee
of First Union Real Estate
Investments, Chairman of the
Board of Trustees and a
member of the Executive
Committee of the Cleveland
Clinic Foundation, a Trustee and
a member of the Executive
Committee of University School
(Cleveland), and a Trustee of
Cleveland Clinic Florida.
Donald J. Kirk Professor at Columbia University 1990
680 Steamboat Road Graduate School of Business
Apartment #1-North and a financial consultant. Prior
Greenwich, CT to 1987, he was Chairman of the
(61) Financial Accounting Standards
Board. Mr. Kirk is a Director of
General Re Corporation
(reinsurance) and Valuation
Research Corp. (appraisals and
valuations, 1993). In addition, he
serves as Vice Chairman of the
Board of Directors of the
National Arts Stabilization Fund
and Vice Chairman of the Board
of Trustees of the Greenwich
Hospital Association.
*Peter S. Lynch Vice Chairman of FMR (1992). 1990
82 Devonshire Street Prior to his retirement on May
Boston, MA 31, 1990, he was a Director of
(51) FMR (1989) and Executive Vice
President of FMR (a position he
held until March 31, 1991); Vice
President of Fidelity Magellan
Fund and FMR Growth Group
Leader; and Managing Director
of FMR Corp. Mr. Lynch was
also Vice President of Fidelity
Investments Corporate Services
(1991-1992). He is a Director of
W.R. Grace & Co. (chemicals,
1989) and Morrison Knudsen
Corporation (engineering and
construction). In addition, he
serves as a Trustee of Boston
College, Massachusetts Eye &
Ear Infirmary, Historic Deerfield
(1989) and Society for the
Preservation of New England
Antiquities, and as an Overseer
of the Museum of Fine Arts of
Boston (1990).
Gerald C. McDonough Chairman of G.M. Management 1990
135 Aspenwood Drive Group (strategic advisory
Cleveland, OH services). Prior to his retirement
(65) in July 1988, he was Chairman
and Chief Executive Officer of
Leaseway Transportation Corp.
(physical distribution services).
Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal
working, telecommunications
and electronic products),
Brush-Wellman Inc. (metal
refining), York International
Corp. (air conditioning and
refrigeration, 1989), Commercial
Intertech Corp. (water treatment
equipment, 1992), and
Associated Estates Realty
Corporation (a real estate
investment trust, 1993).
Edward H. Malone Prior to his retirement in 1985, 1990
5601 Turtle Bay Drive Mr. Malone was Chairman,
#2104 General Electric Investment
Naples, FL Corporation and a Vice
(69) 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 Chairman of the Board, 1993
55 Railroad Avenue President, and Chief Executive
Greenwhich, CT Officer of Lexmark International,
(61) Inc. (office machines, 1991).
Prior to 1991, he held 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 President of The Wales Group, 1990
21st Floor Inc. (management and financial
191 Peachtree Street, advisory services). Prior to
N.E. retiring in 1987, Mr. Williams
Atlanta, GA served as Chairman of the
(66) 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. (1989), and AppleSouth,
Inc. (restaurants, 1992).
</TABLE>
_______________
** Except as otherwise indicated, each individual has held the office shown
or other offices in the same company for the last five years.
As of August 31, 1994, the nominees and officers of the trust owned, in
the aggregate, less than 1% of either of the fund's outstanding shares.
If elected, the Trustees will hold office without limit in time except
that (a) any Trustee may resign; (b) any Trustee may be removed by written
instrument, signed by at least two-thirds of the number of Trustees prior
to such removal; (c) any Trustee who requests to be retired or who has
become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees; and (d) a Trustee
may be removed at any Special Meeting of shareholders by a two-thirds vote
of the outstanding voting securities of the trust. In case a vacancy shall
for any reason exist, the remaining Trustees will fill such vacancy by
appointing another Trustee, so long as, immediately after such appointment,
at least two-thirds of the Trustees have been elected by shareholders. If,
at any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly call
a shareholders' meeting for the purpose of electing a Board of Trustees.
Otherwise, there will normally be no meeting of shareholders for the
purpose of electing Trustees.
The trust's Board, which is currently composed of three interested and
nine non-interested Trustees, met eleven times during the twelve months
ended November 30, 1993. It is expected that the Trustees will meet at
least ten times a year at regularly scheduled meetings.
As a group, the non-interested Trustees received fees and expenses of $250
from the trust in their capacities as Trustees of the funds for the fiscal
year ended November 30, 1993. The non-interested Trustees also served in
similar capacities for other funds advised by FMR (see page __ ), and
received additional compensation for such services.
The Board of Trustees has adopted a policy whereby non-interested
Trustees, upon reaching their 72nd birthday, will resign. Under a defined
benefit retirement program, non-interested Trustees, upon reaching age 72,
are entitled to payments during their lifetime based on their basic Trustee
fees and their length of service.
The trust's Audit Committee is composed entirely of Trustees who are not
interested persons of the trust, of FMR or its affiliates and normally
meets four times a year, or as required, prior to meetings of the Board of
Trustees. Currently, Messrs. Kirk (Chairman), Cox, and Jones are members of
the Committee. This Committee oversees and monitors the financial reporting
process, including recommending to the Board the independent accountants to
be selected for the trust (see Proposal 2), reviewing internal controls and
the auditing function (both internal and external), reviewing the
qualifications of key personnel performing audit work, and overseeing
compliance procedures. During the twelve months ended November 30, 1993,
the Committee held five meetings.
The trust's Nominating and Administration Committee is currently composed
of Messrs. Flynn (Chairman), McDonough, and Williams. The Committee members
confer periodically and hold meetings as required. The Committee is charged
with the duties of reviewing the composition and compensation of the Board
of Trustees, proposing additional non-interested Trustees, monitoring the
performance of legal counsel employed by the funds and the non-interested
Trustees, and acting as administrative committee under the Retirement Plan
for non-interested Trustees. During the twelve months ended November 30,
1993, the Committee held five meetings. The Nominating and Administration
Committee will consider nominees recommended by shareholders.
Recommendations should be submitted to the Committee in care of the
Secretary of the Trust. The trust does not have a compensation committee;
such matters are considered by the Nominating and Administration Committee.
2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND, L.L.P. AS INDEPENDENT
ACCOUNTANTS OF THE TRUST.
By a vote of the non-interested Trustees, the firm of Coopers & Lybrand,
L.L.P. has been selected as independent accountants for the trust to sign
or certify any financial statements of the trust required by any law or
regulation to be certified by an independent accountant and filed with the
Securities and Exchange Commission (SEC) or any state. Pursuant to the 1940
Act, such selection requires the ratification of shareholders. In addition,
as required by the 1940 Act, the vote of the Trustees is subject to the
right of the trust, by vote of a majority of its outstanding voting
securities at any meeting called for the purpose of voting on such action,
to terminate such employment without penalty. Coopers & Lybrand, L.L.P. has
advised the trust that it has no direct or material indirect ownership
interest in the trust.
The services provided to the trust include (1) audit of annual financial
statements and, if requested, an audit of semiannual financial statements;
(2) assistance and consultation in connection with SEC filings; and (3) if
requested, review of the federal income tax returns filed on behalf of the
trust. In recommending the selection of the trust's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such services
would affect the accountants' independence. Representatives of Coopers &
Lybrand, L.L.P. are not expected to be present at the Meeting, but have
been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence.
3. TO AMEND THE DECLARATION OF TRUST TO PROVIDE DOLLAR-BASED VOTING RIGHTS
FOR SHAREHOLDERS OF THE TRUST.
The Board of Trustees has approved, and recommends that shareholders of
Advisor Limited Term Tax Exempt approve, a proposal to amend Article VIII,
Section 1 of the Declaration of Trust. The amendment would provide voting
rights based on a shareholder's total dollar interest in a fund
(dollar-based voting), rather than on the number of shares owned, for all
shareholder votes for a fund. As a result, voting power would be allocated
in proportion to the value of each shareholder's investment.
BACKGROUND. Limited Term Tax-Exempt Fund is a fund of Fidelity Advisor
Series VI, an open-end management investment company organized as a
Massachusetts business trust. Currently, there are two other funds in the
trust. Limited Term Tax-Exempt Fund has three separate classes of shares:
Class A, Class B and Institutional Class. Shareholders of each class vote
separately on matters concerning only that class, such as amendment to the
Distribution and Service Plan. Shareholders of the fund vote separately on
matters concerning only that fund and vote on a trust-wide basis on matters
that affect the trust as a whole, such as electing trustees or amending the
Declaration of Trust. Currently, under the Declaration of Trust, each share
is entitled to one vote, regardless of the relative value of the shares of
each fund in the trust.
The original intent of the one-share, one-vote provision was to provide
equitable voting rights as required by the 1940 Act. In the case where a
trust has several series or funds, such as Fidelity Advisor Series VI,
voting rights may have become disproportionate since the net asset value
per share (NAV) of the separate funds or classes diverge over time. The
Staff of the SEC has issued a "no-action" letter permitting a trust to seek
shareholder approval of a dollar-based voting system. The proposed
amendment will comply with the conditions stated in the no-action letter.
REASON FOR THE PROPOSAL. If approved, the amendment would provide a more
equitable distribution of voting rights than the one-share, one-vote system
currently in effect for certain votes. The voting power of shareholders
would be commensurate with the value of the shareholders' dollar investment
in a fund rather than with the number of shares held.
Under the current voting provisions, an investment in a fund with a lower
NAV may have significantly greater voting power than the same dollar amount
invested in a fund with a higher NAV. The table below shows each class' net
asset value.
FUND NET ASSET $1,000 INVESTMENT
VALUE IN TERMS OF
AS OF SHARES ON
AUGUST 31,1994 AUGUST 31, 1994
Limited Term $ _____ _______
Tax-Exempt: Class A
Limited Term $ _____ _______
Tax-Exempt: Class B
Limited Term $ _____ _______
Tax-Exempt:
Institutional Class
For example, _______ shareholders would have approximately ____% greater
voting power than ________ shareholders because at current NAVs, a $1,000
investment in _______ would equal ________ shares, whereas a $1,000
investment in ______ would equal _______ shares. Accordingly, a one share,
one-vote system may provide certain shareholders with a disproportionate
ability to affect the vote relative to shareholders of other funds in the
trust. If dollar-based voting had been in effect, each shareholder would
have had 1,000 voting shares. Their voting power would be proportionate to
their economic interest, which FMR believes is a more equitable result, and
is the result in a typical corporation where each voting share generally
has an equal market price.
On matters requiring trust-wide votes where all funds are required to
vote, shareholders who own shares with a lower NAV than other funds in the
trust would be giving other shareholders in the trust more voting "power"
than they currently have. On matters affecting only one fund or class of
the fund, only shareholders of that fund or class vote on the issue. In
this instance, under both the current Declaration of Trust and an amended
Declaration of Trust, all shareholders of the fund or class would have the
same voting rights, since the NAV is the same for all shares in a single
fund or class.
AMENDMENT TO THE DECLARATION OF TRUST. Article VIII, Section I
determines the method of calculating voting rights for all shareholder
votes for a fund. If approved, Article VIII, Section I will be amended as
follows (material to be added is [[underlined]] and material to be deleted
is [bracketed]):
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section I. The Shareholders shall have power to vote... On any matter
submitted to a vote of the Shareholders, all shares shall be voted by
individual Series, except (i) when required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual Series; and (ii) when the
Trustees have determined that the matter affects only the interests of one
or more Series, then only the Shareholders of such Series shall be entitled
to vote thereon. [Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote.] [[A Shareholder of each
Series shall be entitled to one vote for each dollar of net asset value
(number of Shares owned times net asset value per share) of such Series, on
any matter on which such Shareholder is entitled to vote and each
fractional dollar amount shall be entitled to a proportionate fractional
vote.]] There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required or permitted by law, this Declaration of Trust or any Bylaws of
Trust to be taken by Shareholders.
CONCLUSION. If approved, the amendment will be implemented on the
effective date of the next prospectus. The Trustees believe the proposed
amendment will benefit the trust, by creating greater equality in voting
rights among all shareholders of the trust. The Trustees recommend that
shareholders vote FOR the proposed amendment to the Declaration of Trust.
If the amendment is not approved, the Declaration of Trust will remain
unchanged.
4. TO AMEND THE DECLARATION OF TRUST REGARDING SHAREHOLDER NOTIFICATION OF
APPOINTMENT OF TRUSTEES.
The trust's Declaration of Trust provides that in the case of a vacancy on
the Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion see fit, consistent with the
limitations of the 1940 Act. Section 16 of the 1940 Act states that a
vacancy may be filled by the Trustees, if after filling the vacancy, at
least two-thirds of the Trustees then holding office were elected by the
outstanding shareholders of the trust. It also states that if at any time
less than 50% of the Trustees were elected by shareholders, a shareholder
meeting must be called within 60 days for the purposes of electing Trustees
to fill the existing vacancies.
The Declaration of Trust currently requires that within three months of a
Trustee appointment, notification of such be mailed to each shareholder of
the trust. Trustees also may appoint a Trustee in anticipation of a
current Trustee's retirement or resignation, or in the event of an increase
in the number of Trustees. An appointment in this case currently requires
shareholder notification within three months of the appointment under the
current Declaration of Trust.
Subject to shareholder approval, the Trustees intend to eliminate the
notification requirement from the trust's Declaration of Trust. The
language to be deleted from the Declaration of Trust is [bracketed].
ARTICLE VI
THE TRUSTEES
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, or for any other reason,
exist, the remaining Trustees shall fill such vacancy by appointing such
other person as they in their discretion shall see fit consistent with the
limitations under the Investment Company Act of 1940. Such appointment
shall be evidenced by a written instrument signed by a majority of the
Trustees in office or by recording in the records of the Trust, whereupon
the appointment shall take effect. [Within three months of such appointment
the Trustees shall cause notice of such appointment to be mailed to each
Shareholder at his address as recorded on the books of the trust.] An
appointment of a Trustee may be made by the Trustees then in office [and
notice thereof mailed to Shareholders as aforesaid] in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number
of Trustees effective at a later date, provided that said appointment shall
become effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted this trust, the trust estate shall vest in
the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder.
The power of appointment is subject to the provisions of Section 16 (a) of
the 1940 Act.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification to
all shareholders of a trust would be costly to the funds of the trust. If
the proposal is approved, shareholders will be notified of Trustee
appointments in the next financial report for the funds. Other than
eliminating the notification requirement, this proposal does not amend any
other aspect of Trustee resignation or appointment.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the Declaration of Trust's shareholder notification
requirement in the event of an appointment of a Trustee is in the best
interests of the trust's shareholders. The Trustees recommend voting FOR
the proposed amendment. If the proposal is approved, the amendment will
become effective immediately upon shareholder approval. If the proposal is
not approved, the Declaration of Trust's current section entitled
"Resignation and Appointment of Trustees" will remain unchanged.
5. TO AMEND THE DECLARATION OF TRUST TO PROVIDE THE FUND WITH THE ABILITY
TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY WITH
SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal to amend Article V, Section 1 of the
Declaration of Trust to clarify that the Trustees may authorize the
investment of all of the fund's assets in another open-end investment
company with substantially the same investment objective and policies
("Pooled Fund Structure"). The purpose of the Pooled Fund Structure is to
achieve operational efficiencies by consolidating portfolio management
while maintaining different distribution and servicing structures. In
order to implement a Pooled Fund Structure, both the Declaration of Trust
and the fund's investment policies must permit the structure. Currently,
the fund's investment policies do not allow for such investments. Proposal
6 on page __ seeks the fund's shareholder approval to adopt a fundamental
investment policy to permit investment in another open-end investment
company. This proposal, which amends the Declaration of Trust, clarifies
the Board's ability to implement the Pooled Fund Structure if the fund's
investment policies permit it.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single pooled investment, or "master" fund. For
example, an institutional equity fund with a high initial minimum
investment amount for large investors might pool its investments with a
retail equity fund designed for investors with lower minimums. This
structure allows several feeder funds with substantially the same objective
but different distribution and servicing features to combine their
investments and manage them as one master pool instead of managing them
separately. The feeder funds combine their investments by investing all of
their assets in one master pooled fund which would be organized as an
open-end management investment company. (Each feeder fund invested in a
single master pooled fund retains its own characteristics, but is able to
achieve operational efficiencies through investing together with the other
feeder funds in the Pooled Fund Structure.) The current Declaration of
Trust does not specifically provide the Trustees the ability to authorize
the Pooled Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees has determined that the
fund should invest in a Pooled Fund, the Trustees believe it could be in
the best interest of the fund to adopt such a structure at a future date.
If this proposal is approved, the Declaration of Trust amendment would
provide the Trustees with the power to authorize the fund to invest all of
its assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Pooled Fund Structure is permitted
under the fund's investment policies (see Proposal 6), if they determine
that a Pooled Fund Structure is in the best interest of the fund, and if,
upon advice of counsel, they determine that the investment will not have
material adverse tax consequences to the fund or its shareholders. The
Trustees will specifically consider the impact, if any, on fees paid by the
fund as a result of adopting a Pooled Fund Structure. Although the current
Declaration of Trust does not contain any explicit prohibition against
implementing a Pooled Fund Structure, the specific authority is being
sought in the event the Trustees deem it appropriate to adopt a Pooled Fund
Structure in the future.
AMENDMENT TO THE DECLARATION OF TRUST. If the proposal is approved,
Article V, Section 1 of the Declaration of Trust will be amended as
follows: (material to be added is [[underlined]]):
"Subject to any applicable limitation in the Declaration of Trust or the
Bylaws of the Trust, the Trustees shall have the power and authority:
[[(t) Notwithstanding any other provision hereof, to invest all of the
assets of any series in a single open-end investment company, including
investment by means of transfer of such assets in exchange for an interest
or interests in such investment company;]]"
CONCLUSION. The Trustees believe the proposed amendment will benefit the
fund by providing the Trustees with the flexibility to adopt a Pooled Fund
Structure in the future if permitted by the fund's investment policies and
if the Trustees determine it to be in the best interest of Limited Term
Tax-Exempt. The Trustees recommend that shareholders vote FOR the proposed
amendment to the Declaration of Trust. If approved, the amendment to the
Declaration of Trust will be implemented on the effective date of the next
prospectus. If the proposal is not approved, Article V, Section 1 of the
Declaration of Trust will remain unchanged.
6. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR THE FUND TO INVEST ALL
OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY WITH SUBSTANTIALLY THE
SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, the adoption of a new fundamental investment policy that
would permit the fund to invest all of its assets in another open-end
investment company with substantially the same investment objective and
policies ("Pooled Fund Structure"). The purpose of pooling would be to
achieve operational efficiencies by consolidating portfolio management
while maintaining different distribution and servicing structures.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single pooled "master" fund. In order to
implement a Pooled Fund Structure, an amendment to the Declaration of Trust
is required, as is the adoption of a new fundamental investment policy.
Proposal 5, proposes to amend the Declaration of Trust, and if approved,
would allow the Trustees to authorize the conversion to a Pooled Fund
Structure when permitted by the fund's policies. This proposal would add a
fundamental policy for the fund that permits a Pooled Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take advantage of potential
efficiencies. While neither the Board nor FMR has determined that the fund
should invest in a master fund, the Trustees believe it could be in the
best interests of the fund to adopt such a structure at a future date.
At present, certain of the fund's fundamental investment policies and
limitations would prevent the fund from investing all of its assets in
another investment company, and would require a vote of shareholders before
such a structure could be adopted. To avoid the costs associated with a
subsequent shareholder meeting, the Trustees recommend that shareholders
vote to permit the fund's assets to be invested in a single Pooled Fund,
without a further vote of shareholders, if the Trustees determine that
action to be in the best interests of the fund and its shareholders.
Approval of Proposal 5 provides the Trustees with explicit authority to
approve a Pooled Fund Structure. If shareholders approve this proposal,
certain fundamental and non-fundamental policies and limitations of the
fund that currently prohibit investment in shares of one investment company
would be modified to permit the investment in a Pooled Fund. These
policies include the fund's limitations on investing more than 25% of
total assets in one issuer or more than 25% of total assets in one
industry, and acting as an underwriter.
DISCUSSION. FMR may manage a number of mutual funds with similar
investment objectives, policies, and limitations but with different
features and services (Comparable Funds). Were these Comparable Funds to
pool their assets, operational efficiencies could be achieved, offering the
opportunity to reduce costs. Similarly, FMR anticipates that a Pooled Fund
Structure would facilitate the introduction of new Fidelity mutual funds,
increasing the investment options available to shareholders.
The fund's method of operation and shareholder services would not be
materially affected by its investment in a Pooled Fund, except that the
assets would be managed as part of a larger pool. Were either fund to
invest all of its assets in a Pooled Fund, it would hold only a single
investment security, and the Pooled Fund would directly invest in
individual securities pursuant to its investment objective. The Pooled Fund
would be managed by FMR or an affiliate, such as FMR Texas Inc., in the
case of a money market fund. The Trustees would retain the right to
withdraw a fund's investments from a Pooled Fund at any time and would do
so if the Pooled Fund's investment objective and policies were no longer
appropriate for the fund. The fund would then resume investing directly in
individual securities as it does currently. Whenever a fund is asked to
vote at a shareholder meeting of the Pooled Fund, the fund will hold a
meeting of its shareholders if required by applicable law or the fund's
policies to vote on the matters to be considered at the Pooled Fund
shareholder meeting. The fund will cast its votes at the Pooled Fund
meeting in the same proportion as the fund's shareholders voted at theirs.
The fund would otherwise continue its normal operations.
At present, the Trustees have not considered any specific proposal to
authorize pooling of assets. The Trustees will authorize investing the
fund's assets in a Pooled Fund only if they determine that pooling is in
the best interests of the fund and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to the fund or its shareholders. In determining whether to
invest in a Pooled Fund, the Trustees will consider, among other things,
the opportunity to reduce costs and to achieve operational efficiencies.
The Trustees will not authorize investment in a Pooled Fund if doing so
would materially increase costs (including fees) to shareholders.
FMR intends to seek federal and state regulatory approval in order to
allow the Fidelity funds to invest in Pooled Funds. There is, of course, no
assurance that all necessary regulatory approvals will be obtained, or that
cost reductions or increased efficiencies will be achieved.
FMR may benefit from the use of a Pooled Fund if overall assets are
increased (since FMR's fees are based on assets). Also, FMR's expenses of
providing investment and other services to the fund may be reduced. If a
fund's investment in a Pooled Fund were to reduce FMR's expenses
materially, the Trustees would consider whether a reduction in FMR's
management fee would be appropriate if and when a Pooled Fund structure is
implemented.
PROPOSED FUNDAMENTAL POLICY. To allow the fund to invest in a Pooled Fund
at a future date, the Trustees recommend that the fund adopt the following
fundamental policy:
"The fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental
investment objective, policies, and limitations as the fund."
If the proposal is adopted, the Trustees intend to adopt a non-fundamental
investment limitation for Limited Term Tax-Exempt which states:
"The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
CONCLUSION. The Board of Trustees recommends that the fund's
shareholders vote to adopt a new fundamental policy that would permit the
fund, subject to future review by the Board of Trustees as described above,
to invest all of its assets in an open-end investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund. If the proposal is adopted, the amendments will be
implemented on the effective date of the next prospectus. If the proposal
is not adopted, the fund's current fundamental investment policies will
remain unchanged with respect to potential investment in Pooled Funds.
7. TO AMEND THE BYLAWS OF THE TRUST TO REQUIRE TRUSTEE APPROVAL FOR FURTHER
AMENDMENTS TO THE BYLAWS.
The Board of Trustees has approved for submission to shareholders of the
trust, a proposal to amend the Bylaws of the trust to allow the Trustees to
approve any future amendments to the Bylaws without seeking shareholder
approval. Currently, shareholder approval is required to amend the trust's
Bylaws.
In the past, certain state securities (Blue Sky) authorities required that
various operational and investment restrictions be included in a charter or
Bylaw provision amendable only by shareholder vote. The Trustees believe
that the fund will be able to respond to changing conditions more rapidly,
and without the expense to the funds of a special shareholder meeting, if
the Trustees have the power to amend the Bylaws. If the shareholders vote
in favor of this proposal, the Trustees intend to amend those provisions of
the Bylaws indicated below.
Current Article X of the trust's Bylaws allows amendments to the Bylaws by
majority vote of the Trustees, provided, however, that any amendment which
changes or affects the provisions of Articles VII, X, or XII must be
approved by vote of a majority of the outstanding shares of the Trust
entitled to vote. The proposed amendment to Article X eliminates the
requirement for a shareholder vote to amend Articles VII, X, and XII.
Current Article VII contains provisions which are to be included in any
contract between the trust and a custodian, provisions governing
termination of custodian agreements and the appointment of success or
custodians, and provisions governing sub-custodian arrangements. The 1940
Act, and the rules and regulations thereunder, impose various requirements
with respect to custodians for registered investment companies. These
requirements apply to the trust regardless of whether they are set forth in
the Bylaws. The Trustees believe that it would be in the best interests of
the trust and its shareholders for the Trustees to have the authority to
amend or delete any provisions in the trust's custodian contracts as they
deem necessary, consistent with the 1940 Act, in order to maintain maximum
flexibility in the operation of the funds.
Current Article XII requires that the Trustees, at least semiannually,
submit to shareholders a written financial report of the transactions of
the funds, including financial statements which must be certified by
independent public accountants, at least annually. These requirements
currently are contained in rules promulgated under the 1940 Act and,
therefore, permit the Trustees to furnish more limited financial statements
if such rules are modified, or if permitted by order of the SEC.
If approved by shareholders of the trust, Article X of the Bylaws will be
amended as indicated below. Material to be deleted is indicated in
[brackets].
ARTICLE X
Amendments
These Bylaws may be amended at any meeting of the Trustees of the Trust by
a majority vote [; provided, however, that any amendment which changes or
affects the provisions of Article VII, Article X, or Article XII shall be
approved by vote of a majority of the outstanding shares of the Trust
entitled to vote].
CONCLUSION. The Trustees believe the proposed amendment will benefit the
trust by allowing the Trustees the flexibility to amend the Bylaws in
response to, or in anticipation of, statutory and/or regulatory changes
affecting the trust's contractual arrangements with its custodians, without
the expense to the funds of a special shareholder meeting. The Trustees
recommend that shareholders vote FOR the proposed amendment to the
provisions of the Bylaws of the trust. If approved, the amendment to the
provisions of the Bylaws of the trust will be implemented on the effective
date of the next prospectus. If the proposal is not approved, Articles VII,
X and XII of the Bylaws of trust will remain unchanged.
8. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR THE FUND.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal to amend the fund's management contract with
FMR (the Amended Contract). The proposal would modify the management fee
that FMR receives from the fund to provide for lower fees when FMR's assets
under management exceed certain levels. THE PROPOSED CONTRACT WILL RESULT
IN A MANAGEMENT FEE THAT IS THE SAME AS, OR LOWER THAN, THE FEE PAYABLE
UNDER THE CURRENT MANAGEMENT CONTRACT (THE CURRENT CONTRACT).
PROPOSED AMENDMENT TO THE CURRENT MANAGEMENT CONTRACT. A copy of the
Amended Contract, marked to indicate the proposed amendments, is supplied
as Exhibit __ on page __ . Except for the amendment to the management fee
and the addition of item 1(c) which discusses FMR's ability to use
broker-dealers on behalf of the fund, as discussed in this proposal, it is
substantially identical to the Current Contract. (For a detailed discussion
of Limited Term Tax-Exempt 's Current Contract, refer to the section
entitled "Current Management Contract" beginning on page ___.) If approved
by shareholders, the Amended Contract will take effect on the first day of
the month following shareholder approval and will remain in effect through
July 31, 1996 and thereafter subject to continuation by the fund's Board of
Trustees. If the Amended Contract is not approved, the Current Contracts
will continue in effect through July 31, 1995, and thereafter subject to
continuation by the fund's Board of Trustees.
The management fee is an annual percentage of the fund's average net
assets, calculated and paid monthly. The percentage is the sum of two
components: a group fee rate, which varies according to FMR's assets under
management, and a fixed individual fund fee rate. The proposal would
modify the group fee rate by providing for lower fee rates if FMR's assets
under management remain above $84 billion for Limited Term Tax-Exempt Fund.
MODIFICATION TO GROUP FEE RATE. The group fee rate varies based on the
aggregate net assets of all registered investment companies having
management contracts with FMR. As group net assets increase, the group fee
rate declines. The Amended Contract would not change the group fee
calculation for group net assets of $120 billion or less for Limited Term
Tax-Exempt Fund. Above $120 billion in group net assets, the group fee rate
does not decline under the fund's contract, but under its Amended Contract,
it declines as indicated in the table below. Group fee rates that are lower
than those contained in the fund's Current Contract have been implemented
at various times by FMR. On January 1, 1992, November 1, 1993 for and
August 1, 1994, FMR voluntarily implemented lower group fee rates.
The group fee rate is calculated according to a graduated fee schedule
providing for different rates for different levels of group net assets. The
rate at which the fee declines is determined by fee "breakpoints" that
provide for lower fees when assets increase. The Amended Contract would add
nine new fee breakpoints for group asset levels above $120 billion as
illustrated in the table below. (For an explanation of how these
breakpoints are factored into the fee calculation, see the section "Current
Management Contract" beginning on page ___.)
GROUP FEE RATE SCHEDULES
LIMITED TERM TAX-EXEMPT FUND:
AVERAGE GROUP
ASSETS CURRENT AMENDED
($ BILLIONS) CONTRACT* CONTRACT
84-120 .1500% .1500%
120-156 .1500% .1450%
156-192 .1500% .1400%
192-228 .1500% .1350%
228-264 .1500% .1300%
264-300 .1500% .1275%
300-336 .1500% .1250%
336-372 .1500% .1225%
over 372 .1500% .1200%
The result at various levels of group net assets is illustrated by the
table below.
EFFECTIVE ANNUAL GROUP FEE RATES
GROUP NET
ASSETS CURRENT AMENDED
($ BILLIONS) CONTRACT* CONTRACT
250 .____% .____%
300 .____% .____%
350 .____% .____%
400 .____% .____%
* Does not reflect voluntary adoption of extended group fee rate schedules
by FMR on: January 1, 1992, November 1,1993, and August 1, 1994.
Average group net assets for August,1994 were approximately $___
billion.
The fund's annual individual fund fee rate is .25%. The sum of the group
fee rate and the individual fund fee rate is referred to as a fund's
management fee rate. One-twelfth (1/12) of this annual management fee rate
is applied to the fund's average net assets for the current month,
resulting in a dollar amount which is the management fee for that month.
COMPARISON OF MANAGEMENT FEES AND TOTAL EXPENSES. The following table
compares the fund's management fee under the terms of its Current Contract
and the Proposed Contract for August 1994 average group net assets of
$_____billion.
Current Contract Proposed Contract Management
Management Fee Rate* Fee Rate
._____% _____%
* Does not reflect voluntary adoption of group fee rate schedules.
The following chart compares the fund's management fee and total expense
ratio under the terms of the Current Contract for the fiscal year ended
November 30, 1993 to the fees and expenses the funds would have incurred if
the Amended Contract had been in effect.
Current Contract* Proposed Contract
Management Total Expense Management Total Expense
Fee Ratio Fee Ratio
$________ ____% $________ _____%
* Does not reflect voluntary adoption of extended group fee rate schedules
TRANSACTIONS WITH BROKER-DEALERS. The fund 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. The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of 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 and to its other clients, and conversely, such
research provided by broker-dealers who execute 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 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
the funds 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.
The fund has been authorized by the Board of Trustees, consistent with the
federal securities laws and the rules and regulations of the SEC, to place
portfolio transactions through broker-dealers who are affiliated with FMR
and through broker-dealers who provide research. The Amended Management
Contract expressly recognizes this authority.
MATTERS CONSIDERED BY THE BOARD OF TRUSTEES. The non-interested Trustees
recommended in 1991, 1993 and again in 1994, that the existing group fee be
reconsidered in light of the significant growth in the assets of funds
advised by FMR. The Combined Committee, a standing Committee of the Board
composed solely of non-interested Trustees, and the Board considered to the
group fee component of the management fee on various occasions during 1991,
1993 and 1994. FMR provided substantial information to the Trustees to
assist it in its deliberations. In addition, the Committee requested and
reviewed additional data, including analyses prepared by independent
counsel to both the funds and the non-interested Trustees. In unanimously
approving the proposed contract and recommending its approval by
shareholders, the Trustees of the funds, including the Independent
Trustees, considering the best interests of shareholders of the funds, took
into account all factors they deemed relevant. The factors considered by
the Independent Trustees included the nature, quality, and extent of the
services furnished by FMR to the fund; the necessity of FMR maintaining and
enhancing its ability to retain and attract high caliber personnel to serve
the funds; the increased complexity of the securities markets; the
investment record of FMR in managing the funds; extensive financial,
personnel, and structural information as to the Fidelity organization,
including the revenues and expenses of FMR and Fidelity Investments
Institutional Operations Company (FIIOC) relating to their mutual fund
activities; whether economies of scale were demonstrated in connection with
FMR's provision of investment management and shareholder services as assets
increased; data on investment performance, management fees and expense
ratios of competitive funds and other Fidelity funds; FMR's expenditures in
developing enhanced shareholder services for the funds; enhancements in the
quality and scope of the shareholder services provided to the fund's
shareholders; the fees charged and services offered by an affiliate of FMR
for providing investment management services to non-investment company
accounts; and possible "spin-off" benefits to FMR from serving as manager
and from affiliates of FMR serving as principal underwriter and transfer
agent of the funds.
With regard to the section of the proposed contract describing the changes
to portfolio transactions, the Trustees considered the value of research
provided by the broker-dealers, the quality of the execution services
provided, and the level of commissions paid. While the funds do not
generally purchase securities through a broker-dealer by paying
commissions, the Board of Trustees has determined that amending the
management contract to expressly recognize the authority of FMR to use
affiliated broker-dealers and broker-dealers who provide research services
furthers the goal of standardizing management contracts for Fidelity funds,
and that explicitly permitting all Fidelity funds to utilize certain
broker-dealers is beneficial to the funds.
CONCLUSION, ACTION OF THE BOARD OF TRUSTEES, AND RECOMMENDED SHAREHOLDER
ACTION. Based on its evaluation of the extensive materials presented and
assisted by the advice of independent counsel, the Board of Trustees
concluded (i) that the existing management fee rate structure was fair and
reasonable and (ii) that the proposed reduction in the group fee rate
structure was in the best interest of the fund's shareholders. The Board of
Trustees voted to approve the submission of the Amended Contract to
shareholders of the fund and recommends that shareholders of the fund vote
FOR the Amended Contract.
9. TO AMEND THE CLASS A DISTRIBUTION AND SERVICE PLAN OF THE FUND.
The Board of Trustees has approved, and recommends that shareholders
approve, an amended Distribution and Service Plan for Class A shares (the
Amended Class A Plan). Each Amended Class A Plan must be approved by a
"majority," as defined in the 1940 Act of the outstanding voting securities
of the Class A shareholders.
In addition, Class B shareholders of Limited Term Tax-Exempt Fund are
being asked to approve the Amended Class A Plan. Class B shares are offered
to retail investors and pay a contingent deferred sales charge which
declines for Class B shares held up to a maximum of 5 years. Class B
shares convert automatically to Class A shares of the same Fidelity Advisor
fund at NAV after a maximum holding period of 6 years. Due to this
conversion feature, and as a condition of an exemptive order received by
Fidelity which permits separate classes, if material changes are made to
the Class A Distribution and Service Plan, a "majority" as defined by the
1940 Act, of Class B shareholders must approve the amended Class A
Distribution and Service Plan.
A copy of the Amended Class A Plan is attached to this Proxy Statement as
Exhibit __.
Rule 12b-1 (the Rule), promulgated by the Securities and Exchange
Commission (SEC) under the 1940 Act, provides that in order for an
investment company (e.g. a mutual fund) to act as a distributor of its
shares, a written plan "describing all material aspects of the proposed
financing of distribution" must be adopted by the company. Under the Rule,
an investment company is deemed to be acting as a distributor of its shares
if it engages "directly or indirectly in financing any activity which is
primarily intended to result in the sale of shares issued by such company,
including, but not necessarily limited to, advertising, compensation of
underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and
mailing of sales literature."
THE CURRENT CLASS A PLAN. The Trustees, as provided for by the Rule, have
approved a Distribution and Service Plan for Class A (the Plan). Under the
fund's Plan, Class A pays Fidelity Distributors Corporation (Distributors)
a fee at an annual rate of its average daily net assets throughout the
month. The determination of daily net assets is made at the close of
business each day throughout the month, but the net assets for purposes of
calculating the fee will exclude assets attributable to shares purchased
more than 144 months (12 years) prior to such date. Class A shares begin
accruing time upon initial purchase into Class A. Class B shares upon
conversion into Class A shares begin accruing time under the Class A Plan
as of their initial purchase into Class B. Pursuant to the Plan for the
fund, Class A pays Distributors a distribution fee at an annual rate of up
to .25% (Limited Term Tax-Exempt Fund), and .15% (Short-intermediate
Tax-Exempt Fund) of its average net assets. Distributors may pay all or a
portion of such fee to securities dealers or other persons (investment
professionals) as distribution or service fees pursuant to agreements with
investment professionals. To the extent the fee is not paid to such
investment professionals, Distributors could use such fee for its expenses
incurred in the distribution of Class A shares. The Plan also provides
that to the extent that the fund's payment of management fees to FMR might
be considered to constitute the "indirect" financing of activities
"primarily intended to result in the sale of shares," such payment is
expressly authorized.
If approved by shareholders, the Amended Class A Plan will continue in
effect as long as its continuance is specifically approved at least
annually by a majority of the Board of Trustees, including a majority of
the Trustees who are not "interested persons" of the trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreement related to the Plan (the non-interested Trustees), cast in person
at a meeting called for the purpose of voting on the Plan. The Plan
requires that the Trustees receive, at least quarterly, a written report as
to the amounts expended during the quarter by FMR, or FDC, in connection
with financing any activity primarily intended to result in the sale of
shares issued by the fund and the purposes for which such expenditures were
made.
Although the Plan contemplates that FMR and FDC may engage in various
distribution activities, it does not require them to perform any specific
type of distribution activity or to incur any specific level of expense for
such activities.
THE AMENDED CLASS A PLAN. The Amended Class A Plan is identical to the
current Plan with the exception of the provision which excludes assets
attributable to shares purchased more than 144 months prior to the date of
the distribution fee calculation (144-month limitation). When the funds
were first introduced in the mid 1980s, the National Association of
Securities Dealers, Inc. (NASD) Rules of Fair Practice set a limit on the
amount of front-end sales charges which a fund could impose. However, no
similar limit existed for 12b-1 fees. The 144-month limitation was an
effort by FDC and the Board of Trustees to protect shareholders against
indefinite payment on a given amount of assets. The 144-month period was
intended to result in total distribution charges (front-end plus 12b-1
fees) roughly equivalent to the front-end sales charge limit then imposed
by the NASD.
In July 1993, the NASD amended its Rules of Fair Practice to establish a
combined limit on mutual fund sales loads and 12b-1 fees. Like the
144-month limitation, the NASD Rule restricts a mutual fund's total payment
of 12b-1 fees. Under the NASD Rule, a fund is subject to a limit on
aggregate payments of 7.25% of total new gross sales (6.25% if a service
fee is also imposed), plus interest. When the limit is reached, no further
sales loads by the fund may be paid to the distributor, and no further
payments under the 12b-1 plan can be made, until the fund has further gross
sales that result in an increased limit.
The NASD Rule has become the industry standard restricting distribution
charges. Regardless of whether the proposal is approved, each class is and
will continue to be subject to the NASD Rule. The NASD Rule addresses the
same concerns the 144-month limitation was intended to address. However,
the limitations of the NASD Rule are calculated differently than those of
the 144-month limitation. For example, using reasonable sales, redemption
and performance assumptions, there is a considerable likelihood that many
funds may never reach their NASD cap, because the cap is constantly
replenished by additional gross sales. To the extent that this is true,
funds which contain assets older than 144 months will pay more in 12b-1
fees if the proposal is approved than under the current Plan.
TRUSTEE CONSIDERATION. In determining to recommend the adoption of the
Amended Class A Plan, the trustees considered a variety of factors and were
advised by counsel who are not counsel to FMR or FDC. The Trustees,
Distributors and FMR believe that the implementation of the Amended Class A
Plan would assist in the selling of shares of the fund and thus increase
the fund's asset base, which in turn may prove beneficial to the fund and
its shareholders by spreading fixed costs over a larger asset base and
making additional monies available for investing. Positive cash flow
affords portfolio management a greater ability to diversify investments and
minimizes the need to sell securities to meet redemptions. In addition,
since each class is dependent primarily on investment professionals for
sales of its shares, the ongoing payment to investment professionals who
have sold shares (by reallowance of the distribution fee) should provide
incentives to offer better and continuous services to current shareholders.
Investment professionals also allow investors access to investment
alternatives to which they might otherwise not have been exposed.
The Board recognized that a greater level of fund assets benefits FMR by
increasing its management fee revenues. The Board believes that revenues
received by FMR contribute to its continuing ability to attract and retain
a high caliber of investment and other personnel and to develop and
implement new systems for providing services and information to
shareholders. The Board considers this to be an important benefit to the
fund.
CONCLUSION. The Board of Trustees recommends that shareholders vote FOR
approval of the amendment to the Class A Distribution and Service Plan. If
Class A shareholders vote to approve the Amended Class A Plan, it will be
effective as to shares purchased into Class A irrespective of whether the
Class B shareholders vote to approve the amendment. If so approved, the
Amended Class A Plan will become effective the first day of the month
following shareholder approval. If the Amended Class A Plan is not
approved by Class A shareholders, the current Plan will remain in effect
unchanged for shares purchased into Class A. The effect of approval or
disapproval of the Amended Class A Plan by Class B shareholders will depend
upon the approval or disapproval of the proposed amendment to the Class B
Plan by Class B shareholders (see Proposal 10).
10. TO AMEND THE CLASS B DISTRIBUTION AND SERVICE PLAN OF THE FUND.
The Board of Trustees has approved, and recommends that Class B
shareholders approve, an amended Distribution and Service Plan for Class B
shares (the Amended Class B Plan). The Amended Class B Plan must be
approved by a "majority," as defined in the 1940 Act of the outstanding
voting securities of Class B.
In addition, Class B shareholders of Limited Term Tax-Exempt are being
asked to approve the Amended Class A Plan (see Proposal __).
A copy of the Amended Class B Plan is attached to this Proxy Statement as
Exhibit __.
Rule 12b-1 (the Rule), promulgated by the Securities and Exchange
Commission (SEC) under the 1940 Act, provides that in order for an
investment company (e.g. a mutual fund) to act as a distributor of its
shares, a written plan "describing all material aspects of the proposed
financing of distribution" must be adopted by the company. Under the Rule,
an investment company is deemed to be acting as a distributor of its shares
if it engages "directly or indirectly in financing any activity which is
primarily intended to result in the sale of shares issued by such company,
including, but not necessarily limited to, advertising, compensation of
underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and
mailing of sales literature."
THE CURRENT CLASS B PLAN. The Trustees, as provided for by the Rule, have
approved a Distribution and Service Plan for Class B (the Plan). Under the
fund's Plan, Class B pays Fidelity Distributors Corporation (Distributors)
a fee at an annual rate of its average daily net assets throughout the
month. The determination of daily net assets is made at the close of
business each day throughout the month, but the net assets for purposes of
calculating the fee will exclude assets attributable to shares purchased
more than 144 months (12 years) prior to such date. Shares converted from
Class B to Class A begin accruing time from the initial purchase of Class B
shares. Pursuant to the Plan, Class B pays Distributors a distribution fee
at an annual rate of .75% of its average net assets. Class B also pays
Distributors a service fee at an annual rate of .25% of its average net
assets with which Distributors compensates investment professionals for
personal service and/or the maintenance of shareholder accounts.
Distributors may pay all or a portion of such fee to securities dealers or
other persons (investment professionals) as distribution or service fees
pursuant to agreements with investment professionals. To the extent the
fee is not paid to such investment professionals, Distributors could use
such fee for its expenses incurred in the distribution of Class B shares.
The Plan also provides that to the extent that the fund's payment of
management fees to FMR might be considered to constitute the "indirect"
financing of activities "primarily intended to result in the sale of
shares," such payment is expressly authorized.
If approved by shareholders, the Amended Class B Plan will continue in
effect as long as its continuance is specifically approved at least
annually by a majority of the Board of Trustees, including a majority of
the Trustees who are not "interested persons" of the trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreement related to the Plan (the non-interested Trustees), cast in person
at a meeting called for the purpose of voting on the Plan. The Plan
requires that the Trustees receive, at least quarterly, a written report as
to the amounts expended during the quarter by FMR, or FDC, in connection
with financing any activity primarily intended to result in the sale of
shares issued by the fund and the purposes for which such expenditures were
made.
Although the Plan contemplates that FMR and FDC may engage in various
distribution activities, it does not require them to perform any specific
type of distribution activity or to incur any specific level of expense for
such activities.
THE AMENDED CLASS B PLAN. The Amended Class B Plan is identical to the
current Plan with the exception of the provision which excludes assets
attributable to shares purchased more than 144 months prior to the date of
the distribution fee calculation (144-month limitation). When the funds
were first introduced in the mid 1980s, the National Association of
Securities Dealers, Inc. (NASD) Rules of Fair Practice set a limit on the
amount of front-end sales charges which a fund could impose. However, no
similar limit existed for 12b-1 fees. The 144-month limitation was an
effort by FDC and the Board of Trustees to protect shareholders against
indefinite payment on a given amount of assets. The 144-month period was
intended to result in total distribution charges (front-end plus 12b-1
fees) roughly equivalent to the front-end sales charge limit then imposed
by the NASD. Since Class B shares convert automatically to Class A shares
after 6 years, the 144-month limitation was included in the current Plan to
allow time to begin accruing upon purchase into Class B shares.
In July 1993, the NASD amended its Rules of Fair Practice to establish a
combined limit on mutual fund sales loads and 12b-1 fees. Like the
144-month limitation, the NASD Rule restricts a mutual fund's total payment
of 12b-1 fees. Under the NASD Rule, a fund is subject to a limit on
aggregate payments of 7.25% of total new gross sales (6.25% if a service
fee is also imposed), plus interest. When the limit is reached, no further
sales loads by the fund may be paid to the distributor, and no further
payments under the 12b-1 plan can be made, until the fund has further gross
sales that result in an increased limit.
The NASD Rule has become the industry standard restricting distribution
charges. Regardless of whether the proposal is approved, each class is and
will continue to be subject to the NASD Rule. The NASD Rule addresses the
same concerns the 144-month limitation was intended to address. However,
the limitations of the NASD Rule are calculated differently than those of
the 144-month limitation. For example, using reasonable sales, redemption
and performance assumptions, there is a considerable likelihood that many
funds may never reach their NASD cap, because the cap is constantly
replenished by additional gross sales. To the extent that this is true,
funds which contain assets older than 144 months will pay more in 12b-1
fees if the proposal is approved than under the current Plan.
TRUSTEE CONSIDERATION. In determining to recommend the adoption of the
Amended Class B Plan, the trustees considered a variety of factors and were
advised by counsel who are not counsel to FMR or FDC. The Trustees,
Distributors and FMR believe that the implementation of the Amended Class B
Plan would assist in the selling of shares and thus increase the fund's
asset base, which in turn may prove beneficial to the fund and its
shareholders by spreading fixed costs over a larger asset base and making
additional monies available for investing. Positive cash flow affords
portfolio management a greater ability to diversify investments and
minimizes the need to sell securities to meet redemptions. In addition,
since each class is dependent primarily on investment professionals for
sales of its shares, the ongoing payment to investment professionals who
have sold shares (by reallowance of the distribution fee) should provide
incentives to offer better and continuous services to current shareholders.
Investment professionals also allow investors access to investment
alternatives to which they might otherwise not have been exposed.
The Board recognized that a greater level of fund assets benefits FMR by
increasing its management fee revenues. The Board believes that revenues
received by FMR contribute to its continuing ability to attract and retain
a high caliber of investment and other personnel and to develop and
implement new systems for providing services and information to
shareholders. The Board considers this to be an important benefit to the
fund.
CONCLUSION. The Board of Trustees recommends that shareholders vote FOR
approval of the amendment to the Class B Distribution and Service Plan. If
Class B shareholders approve the Amended Class A Plan (see Proposal __) and
the Amended Class B Plan, the amended Plans will become effective the first
day of the month following shareholder approval. If Class B shareholders
do not approve the amended Class B Plan, the current Class B Plan will
remain in effect unchanged. If Class B shareholders approve the Amended
Class B Plan, but do not approve the Amended Class A Plan (see Proposal 9)
the amended Class B Plan will become effective on the first day of the
month following shareholder approval and the Class A Plan will remain
unchanged. In this event, the 144-month period would commence for Class B
shares simultaneously with their conversion to Class A shares.
11. TO AMEND LIMITED TERM TAX-EXEMPT FUND'S INVESTMENT OBJECTIVE AND
POLICIES TO PROVIDE GREATER INVESTMENT LATITUDE TO SEEK HIGH CURRENT
INCOME.
The Board of Trustees has approved, and recommends that the shareholders
of the fund approve, proposed amendments to the fund's investment objective
and policies, which would (1) eliminate from the investment objective the
fundamental credit quality policies, which currently limit investments to
municipal securities rated high quality or upper-medium quality, and (2)
adopt a non-fundamental policy limiting investments in municipal securities
rated investment grade or higher.
Currently, Limited Term Tax-Exempt Fund's investment objective is to seek
the highest level of income exempt from federal income taxes that can be
obtained consistent with the preservation of capital, from a diversified
portfolio of high quality or upper-medium quality municipal obligations.
The fund will invest in municipal obligations which, in the judgment of
FMR, are high quality or at least upper-medium quality. The fund's
standards for high quality and upper-medium quality obligations are
essentially the same as those described by Moody's Investors Service, Inc.
(Moody's) in rating municipal securities within its three highest ratings
of Aaa, Aa, and A and as those described by Standard and Poor's Corporation
(S&P) in rating such obligations within its three highest ratings of AAA,
AA, or A. As a non-fundamental policy, the fund will not purchase a
security rated by Moody's or S&P unless it has received at least an A
rating from either rating service.
The Trustees recommend eliminating the fundamental credit quality policy
from the investment objective and replacing it with the following revised
fundamental objective:
"The fund seeks the highest level of income exempt from federal taxes that
can be obtained consistent with the preservation of capital."
If this proposal is approved by shareholders, the fund would adopt a
non-fundamental policy that would allow it to invest in municipal
securities which, in the judgment of FMR, are of medium to high quality.
The fund's standards for medium to high quality obligations are essentially
the same as those described by Moody's in rating municipal securities
within its four highest ratings of Aaa, Aa, A and Baa and as those
described by S&P in rating such securities within its four highest ratings
of AAA, AA, A and BBB. The fund will not purchase an obligation rated by
Moody's or S&P unless it has received at least a Baa/BBB rating from either
rating service. In addition, the fund's investment in municipal securities
that are rated Baa/BBB, or that are of equivalent quality if unrated, will
be limited to 25% of its total assets. Obligations rated investment grade
or better (Baa/BBB or higher) typically have moderate to poor protection of
principal and interest payments and have speculative characteristics.
Further, the fund may currently invest up to 20% of its total assets in
municipal obligations which are unrated by Moody's or S&P, if in the
judgment of FMR, such municipal obligations meet the quality standards as
set forth above. Unrated bonds are not necessarily of lower quality and
may have higher yields than rated bonds, but the market for rated bonds is
usually broader.
The adoption of the non-fundamental policy is not intended to change the
manner in which the fund's assets are managed; rather, it is intended to
give the fund more investment flexibility. The proposed changes to the
credit quality policies, if approved by shareholders would allow the fund
to invest in a broader range of investment grade instruments, by providing
greater latitude to seek high current income.
Changes in non-fundamental investment policies can be made without
shareholder approval but are subject to the supervision of the Board of
Trustees, and to appropriate disclosure to fund shareholders and
prospective investors.
CONCLUSION. The Board of Trustees has considered this proposal and
believes that the amendment to the fund's fundamental investment objective
and policies would allow the fund to invest in a broader range of
investment-grade instruments, thereby providing greater latitude to seek
high current income. The Trustees recommend that shareholders vote FOR the
proposed changes to the fund's investment objective and policies. If
approved by shareholders, the amendments will be effective immediately. If
the proposal is not approved by shareholders, the current investment
objective and policies will remain in effect unchanged.
12. TO REPLACE CERTAIN OF LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL
POLICIES WITH NON-FUNDAMENTAL POLICIES.
The Board of Trustees has approved a proposal for shareholder
consideration that would restate the fundamental policies of Limited Term
Tax-Exempt Fund as non-fundamental policies. Fundamental policies may be
changed only with shareholder approval. Typically, a material change to a
non-fundamental investment policy would require approval by the Board of
Trustees.
The fund's investment policies are construed in accordance with the 1940
Act, which provides that an investment company must state certain of its
investment policies as being fundamental. Unless otherwise noted in the
fund's Prospectus and Statement of Additional Information, all of its
investment policies are currently fundamental. This strict formulation is
not a requirement of the 1940 Act.
The Trustees recognize that mutual funds operate in an increasingly
dynamic and competitive environment and that the fund and its shareholders
may benefit if FMR is given the flexibility to modify the fund's investment
policies, subject to SEC regulation, without the delay and expense to the
fund of arranging shareholder meetings. The Trustees recommend restating
those of the fund's fundamental investment policies, which are not required
to be fundamental, as non-fundamental investment policies that are designed
to provide the fund with the greatest flexibility to pursue its investment
objective under current federal law.
The following currently are fundamental policies of Limited Term
Tax-Exempt Fund, which are proposed to be restated as non-fundamental
policies. Bold-faced headings indicate the section of the fund's prospectus
in which the policy can be found:
MUNICIPAL / TAX-EXEMPT FUNDS
"The fund will maintain a dollar-weighted average maturity of 10 years or
less."
"The fund may invest up to 25% of its total assets in a single issuer's
securities."
"The fund may invest more than 25% of its 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. . ."
In a separate but related proposal, shareholders are being asked to
approve amendments to the fund's fundamental objective. See Proposal 11.
CONCLUSION. The Board of Trustees has considered this proposal and
believes that replacing the fund's policies with identical non-fundamental
policies is in the best interests of the fund and its shareholders. The
Trustees recommend that shareholders vote FOR the proposed change to the
fund's investment policies. If approved by shareholders, the amendments
will be implemented on the effective date of the next prospectus. If the
proposal is not approved by shareholders, the current investment objective
and policies will remain in effect unchanged.
13. TO RESTATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL DEFENSIVE POLICY
WITH ONE THAT IS NON-FUNDAMENTAL.
The primary purpose of this proposal is to replace the fund's fundamental
temporary, defensive policy with a substantially similar non-fundamental
policy. The fund's temporary defensive policy is currently fundamental and
states:
"The fund currently does not intend to invest in taxable obligations;
however, consistent with that portion of its investment objective concerned
with the preservation of capital, from time to time the fund may invest a
portion (normally not to exceed 20%) of its net assets on a temporary basis
in fixed-income obligations whose interest is subject to federal income
tax. These taxable obligations may include repurchase agreements. The fund
does not currently intend to invest in AMT bonds."
Although the fund wants to retain the ability to invest according to a
temporary defensive policy, it proposes to replace this fundamental policy
with the following non-fundamental defensive policy that is expected to
become the standard for all Fidelity tax-exempt funds. The new
non-fundamental defensive policy would permit Limited Term Tax-Exempt to
invest in any type of high-quality, short-term instruments, for temporary,
defensive purposes. Such short-term instruments generally would be no lower
quality than the fund's primary instruments. And, by virtue of their
short-term characteristics, such securities would likely be less sensitive
to interest rate changes than longer term securities. The current policy
limits the fund to investing in repurchase agreements as a defensive
measure and not for investment, and does not allow for the fund to hold a
substantial amount of uninvested cash. The fundamental restriction on
engaging in repurchase agreements would be eliminated. The proposed
non-fundamental defensive policy would be as follows:
"FMR normally invests the fund's assets according to its investment
strategy and does not expect to invest in federally taxable obligations.
The fund also 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."
Fundamental policies can be changed or eliminated only with shareholder
approval. Changes in non-fundamental investment policies can be changed
without shareholder approval but are subject to the supervision of the
Board of Trustees, and to appropriate disclosure to fund shareholders and
prospective investors.
This change is not expected to have any significant effect on the fund's
management.
CONCLUSION. The Board of Trustees has considered this proposal and
believes that replacing the fund's fundamental defensive policy with one
that is non-fundamental is in the best interests of the fund and its
shareholders. The Trustees recommend that shareholders vote FOR the
proposed changes to the fund's investment policies. If approved by, the new
non-fundamental policy will be implemented on the effective date of the
nest prospectus. If the proposal is not approved by shareholders, the
fund's current policies will remain unchanged.
14. TO ADOPT A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING SENIOR
SECURITIES FOR LIMITED TERM TAX-EXEMPT FUND.
Limited Term Tax-Exempt currently does not have a fundamental limitation
concerning senior securities.
Subject to shareholder approval, the Trustees intend to add the following
fundamental investment limitation concerning senior securities:
"The fund will not issue senior securities, except as permitted under the
Investment Company Act of 1940."
The 1940 Act restricts a fund's ability to issue senior securities.
Although the definition of a "senior security" involves complex statutory
concepts, a senior security is generally thought of as a class of security
preferred over shares of the fund with respect to the fund's assets or
earnings. It generally does not include temporary or emergency borrowings
by the fund (which might occur to meet shareholder redemption requests) in
accordance with federal law and the fund's investment limitations. Various
investment techniques that obligate the fund to pay money at a future date
(e.g., the purchase of securities of settlement on a date that is longer
than normal) occasionally raise questions as to whether a "senior security"
is created. The fund utilizes such techniques only in accordance with
applicable regulatory requirements under the 1940 Act.
Although adoption of the senior securities limitation is not likely to
have any impact on the investment techniques employed by the fund, it will
contribute to the overall objective of standardization. (See "Adoption of
Standard Investment Limitations" on page ___.) If the proposal is approved,
the new fundamental senior securities limitation cannot be changed without
a future vote of the fund's shareholders.
CONCLUSION. The Board of Trustees recommends voting FOR the addition of
the proposed investment limitation. If approved by shareholders, the new
fundamental limitation will be implemented on the effective date of the
next prospectus. If the proposal is not approved, the fund will not adopt a
senior security limitation.
15. TO ADOPT A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING COMMODITIES FOR
LIMITED TERM TAX-EXEMPT FUND.
Currently, Limited Term Tax- Exempt Fund does not have a fundamental
limitation describing its policy regarding the purchase and sale of
commodities. Pursuant to Section 8(b) of the 1940 Act, a mutual fund must
state its policy relating to, among other things, the purchase and sale of
commodities. In general, the fund does not anticipate any future investment
activity with respect to physical commodities, but pursuant to securities
regulation, must adopt a state policy.
The following proposed fundamental investment limitation concerning the
purchase or sale of commodities is the standard for all funds managed by
FMR and has been recommended by the Board of Trustees:
"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 form investing in securities or other instruments backed by
physical commodities)."
The proposed fundamental policy conforms to a limitation that is expected
to become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page ___.) The fund does not expect
to purchase or sell commodities. However, the proposed limitation would
permit the fund to invest in securities backed by commodities and to sell
commodities acquired as a result of ownership of other investments. In
addition, the proposed limitation does not prevent the fund from engaging
in options and futures contracts.
CONCLUSION. The Board of Trustees recommends voting FOR the proposal to
adopt a fundamental investment limitation concerning commodities. The
proposed limitation, upon shareholder approval, will be implemented on the
effective date of the next prospectus. If the proposal is not approved, the
fund will continue its current practice of not purchasing or selling
commodities, but will remain without a fundamental investment investment
limitation regarding commodities.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 16 through 28 is to revise several of
Limited Term Tax-Exempt Fund's investment limitations to conform to
limitations which are the standard for similar types of funds managed by
FMR. The Board of Trustees asked FMR to analyze the various fundamental and
non-fundamental investment limitations of the Fidelity funds, and, where
practical and appropriate to a fund's investment objective and policies,
propose to shareholders adoption of standard fundamental limitations and
elimination of certain other fundamental limitations. Generally, when
fundamental limitations are eliminated, Fidelity's standard non-fundamental
limitations replace them. By making these limitations non-fundamental, the
Board of Trustees may amend limitations as they deem appropriate, without
seeking shareholder vote. The Board of Trustees would amend these
limitations to respond, for instance, to developments in the marketplace,
or changes in federal or state law. The costs of shareholder meetings if
called for these purposes are generally borne by the fund and its
shareholders.
It is not anticipated that these proposals will substantially affect the
way Limited Term Tax-Exempt Fund is currently managed. However, FMR is
presenting them to you for your approval because FMR believes that
increased standardization will help to promote operational efficiencies and
facilitate monitoring of compliance with fundamental and non-fundamental
investment limitations. Although adoption of the new or revised limitations
is not likely to have any impact on the current investment techniques
employed by the fund, it will contribute to the overall objectives of
standardization.
16. TO AMEND LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING DIVERSIFICATION.
Limited Term Tax-Exempt Fund's current fundamental limitation concerning
diversification states:
"The fund may not purchase the securities of any issuer (except the U.S.
government its agencies or instrumentalities or securities which are backed
by the full faith and credit of the United States) if, as a result, (a)
more than 5% of the fund's total assets would be invested in the securities
of that issuer; provided, however, that up to 25% of its total assets may
be invested without regard to such 5% limitation (as used in this
Prospectus, the entity which has the ultimate responsibility of the payment
of interest and principal on a particular security will be treated as its
issuer); and (b) the fund would hold more than 10% of the outstanding
voting securities of such issuer."
Subject to shareholder approval, the Trustees intend to replace this
fundamental limitation, with the following fundamental investment
limitation concerning diversification:
"The fund may not, with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's total
assets would be invested in the securities of that issuer, or (b) the fund
would hold more than 10% of the outstanding voting securities of that
issuer."
The Trustees recommend that shareholders approve an amendment to the
fund's fundamental investment limitation regarding diversification that
will permit the fund to hold more than 10% of the voting securities of one
or more issuers. Subject to certain statutory exceptions for securities of
the U.S. government and its agencies and instrumentalities, this increased
investment flexibility will be confined to 25% of the fund's total assets.
The current 10% limitation applicable to purchases of voting securities of
a single issuer will remain in effect with respect to 75% of the fund's
total assets.
State securities regulations (Blue Sky regulations) at one time prohibited
a fund from registering shares for sale if the fund intended to hold more
than 10% of the voting securities of a single issuer. The fund has a
fundamental restriction that incorporates this Blue Sky restriction.
Because the Blue Sky regulations regarding this limitation has been
eliminated, shareholder approval is sought to permit the fund to hold
higher proportion of voting securities of a single issuer. In addition, the
proposed limit is expected to become the standard for all fund's managed by
FMR. (see "Adoption of Standard Investment Limitations" on page ___.) The
standard more closely tracks the language of the diversification limitation
required under the Investment Company Act of 1940.
FMR does not currently expect that approval will materially affect the way
in which the fund is managed with regard to the fund holding more than 10%
of the voting securities of an issuer. If the proposal is approved, the new
fundamental diversification limitation could not be changed without a
future vote of shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund and its shareholders. If approved by
shareholders, the amended limitation will be implemented on the effective
date of the next prospectus.
17. TO ELIMINATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING SHORT SALES OF SECURITIES.
The fund's current fundamental limitation on selling securities short
states:
"The fund may not make short sales of securities; provided, however, that
the fund may purchase or sell futures contracts."
The Trustees of the fund recommend that shareholders vote to eliminate the
above fundamental investment limitation. If the proposal is approved, the
Trustees intend to replace the current fundamental limitation with a
non-fundamental limitation that could be changed without a vote of
shareholders. The proposed non-fundamental limitation is set forth below,
with a brief analysis of the substantive differences between it and the
current limitations.
In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. In
an investment technique known as a short sale "against the box," an
investor sells securities short while owning the same securities in the
same amount, or having the right to obtain equivalent securities. The
investor could have the right to obtain equivalent securities, for example,
through its ownership of warrants, options, or convertible bonds. If the
proposal is approved by shareholders of each respective fund, the Trustees
intend to adopt the following non-fundamental investment limitation on
short selling, which would permit short sales against the box:
The proposed non-fundamental limitation would clarify that transactions in
options transaction are not considered short sales and that transactions in
futures contracts are not deemed to constitute selling securities short.
"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."
Certain state regulations currently prohibit mutual funds from entering
into any short sales, other than short sales against the box. If the
proposal is approved, however, the Board of Trustees would be able to
change the proposed non-fundamental limitation in the future, without a
vote of shareholders, if state regulations were to change to permit other
types of short sales, or if waivers from existing requirements were
available, subject to appropriate disclosure to investors.
The fund does not currently anticipate entering into any short sales,
including short sales against the box. If the proposal is approved,
however, the fund would be able to change that policy in the future,
without a vote of shareholders, subject to the supervision of the Trustees
and appropriate disclosure to existing and prospective investors. Although
elimination of the fund's fundamental limitation on short selling is
unlikely to affect the fund's investment techniques at this time, in the
event of a change in state regulatory requirements, the fund may alter its
investment practices in the future. The Board of Trustees believes that
efforts to standardize the fund's investment limitations will facilitate
FMR's investment compliance efforts (see "Adoption of Standardized
Investment Limitations" on page ___) and are in the best interests of the
shareholders.
CONCLUSION. The Board of Trustees recommends voting FOR the proposal to
eliminate the fund's fundamental investment limitation regarding short
sales of securities. If approved by shareholders, the proposed
non-fundamental limitation will be implemented o the effective date of the
next prospectus. If the proposal is not approved the fund's current
limitation will remain unchanged.
18. TO ELIMINATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING MARGIN PURCHASES.
The fund's current fundamental limitation concerning purchasing securities
on margin is as follows:
"The fund may not 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."
The Trustees recommend that shareholders vote to eliminate the above
fundamental investment limitation. If the proposal is approved, the
Trustees intend to adopt a substantially identical non-fundamental
limitation for the fund that could be changed without a vote of
shareholders.
Margin purchases involve the purchase of securities with money borrowed
from a broker. "Margin" is the cash or eligible securities that the
borrower places with a broker as collateral against the loan. The fund's
current fundamental limitation prohibits the fund from purchasing
securities on margin, except to obtain short-term credits as may be
necessary for the clearance of transactions and for initial and variation
margin payments made in connection with the purchase and sale of futures
contracts and options on futures contracts. With these exceptions, mutual
funds are prohibited from entering into most types of margin purchases by
applicable SEC policies. The proposed non-fundamental limitation includes
these exceptions.
If the proposal is approved by shareholders, the Trustees intend to adopt
the following non-fundamental investment limitation, which would prohibit
margin purchases except as permitted under the conditions referred to
above:
"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."
Although elimination of the fund's fundamental limitation on margin
purchases is unlikely to affect the fund's investment techniques at this
time, in the event of a change in federal regulatory requirements, the fund
may alter its investment practices in the future. The Board of Trustees
believes that efforts to standardize investment limitations will facilitate
FMR's investment compliance efforts (see "Adoption of Standardized
Investment Limitations" on page ___) and are in the best interests of
shareholders.
CONCLUSION. The Board of Trustees recommends voting FOR the proposal to
eliminate the fund's investment limitation regarding margin purchases. If
approved by shareholders, the proposed non-fundamental limitation will be
implemented o the effective date of the next prospectus. If the proposal is
not approved the fund's current limitation will remain unchanged.
19. TO AMEND LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING BORROWING.
The fund's current fundamental limitation concerning borrowing states:
"The fund may not borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount exceeding 33 1/3% of the value of the fund's 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 the net assets will be (within 3 days) reduced to the
extent necessary to comply with the 33 1/3% limitation (the fund will not
purchase securities for investment while borrowings equal to 5% or more of
its total assets are outstanding)."
Subject to shareholder approval, the Trustees intend to replace the fund's
current fundamental investment limitation with the following amended
fundamental investment limitation governing borrowing:
"The fund may not borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation."
The primary purpose of the proposal is to revise the fund's fundamental
borrowing limitation to conform to a limitation that is expected to become
the standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page ___.) If the proposal is approved, the
amended fundamental borrowing limitation cannot be changed without a future
vote of shareholders.
Adoption of the proposed limitation concerning borrowing is not expected
to affect the way in which the fund is managed, its investment performance,
or the securities or instruments in which it invests. However, the proposal
would clarify several points. First, under the current limitation, the fund
must reduce borrowings that come to exceed 33 1/3% of total assets only
when there is a decline in net assets. Second, the proposed limitation
differs from the fund's current limitation because it specifically defines
"three days" to exclude Sundays and holidays, while the fund's current
limitation simply states three days.
In addition, the fund's current fundamental limitation also describes its
policy of not purchasing a security while borrowings representing more than
5% of its total assets are outstanding. Subject to shareholder approval,
the Trustees intend to replace this component of the fundamental limitation
with a similar non-fundamental limitation that could be changed by vote of
the Trustees without further approval by shareholders.
"The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of the fundamental investment limitation). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The find 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.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund. Accordingly, the Trustees recommend that
shareholders of the fund vote FOR the proposed amendment. The amended
limitation, upon shareholder approval, will be implemented on the effective
date of the prospectus. If the proposal is not approved, the fund's current
limitation will remain unchanged.
20. TO AMEND LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING UNDERWRITING OF SECURITIES.
The fund's current fundamental limitation concerning underwriting states:
"The fund may not underwrite any issue of securities, except to the extent
that the purchase of municipal bonds in accordance with the fund's
investment objective, policies, and limitations, either directly from the
issuer, or from an underwriter for an issuer, may be deemed to be
underwriting."
Subject to shareholder approval, the Trustees intend to replace this
limitation with the following fundamental limitation governing
underwriting:
"The fund may not underwrite securities issued by others, except to the
extent that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted securities."
The primary purpose of the proposed amendment is to clarify the fund's
fundamental policy with respect to underwriting. The proposal also serves
to conform the fund's fundamental investment limitation concerning
underwriting to a limitation which is expected to become the standard for
all funds managed by FMR. (See "Adoption of Standardized Investment
Limitations" on page ___.) If the proposal is approved, the new limitation
may not be changed without a future vote of shareholders.
The proposed limitation would also broaden the exception within the
current limitation by eliminating the specific reference to municipal
bonds. However, since the fund, pursuant to its investment objective,
seeks to provide investors with a yield exempt from federal income tax, FMR
regards it as unlikely under Current federal tax laws that the fund will
use the broader authority to purchase any securities other than municipal
securities and certain derivatives thereof. But, by eliminating the
reference to bonds, the revised limitation would eliminate any suggestions
that the exemption does not apply to notes or other instruments.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund. Accordingly, the Trustees recommend that
shareholders of the funds vote FOR the proposed amendment. The amended
limitation, upon shareholder approval, will be implemented on the effective
date of the next prospectus. If the proposal is not approved the fund's
current limitation will remain unchanged.
21. TO AMEND LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING THE CONCENTRATION OF ITS INVESTMENTS IN A SINGLE
INDUSTRY.
The fund's current fundamental investment limitation concerning the
concentration of its investments within a single industry states:
"The fund may not purchase the securities of any issuer (except the United
States government, its agencies or instrumentalities or securities which
are backed by the full faith and credit of the United States) if, as a
result, more than 25% of the fund's total assets would be invested in
industrial development bonds whose issuers are in any one industry."
Subject to shareholder approval, the Trustees of the fund intend to
replace this fundamental investment limitation with the following amended
fundamental investment limitation governing concentration:
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities, 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."
The primary purpose of the proposal is to revise the fund's fundamental
concentration limitation to conform to a limitation which is expected to
become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page ___.) If the proposal is
approved, the new fundamental concentration cannot be changed without a
future vote of shareholders.
"The fund does currently intend to invest more than 25% of its total
assets in industrial revenue bonds related to a single industry."
The proposed non-fundamental limitation differs in several respects from
the existing fundamental limitation. First, the proposed fundamental
limitation explicitly excludes tax-exempt obligations issued or guaranteed
by a U.S. territory or possession or a state or local government, or a
political subdivision thereof. Second, because non-governmental industrial
development bonds are automatically governed by the proposed limitation,
the proposed limitation no longer specifically makes reference to them.
Third, the proposed limitation would clarify that it applies not to issuers
in any one industry, regardless of the extent of their involvement, but
only to those issuers whose "principal business activities" are in the same
industry. This may permit the fund to increase its exposure to certain
industries beyond the current limitations. Finally, the current limitation
affirms the fund's ability to invest more than 25% of its assets in
industrial development revenue bonds. Investment policies of the fund are
construed in accordance with the 1940 Act, which provides that an
investment company must state certain of its investment policies as
fundamental. Affirmation of this ability needs only to be disclosed and is
not required to be a fundamental limitation. In an effort to standardize
investment policies and allow maximum flexibility to modify the fund's
investment policies, subject to SEC regulation, the reference will be
deleted. Deletion of this specific reference will not affect the way in
which the fund is currently managed. The components of this fundamental
limitation are contained in Proposal 13, on page ___, which asks for
shareholder approval to restate certain of the fund's fundamental policies
as non-fundamental policies. The proposed amended limitation is not
substantially different form the current policy and is not likely to have
any impact on the investment techniques employed by the fund.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund. The Trustees recommend voting FOR the
proposed amendment. The new limitation, upon shareholder approval, will be
implemented on the effective date of the next prospectus. If the proposal
is not approved, the fund's current fundamental investment limitation will
remain unchanged.
22. TO AMEND LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING REAL ESTATE.
The fund's current fundamental investment limitation concerning real
estate states:
"The fund may not purchase or sell real estate but this shall not prevent
the fund from investing in bonds or other obligations secured by real
estate or interests therein."
Subject to shareholder approval, the Trustees of the fund intend to
replace this fundamental investment limitation with the following amended
fundamental investment limitation governing purchases and sales of real
estate:
"The fund may not 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)."
The primary purpose of the proposed amendment is to clarify the types of
securities in which the fund is authorized to invest and to conform the
fund's fundamental real estate limitation to a limitation which is expected
to become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page ___.) If the proposal is
approved, the new fundamental real estate limitation may not be changed
without a future vote of shareholders.
Adoption of the proposed limitation concerning real estate is not expected
to significantly affect the way in which the fund is managed, or in the way
in which securities or instruments are selected for the fund. However, to
the extent that the fund invests to a greater extent in real estate related
securities, it will be subject to the risks of the real estate market. This
industry is sensitive to factors such as changes in real estate values and
property taxes, overbuilding, variation in rental income, and interest
rates. Performance could also be affected by the structure, cash flow, and
management skill of real estate companies.
The fund does not expect to acquire real estate. However, the proposed
limitation would clarify several points. First, the proposed limitation
would make it explicit that the fund may acquire a security or other
instrument that is secured by a mortgage or other right to foreclose on
real estate, in the event of a default. Second, the proposed limitation
would clarify the fact that the fund may invest without limitation in
securities issued or guaranteed by companies engaged in acquiring,
constructing, financing, developing, or operating real estate projects
(e.g., securities of issuers that develop various industrial, commercial,
or residential real estate projects such as factories, office buildings, or
apartments). Any investments in these securities or other instruments are,
of course, subject to the fund's investment objective and policies and to
other limitations regarding diversification and concentration in particular
industries. Also, the proposed limitation specifically permits the fund to
sell real estate acquired as a result of ownership of securities or other
instruments. However, in light of the types of securities in which the fund
regularly invests, FMR considers this to be a remote possibility.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund. The Trustees recommend voting FOR the
proposed amendment. The new limitation, upon shareholder approval, will be
implemented on the effective date of the next prospectus. If the proposal
is not approved, the fund's current fundamental investment limitation will
remain unchanged.
23. TO AMEND LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING LENDING.
The fund's current fundamental investment limitation concerning lending
states :
"The fund may not make loans, except (a) by the purchase of a portion of
an issue of debt securities in accordance with its investment objective,
policies and limitations, and (b) by engaging in repurchase agreements."
Subject to shareholder approval, the Trustees intend to replace the
limitation with the following fundamental investment limitation governing
lending:
"The fund may not lend any security or make any other loan if, as a
result, more than 33 1/3% of its total assets would be lent to other
parties, but this limitations does not apply to purchases of debt
securities or to repurchase agreements."
The primary purpose of this proposal is to revise the fund's fundamental
lending limitation to conform to a limitation expected to become the
standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page ___). If the proposal is approved, the new
fundamental lending limitation cannot be changed without a vote of
shareholders.
Adoption of the proposed limitation on lending is not expected to affect
the way in which the fund is managed, the investment performance of the
fund, or the securities or instruments in which the fund invests. However,
the proposed limitation would clarify several points. First, the proposed
limitation provides specific authority for the fund to acquire the entire
portion of an issue of debt securities. Ordinarily, if a fund purchases an
entire portion of an issue of debt securities, there may be greater risks
of illiquidity and unavailability of public information if the issuer has
no other issue of securities outstanding, and it may be more difficult to
obtain pricing information to be used in establishing the fund's daily
share price. As income earned from loans is generally subject to federal
tax, the fund has no current intention of making loans, other than through
the purchase of debt securities.
The fund currently has a non-fundamental limit that restricts the fund
from engaging in repurchase agreements and making loans other than by
purchasing debt securities.
The Trustees may change non-fundamental limitations in response to
regulatory, market, legal or other developments without further approval by
shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund and its shareholders. The Trustees
recommend that shareholders of the fund vote FOR the proposed amendment.
The adopted limitation, upon shareholder approval, will be implemented on
the effective date of the next prospectus. If the proposed is not approved
by shareholders of the fund, the fund's current limitation will remain
unchanged.
24.TO ELIMINATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING INVESTMENTS IN OTHER INVESTMENT COMPANIES.
The fund's current fundamental investment limitation concerning investment
in other investment companies states:
"The fund may not purchase the securities of their investment companies or
investment trusts."
The Trustees recommend that shareholders of the fund vote to eliminate the
above fundamental limitation. If the proposal is approved, the Trustees
intend to replace the current fundamental limitation with the following
non-fundamental limitation, which could be changed without a vote of
shareholders:
"The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commissions 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.
The ability of mutual funds to invest in other investment companies is
restricted by the 1940 Act and by some state regulations. The fund's
current fundamental investment limitation recites certain of the applicable
restriction. The federal restriction will remain applicable to the fund
whether or not they are recited in a fundamental limitation. As a result,
elimination of the above fundamental limitation is not expected to have any
impact on the fund's investment practices, except to the extent that
regulatory requirements may change in the future.
CONCLUSION. The Board of Trustees recommends that shareholders of the fund
vote FOR the proposal to eliminate the fund's fundamental investment
limitation regarding investments in other investment companies. If approved
by the shareholders, the proposed non-fundamental limitation will be
implemented on the effective date of the next prospectus. If the proposal
is not approved by shareholders, the fund's current limitation will remain
unchanged.
25. TO ELIMINATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING INVESTMENTS IN THE SECURITIES OF NEWLY-FORMED
ISSUERS.
The fund's current fundamental investment limitation regarding investments
in securities of newly-formed issuers states:
"The fund may not purchase the securities of any issuer (except the United
States government, its agencies or instrumentalities or securities which
are backed by the full faith and credit of the United States) if, as a
result more than 5% of its total assets would be invested in securities,
such as industrial development bonds, where payment of principal and
interest are the responsibility of a company with less than three years'
operating history."
The Trustees recommend that shareholders of the fund vote to eliminate the
above fundamental limitation. If the proposal is approved, the Trustees
intend to replace the current fundamental limitation with the following
non-fundamental limitation, which could be changed without a vote of
shareholders:
"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 operations."
Newly-formed or "unseasoned issuers" are issuers with less than three
years of continuous operation. The purpose of the fundamental limitation on
investments in unseasoned issuers is to comply with state laws and to limit
the risks associated with investing in companies that have no proven track
record in business and whose prospects are uncertain. The proposed
non-fundamental limitation will clarify the fact that the fund's unseasoned
issuers limitation is applicable only to securities issued by newly-formed
entities engaged in a trade or business with a prior history of operations
of less than three years and not to pools of asset-backed securities and
U.S. government and foreign government securities. The proposal will have
no current impact on the fund. However, adoption of a standard
non-fundamental limitation will facilitate FMR's compliance efforts (see
"Adoption of Standardized Investment Limitations" on page __) and will
enable the fund to respond more promptly if applicable state laws change in
the future.
CONCLUSION. The Board of Trustees has determined that it is in the best
interests of the shareholders to replace the fund's fundamental investment
limitation concerning investments in unseasoned issuers with a
non-fundamental limitation. Accordingly, the Trustees recommend that
shareholders vote FOR the proposal to eliminate the fund's fundamental
investment limitation regarding investments in securities of newly-formed
issuers. If the proposal is approved, the new non-fundamental limitation
will be implemented on the effective date of the next prospectus. If the
proposal is not approved, the current limitation will remain unchanged.
26. TO ELIMINATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING INVESTING IN OIL, GAS, AND MINERAL EXPLORATION
PROGRAMS.
Currently the fund maintains a fundamental investment limitation
specifying that the fund may not "invest in oil, gas, or other mineral
exploration or development programs." Investment in oil, gas, or other
mineral exploration programs is permitted under federal standards for
mutual funds, but currently is prohibited by some state regulations.
The Trustees recommend that shareholders of the fund vote to eliminate the
above referenced fundamental investment limitation. If the proposal is
approved by shareholders of the fund, the Trustees intend to adopt the
following non-fundamental investment limitation, which could be changed
without a shareholder vote:
"The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases."
The fund currently has the above non-fundamental investment limitation
regarding investment in oil, gas or other mineral exploration or
development programs.
This proposal will have no current impact on the fund. However, adoption
of a standardized non-fundamental investment limitation for the fund will
facilitate FMR's investment compliance efforts (see "Adoption of
Standardized Investment Limitations" on page ___), and will enable the fund
to respond more promptly if applicable state laws change in the future. In
addition, the fund's new limitation will,for the first time, specifically
refer to leases.
CONCLUSION. The Board of Trustees recommends voting FOR the proposal to
eliminate the fund's fundamental investment limitation concerning
investment in oil, gas, and other mineral exploration programs. If
approved, the proposal be implemented on the effective date of the next
prospectus. If the proposal is not approved, the fund's current limitation
will remain unchanged.
27.TO ELIMINATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING INVESTING IN COMPANIES FOR THE PURPOSE OF EXERCISING
CONTROL OR MANAGEMENT.
Currently, the fund maintains a fundamental limitation prohibiting the
fund from "investing in companies for the purpose of exercising control or
management." While the fund invests, and if the proposal is approved will
continue to invest, in municipal obligations, FMR believes that by
eliminating this restriction, the fund would make clear that it may freely
exercise its rights as a security holder. For example, the fund may give or
withhold its consent to a proposed action by the management of an authority
or agency or other issuer of portfolio securities; it may solicit support
from other holders of the same or similar securities, or take other action,
including instituting litigation, when FMR believes such action may be
appropriate in order to protect the value of the fund's investments.
The fund does not intend to become involved in directing or administering
to the day-to-day operations of any issuer of portfolio securities. FMR
believes that it should be able to communicate freely the fund's views as a
security holder on important matters of policy to management of an issuer
of portfolio securities when FMR believes that activities of an issuer may
affect significantly the value of a portfolio investment. FMR believes that
a fund currently may engage in such activities without necessarily
violating the fund's restriction on investing for the purpose of exercising
control or management. However, FMR believes that elimination of the
restriction would eliminate any potentially inhibiting effect on FMR in
dealing with issuers of its portfolio investments.
FMR will act, on behalf of the fund in connection with significant matters
affecting security holder's rights, only with Board review and will consult
with the trust's Investment Operations Committee (composed of certain of
its Trustees) on all significant issues that might be raised by such
matters.
CONCLUSION. The Board of Trustees has considered the relevant factors and
believes that elimination of the fundamental investment limitation is in
the best interest of shareholders. Therefore, the Trustees recommend that
the shareholders vote FOR the proposal to eliminate the restriction against
investing in companies for the purpose of exercising control or management.
If the proposal is not approved, the current limitation will remain
unchanged.
28. TO ELIMINATE LIMITED TERM TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING PURCHASING SECURITIES OF AN ISSUER IN WHICH THE
TRUSTEES OR DIRECTORS AND OFFICERS OF THE FUND OR FMR HOLD MORE THAN 5% OF
THE OUTSTANDING SECURITIES OF SUCH ISSUER.
The fund's fundamental investment limitation currently includes a
restriction which prohibits the fund from purchasing or retaining the
securities of any issuer if the officers and Trustees or directors of the
fund or FMR who individually own more than 5% of that issuer's securities.
This investment limitation was originally adopted to address state
securities regulations (Blue Sky requirements) in connection with the
registration of shares of the fund for sale. Only one state currently
requires such limitation.
The fund's current fundamental investment limitation provides:
"The fund may not purchase the securities of any issuer (except the Untied
States government, its agencies or instrumentalities or securities which
are backed by the full faith and credit of the United States) if, as a
result, the fund would hold the securities of any issuer other than the
securities of the fund where the Trustees and officers of the Trust, or of
the Manager, together own beneficially more than 5% of such outstanding
securities."
FMR believes that this fundamental investment limitation should be
eliminated because, while this limitation has not precluded investments in
the past, its elimination will potentially increase the fund's flexibility
when choosing investments in the future.
Subject to shareholder approval, the Trustees intend to replace this
fundamental investment limitation with a non-fundamental investment
limitation that could be changed by a vote of the Trustees in response to
regulatory, market, legal, or other developments without further approval
by shareholders. The new non-fundamental investment limitation, which is
substantially the same as the fund's current fundamental limitation, would
provide that:
"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 the securities of such issuer together own more than 5% of such issuer's
securities."
CONCLUSION. The Trustees have considered the relevant factors and believe
that the proposed non-fundamental limitation is in the best interest of
the fund's shareholders. Therefore, the Trustees have recommended that the
shareholder vote FOR the elimination of the fundamental restriction
concerning investing in the issuers in which the officers, directors or
Trustees of the fund and FMR who own more than 5% of the outstanding
securities of such issuer. If approved, the new non-fundamental investment
limitation will be implemented on the effective date of the next
prospectus. If the proposal is not approved, the fund's current fundamental
limitation will remain unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the
contrary will be voted on such matters in accordance with the judgment of
the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to a
number of investment companies whose net assets as of August 31, 1994, were
in excess of $___ billion. The Fidelity family of funds currently includes
a number of funds with a broad range of investment objectives and
permissible portfolio compositions. The Boards of these funds are
substantially identical to that of this trust. In addition, FMR serves as
investment adviser to certain other funds which are generally offered to
limited groups of investors. Information concerning the advisory fees, net
assets, and total expenses of the funds advised by FMR is contained in the
Table of Average Net Assets and Expense Ratios in Exhibit __, on page ___.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc. (FMR
U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far East),
both wholly owned subsidiaries of FMR formed in 1986, supply investment
research information, and may supply portfolio management services to FMR
in connection with certain funds advised by FMR. FMR Texas Inc., a wholly
owned subsidiary of FMR formed in 1989, supplies portfolio management and
research services in connection with certain money market funds advised by
FMR.
FMR, its officers and directors, its affiliated companies and personnel,
and the Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions which have occurred to date have included mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
The Consolidated Statement of Financial Condition of Fidelity Management &
Research Company and subsidiaries as of December 31, 1993 is shown
beginning on page __
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board; J.
Gary Burkhead, President; and Peter S. Lynch, Vice Chairman. Each of the
Directors is also a Trustee of the trust. Messrs. Johnson 3d, Burkhead,
John H. Costello, Gary L. French, Arthur S. Loring and John H. Haley, Jr.
are currently officers of the trust and officers or employees of FMR or FMR
Corp. With the exception of Mr. Costello, all of these persons are
stockholders of FMR Corp. FMR's address is 82 Devonshire Street, Boston,
Massachusetts 02109, which is also the address of the Directors of FMR.
All of the stock of FMR is owned by a parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts, which was organized on October
31, 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions: Fidelity Service Co., which is
the transfer and shareholder servicing agent for certain of the retail
funds advised by FMR; Fidelity Investments Institutional Operations
Company, which performs shareholder servicing functions for certain
institutional customers; and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization. Messrs. Johnson 3d, Burkhead, William L. Byrnes, James C.
Curvey, Caleb Loring, Jr. and Ms. Abigail P. Johnson are the Directors of
FMR Corp. On July 31, 1994, Messrs. Johnson 3d, Burkhead, Curvey, and
Loring, Jr., and Ms. Johnson owned approximately 24%, 3%, 3%, 13%, and 24%,
respectively, of the voting common stock of FMR Corp. In addition, various
Johnson family members and various trusts for the benefit of Johnson family
members, for which Messrs. Burkhead, Curvey, or Loring, Jr. are Trustees,
owned in the aggregate approximately 32% of the voting common stock of FMR
Corp. Messrs. Johnson 3d, Burkhead, and Curvey owned approximately 2%, 3%
and 1%, respectively, of the non-voting common stock of FMR Corp. In
addition, various trusts for the benefit of members of the Johnson family,
for which Mr. Loring, Jr. is the sole Trustee, and other trusts for the
benefit of Johnson family members, through limited partnership interest in
a partnership the corporate general partner of which is controlled by Mr.
Johnson 3d, Mr. Loring, Jr., and other Johnson family members, together
owned approximately 43% of the non-voting common stock of FMR Corp. Through
ownership of voting common stock and the execution of a shareholders'
voting agreement, Edward C. Johnson 3d (President and a Trustee of the
trust), Johnson family members, and various trusts for the benefit of the
Johnson family form a controlling group with respect to FMR Corp.
During the period December 1, 1992 through July 31, 1994, the following
transactions were entered into by officers and/or Trustees of the fund or
of FMR Corp. involving more than 1% of the voting common, non-voting common
and equivalent stock, or preferred stock of FMR Corp. Mr. C. Bruce
Johnstone redeemed an aggregate of 25,500 shares of non-voting common stock
for an aggregate cash payment of approximately $3.4 million. Mr. Morris J.
Smith redeemed 15,000 shares of non-voting common stock for a cash payment
of approximately $1.8 million. Mr. Edward C. Johnson 3d converted 2,064
shares of voting common stock into 2,064 shares of non-voting common stock.
Mr. Caleb Loring, Jr. purchased 1,064 shares of voting common stock with a
cash payment of approximately $166,000.
CURRENT MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include: providing
facilities for maintaining the fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
United Missouri (for Class A) and FIIOC (for Class B and institutional
Class) the fund pays its expenses, without limitation, that are not assumed
by those parties. the fund pays for typesetting, printing, and mailing
proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although the management
contracts provide that the fund will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices, and
reports to existing shareholders, United Missouri has entered into revised
sub-transfer agent agreements with State Street bank and Trust Company
(State Street for Class A Shares and FIIOC for Class B and Institutional
Class Shares), pursuant to which each bears the cost of providing these
services to shareholders. Other expenses paid by the fund include interest,
taxes, brokerage commissions, the fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. The fund is
also liable for such nonrecurring expenses as may arise, including costs of
any litigation to which a fund may be a party and any obligation it may
have to indemnify the trust's officers and Trustees with respect to
litigation.
COMPUTING THE BASIC FEE. FMR is the fund's manager pursuant to management
contracts dated January 29, 1989, which was approved by shareholders on
November 16, 1988.
For the services of FMR under each contract, the fund pays FMR a monthly
management fee composed of the sum 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 on the left of the following tables. On the right, the
effective fee rate schedule shows the results of cumulatively applying the
annualized rates at varying asset levels. For example, the effective annual
fee rate at $___ billion of group net assets - its approximate level for
the month of August 1994 - was _____%, which is the weighted average of the
respective fee rates for each level of group net assets up to that level.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE
RATES
Average Annualized Group Effective
Group Fee Rate Net Annual
Assets Assets Fee 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 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
* The rates shown for average group assets in excess of $84 billion were
adopted by FMR on a voluntary basis on January 1, 1992. Rates in excess of
$174 billion were adopted by FMR on a voluntary basis on November 1, 1993.
Each was adopted pending shareholder approval of a new management contract
reflecting the extended schedule. The extended schedule provides for lower
management fees as total assets under management increase.
The individual fund fee rate for the fund is .25%. Based on the average
net assets of funds advised by FMR for August 31, 1994, the annual
management fee rate would be calculated as follows:
Individual Fund Fee
Group Fee Rate Management
Rate Fee Rate
.____%+ .25% = .___%
One twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
Management Fees. For the fiscal years ended November 30, 1993, 1992, and
1991, FMR received payments from the fund as shown in the following tables
for its services as investment advisor. If FMR had not voluntarily adopted
the extended group fee rate, these fees would have been higher.
Management Fees
1993 1992 1991
$______ $______ $_____
Percentage of Average Net Assets
1993 1992 1991
.____% .____% .____%
To comply with the California Code of Regulations, FMR will reimburse the
funds if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating a fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses.
FMR may, from time to time, agree to voluntarily reimburse a fund for
expenses above a specified percentage of average net assets. FMR retains
the ability to be repaid for these expenses in the amount that expenses
fall below the limit prior to the end of the fiscal year. Reimbursement by
a fund will lower its yield and total return.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the management
contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions. Commissions for foreign investments for
the fund traded on foreign exchanges generally 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; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers who
provide such services on a regular basis. However, as many transactions on
behalf of the funds are placed with broker-dealers (including
broker-dealers on the list) without regard to the furnishing of such
services, it is not possible to estimate the proportion of such
transactions directed to such broker-dealers solely because such services
were provided. The selection of such broker-dealers is generally made by
FMR (to the extent possible consistent with execution considerations) 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, 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
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 the
funds 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 fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI)
and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if
the commissions are fair, reasonable, and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services.
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 regulations, 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 Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
funds and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal years ended November 30, 1993 and November 30, 1992,
Limited Term Tax-Exempt Fund's portfolio turnover rates were ___% and ___%,
respectively.
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. The funds seek 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 the funds to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to the fund. In some cases, this system could have a detrimental
effect on the price or value of the security as far as the funds are
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 the fund outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
United Missouri is the custodian and transfer agent for the fund.
On behalf of the fund's Class A Shares, United Missouri has entered into a
sub-contract with State Street pursuant to which State Street performs as
transfer, dividend disbursing and shareholder servicing agent. State Street
has further delegated certain transfer, dividend-paying and shareholder
services to FIIOC. Under the contracts, the fund pays a per account fee of
$30 and a monetary transaction fee of $6. For accounts that FIIOC maintains
on behalf of State Street, FIIOC receives all such fees. For accounts as to
which FIIOC provides limited services, FIIOC may receive a portion
(currently $20 and $6, respectively) or related per account fees and
monetary transaction fees, less applicable charges and expenses of State
Street for account maintenance and transactions.
On behalf of Class B and Institutional Class Shares, United Missouri has
entered into a sub-contract with FIIOC pursuant to which FIIOC performs as
transfer and shareholder servicing agent. Under the contracts, the fund
pays a per account fee of $95 and a monetary transaction fee of $20 or
$17.50 depending on the nature of the services provided. From June 1, 1990
through December 31, 1992, FIIOC was paid a per account fee and a monetary
transaction fee of $65 and $14, or $60 and $12 respectively.
Under the sub-contracts, either State Street or FIIOC pays out-of-pocket
expenses associated with providing transfer agent services. In addition,
either State Street or FIIOC bears the expense of typesetting, printing,
and mailing prospectus, statements of additional information, and all other
reports, notices, and statements to shareholders, with the exception of
proxy statements.
Sub-transfer agent fees, including reimbursement for out-of-pocket
expenses, paid to FIIOC on behalf of Institutional Class shares for Limited
Term Tax-Exempt Fund for fiscal 1993, 1992, and 1991 were $32,300, $11,531,
and $8,235, respectively.
United Missouri has a sub-contract with Service which provides that
Service will perform the calculations necessary to determine the fund's net
asset value per share and dividends, and maintain the fund's accounting
records. Prior to July 1, 1991, the annual fee for these pricing and
bookkeeping services was based on two schedules, one pertaining to the
fund's average net assets, and one pertaining to the type and number of
transactions the fund made. The fee rates in effect as of July 1, 1991 are
based on the fund's average net assets, specifically, .02% for the first
$500 million of average net assets and .04% 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. For Limited Term Tax-Exempt Fund: Pricing and
bookkeeping fees, including related out-of-pocket expenses, paid to Service
for fiscal 1993, 1992, 1991 were $45,724, $59,094, and $84,865,
respectively.
The transfer agent fees and charges, and pricing and bookkeeping fees
described above are paid to described parties by United Missouri, which is
entitled to reimbursement from the funds for these expenses.
The fund has a general distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the funds, which are continuously
offered. Promotional and administrative expenses in connection with the
offer and sale of shares are paid by FDC.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of
the Trust, 82 Devonshire Street, Boston, Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Investments Institutional
Services Co., whether other persons are beneficial owners of shares for
which proxies are being solicited and, if so, the number of copies of the
Proxy Statement and Annual Reports you wish to receive in order to supply
copies to the beneficial owners of the respective shares.
EXHIBIT 1
FORM OF DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND [PORTFOLIO]
[RETAIL] CLASS A SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for [the Retail Class] [[the Class A
("Class A), a class of shares of]] Fidelity Advisor Limited Term Tax-Exempt
[Portfolio] [[Fund ]](the "[Portfolio] [[Fund]]"), a [series] [[portfolio]]
of Fidelity [[Advisor Series VI]] [Oliver Steet Trust] (the [["Trust"]]
["Fund"]).
2. The [[Trust]] [Fund] has entered into a General Distribution Agreement
on behalf of the [[Fund]] with Fidelity Distributors Corporation (the
"Distributor"), [a wholly owned subsidiary of FIdelity Management &
Research Company (the "Adviser")] under which the Distributor uses all
reasonable efforts, consistent with its other business, to secure
purchasers of the [Portfolio] [[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]]
[Portfolio] and reports to recipients other than existing shareholders of
the [Portfolio] Fund; (4) obtaining such information, analyses and reports
with respect to marketing and promotional activities as the Distributor
may, from time to time, deem advisable; (5) making payments to securities
dealers and others engaged in the sale of Shares or who engage in
shareholder support services; and (6) providing training, marketing and
support to such dealers and others with respect to the sale of Shares.
3. In consideration for the services provided and the expenses incurred by
the Distributor pursuant to the General Distribution Agreement, the [Retail
Class of the Portfolio] Fund shall pay to the Distributor a fee at the
annual rate of .40% [of such class' average] (or such lesser amount as the
Trustees may, from time to time, determine) of its average daily net assets
throughout the month. The determination of daily net assets shall be made
at the close of business each day throughout the month and computed in the
manner specified in the [Portfolio's] Fund's then current Prospectus for
the determination of the net asset value of the Fund's shares, [shares of
the Retail Class] [but shall exclude assets attributable to (i) shares
purchased more than 144 months prior to such day or (ii) any other class of
the Portfolio]. The Distributor may use all or any portion of the fee
received pursuant to the Plan to compensate securities dealers or other
persons who have engaged in the sale of Shares or in shareholder support
services pursuant to agreements with the Distributor, or to pay any of the
expenses associated with other activities authorized under paragraph 2
hereof.
4. [Each Class of the Portfolio] [[The Fund ]] presently pays, and will
continue to pay, a management fee to [the Advisor] Fidelity Management &
Research Company (the "Adviser") pursuant to a management agreement between
the [Portfolio] [[Fund ]]and the Adviser (the "Management Contract"). It
is recognized that the Adviser may use its management fee revenue, as well
as its past profits or its resources from any other source, to reimburse
the Distributor for expenses incurred in connection with the distribution
of Shares, including the activities referred to in paragraphs 2 and 3
hereof. To the extent that the payment of management fees by the [class]
Fund to the Adviser should be deemed to be indirect financing of any
activity primarily intended to result in the sale of Shares within the
meaning of Rule 12b-1, then such payment shall be deemed to be authorized
by this Plan.
5. This Plan shall become effective upon the first business day of the
month following approval by a vote of at least a "majority of the
outstanding voting securities of the Fund" (as defined in the Act), [of the
Retail Class] this Plan having been approved by a vote of a majority of the
Trustees of the [Fund] Trust, including a majority of Trustees who are not
"interested persons" of the [Fund] [[Trust]] (as defined in the Act) and
who have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to the Plan (the "Independent Trustees"),
cast in person at a meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain in
effect until [July 31, 1993] [[June 30, 1995,]] and from year to year
thereafter; provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the [Fund] [[Trust,]]
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may be
amended at any time by the Board of Trustees, provided that (a) any
amendment to increase materially the fee provided for in paragraph 3 hereof
or any amendment of the Management Contract to increase the amount to be
paid by the [Portfolio] Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities of
[Retail Class in the case of the Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Portfolio, in the case
of the Management Contract,] the Fund, and (b) any material amendment of
this Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of the [class] [[Fund.]]
8. During the existence of this Plan, the [Fund] Trust shall require the
Adviser and/or the Distributor to provide the [Fund] Trust, for review by
the [Fund] [[Trust's]] Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended in connection with
financing any activity primarily intended to result in the sale of shares
of [shares of the Retail Class] [[the Fund]] (making estimates of such
costs where necessary or desirable) and the purposes for which such
expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of shares of the [class] [[Fund.]]
10. Consistent with the limitation of shareholder liability as set forth
in the [Fund's] [[Trust's]] Declaration of Trust, any obligation assumed by
the [Retail Class] [[Fund]] pursuant to this Plan and any agreement related
to this Plan shall be limited in all cases to the Fund [Retail Class] and
its assets and shall not constitute an obligation of any shareholder of the
[Fund] [[Trust ]]or of any other series [or class][[ of shares]] of the
[[Trust.]]
11. If any provision of the Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
EXHIBIT 2
FORM OF DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
CLASS B SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for the Class B shares of Fidelity
Advisor Limited Term Tax-Exempt Fund ("Class B"), a class of shares of
Fidelity Advisor Limited Term Tax-Exempt Fund (the "Fund"), a series of
Fidelity Advisor Series VI (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 3
FORM OF
MANAGEMENT CONTRACT
BETWEEN
[[FIDELITY ADVISOR SERIES VI]]
[Tax-Exempt Portfolios: Limited Term Series]
[[FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND]]
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[[MODIFICATION]] [AGREEMENT] made this [[1st day of _____ 1994,]] [29th
day of January, 1989] by and between [[Fidelity Advisor Series VI,]]
[Tax-Exempt Portfolios] a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of [[Fidelity Advisor]] Limited Term [Series]
[[Tax-Exempt Fund]] (hereinafter called the "Portfolio"), and Fidelity
Management & Research Company, a Massachusetts corporation (hereinafter
called the "Adviser").
[[Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
January 29, 1989, to a modification of said Contract in the manner set
forth below. The Modified Management Contract shall when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of _______ 1, 19__ or the first day of the month following approval.]]
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) [[The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.]]
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. [[The Adviser will be compensated on the following basis ]] for the
services and facilities to be furnished [,]. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, [which shall be computed as follows:] composed of a
Group Fee and an Individual Fund Fee.
The Basic Fee rate shall be composed of two elements.
[[(a)]] [(i)] Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment companies
having Advisory and Service or Management Contracts with the Adviser
(computed in the manner set forth in the fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month. The Group Fee Rate shall be
determined on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
[[84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200]]
[[(b)]] [(ii)] Individual Fund Fee Rate. The Individual Fund Fee Rate
shall be[[ .30%. ]] [.25%]
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual [[Management]] Fee Rate.
One-twelfth of the Annual Management Fee Rate shall be applied to the
average of the net assets of the [Series] [[Portfolio]] (computed in the
manner set forth in the Fund's Declaration of Trust [of the Trust] [[or
other organizational document)]] determined as of the close of business on
each business day throughout the month.
[[(c) ]]In case of [initiation of] termination of this Contract during
any month, the fee for that month shall be reduced proportionately on the
basis of the number of business days during which it is in effect, and the
fee computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until [[June 30,
1995]] [July 31, 1989] and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority of
the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
[[8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving effect
to the choice of laws provisions thereof.]]
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
Vote this proxy card TODAY! Your prompt response will
save Fidelity Advisor Limited Term Tax-Exempt - Class A the expense of
additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- - - --------------------------------------------------------------------------
- - - --------------------
FIDELITY ADVISOR SERIES VI: FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND -
CLASS A
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Marvin L. Mann, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
Fidelity Advisor Series VI: Fidelity Advisor Limited Term Tax-Exempt Fund -
Class A which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on November 16, 1994 at 11:00 a.m. and at
any adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one votes
and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt
of the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
ATEPA-PXC-date produced] cusip # XXXXXXXXX/287]
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- - - --------------------------------------------------------------------------
- - - --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the 12 nominees specified below as [ ] FOR all nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Gerald C. McDonough, Edward H. Malone, nominees.
Marvin L. Mann and Thomas R. Williams
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
__________________________________________________________________________
___________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of Coopers & Lybrand, L.L.P. as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting the fund to invest all of its assets in
another open-end investment company with
substantially the same investment objective and
policies.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
7. To amend the Bylaws of the Trust to require Trustee FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
approval of further amendments to the bylaws.
8. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
fund.
9. To amend the Class A Distribution and Service Plan FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
for the fund.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11. To amend the fund's investment objective and policies FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
to provide greater investment latitude to seek high
current income.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
12. To replace certain of the fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
investment policies with non-fundamental policies.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
13. To restate the fund's fundamental defensive policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
with one that is non-fundamental.
14. To adopt a fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
concerning senior securities for the fund.
15. To adopt a fundamental investment limitation policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 15.
concerning commodities for the fund.
16. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 16.
concerning diversification for the fund.
17. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 17.
limitation concerning short sales of securities.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
18. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
limitation concerning margin purchases.
19. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
limitation concerning borrowing.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
20. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
limitation concerning the underwriting of securities.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
21. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 21.
limitation concerning the concentration of its
investments in a single industry.
22. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
limitation concerning real estate.
23. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
limitation concerning lending.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
24. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
limitation concerning purchasing the securities of
other investment companies.
25. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
limitation concerning investments in securities of
newly-formed issuers.
26. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 26.
limitation concerning investing in oil, gas, and mineral
exploration programs.
27. To replace the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
limitation concerning investment in companies for the
purpose of exercising control or management.
28. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 28.
limitation concerning purchasing securities of an
issuer in which the Trustees or directors and officers of
the fund or FMR hold more than 5% of the outstanding
securities of such issuer.
</TABLE>
Vote this proxy card TODAY! Your prompt response will
save Fidelity Advisor Limited Term Tax-Exempt- Class B the expense of
additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- - - --------------------------------------------------------------------------
- - - --------------------
FIDELITY ADVISOR SERIES VI: FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND -
CLASS B
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Marvin L. Mann, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
Fidelity Advisor Series VI: Fidelity Advisor Limited Term Tax-Exempt Fund -
Class B which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on November 16, 1994 at 11:00 a.m. and
at any adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one votes
and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt
of the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
ATEPB-PXC-date produced] cusip # XXXXXXXXX/687]
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- - - --------------------------------------------------------------------------
- - - --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the 12 nominees specified below as [ ] FOR all nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Gerald C. McDonough, Edward H. Malone, nominees.
Marvin L. Mann and Thomas R. Williams
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
__________________________________________________________________________
___________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of Coopers & Lybrand, L.L.P. as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting the fund to invest all of its assets in
another open-end investment company with
substantially the same investment objective and
policies.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
7. To amend the Bylaws of the Trust to require Trustee FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
approval of further amendments to the bylaws.
8. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
fund.
9. To amend the Class A Distribution and Service Plan FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
for the fund.
10. To amend the Class B Distribution and Service Plan FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
for the fund.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11. To amend the fund's investment objective and policies FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
to provide greater investment latitude to seek high
current income.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
12. To replace certain of the fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
investment policies with non-fundamental policies.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
13. To restate the fund's fundamental defensive policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
with one that is non-fundamental.
14. To adopt a fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
concerning senior securities for the fund.
15. To adopt a fundamental investment limitation policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 15.
concerning commodities for the fund.
16. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 16.
concerning diversification for the fund.
17. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 17.
limitation concerning short sales of securities.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
18. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
limitation concerning margin purchases.
19. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
limitation concerning borrowing.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
20. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
limitation concerning the underwriting of securities.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
21. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 21.
limitation concerning the concentration of its
investments in a single industry.
22. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
limitation concerning real estate.
23. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
limitation concerning lending.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
24. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
limitation concerning purchasing the securities of
other investment companies.
25. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
limitation concerning investments in securities of
newly-formed issuers.
26. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 26.
limitation concerning investing in oil, gas, and mineral
exploration programs.
27. To replace the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
limitation concerning investment in companies for the
purpose of exercising control or management.
28. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 28.
limitation concerning purchasing securities of an
issuer in which the Trustees or directors and officers of
the fund or FMR hold more than 5% of the outstanding
securities of such issuer.
</TABLE>
Vote this proxy card TODAY! Your prompt response will
save Fidelity Advisor Limited Term Tax-Exempt - Institutional Class the
expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- - - --------------------------------------------------------------------------
- - - --------------------
FIDELITY ADVISOR SERIES VI: FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND -
INSTITUTIONAL CLASS
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Marvin L. Mann, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
Fidelity Advisor Series VI: Fidelity Advisor Limited Term Tax-Exempt Fund -
Institutional Class which the undersigned is entitled to vote at the
Special Meeting of Shareholders of the fund to be held at the office of the
trust at 82 Devonshire St., Boston, MA 02109, on November 16, 1994 at 11:00
a.m. and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if only
one votes and acts, then by that one. This Proxy shall be voted on the
proposals described in the Proxy Statement as specified on the reverse
side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
ATEPI-PXC-date produced] cusip # XXXXXXXXX/087]
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- - - --------------------------------------------------------------------------
- - - --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the 12 nominees specified below as [ ] FOR all nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Gerald C. McDonough, Edward H. Malone, nominees.
Marvin L. Mann and Thomas R. Williams
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
__________________________________________________________________________
___________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of Coopers & Lybrand, L.L.P. as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting the fund to invest all of its assets in
another open-end investment company with
substantially the same investment objective and
policies.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
7. To amend the Bylaws of the Trust to require Trustee FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
approval of further amendments to the bylaws.
8. To approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
fund.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11. To amend the fund's investment objective and policies FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
to provide greater investment latitude to seek high
current income.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
12. To replace certain of the fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
investment policies with non-fundamental policies.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
13. To restate the fund's fundamental defensive policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
with one that is non-fundamental.
14. To adopt a fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
concerning senior securities for the fund.
15. To adopt a fundamental investment limitation policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 15.
concerning commodities for the fund.
16. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 16.
concerning diversification for the fund.
17. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 17.
limitation concerning short sales of securities.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
18. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
limitation concerning margin purchases.
19. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
limitation concerning borrowing.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
20. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
limitation concerning the underwriting of securities.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
21. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 21.
limitation concerning the concentration of its
investments in a single industry.
22. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
limitation concerning real estate.
23. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
limitation concerning lending.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
24. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
limitation concerning purchasing the securities of
other investment companies.
25. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
limitation concerning investments in securities of
newly-formed issuers.
26. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 26.
limitation concerning investing in oil, gas, and mineral
exploration programs.
27. To replace the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
limitation concerning investment in companies for the
purpose of exercising control or management.
28. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 28.
limitation concerning purchasing securities of an
issuer in which the Trustees or directors and officers of
the fund or FMR hold more than 5% of the outstanding
securities of such issuer.
</TABLE>
